INTERNATIONAL BUSINESS
 

International business refers to the trade in goods and services along with the exchange of capital, technology, skills and patents that takes place across national boundaries.

Component of international business	Meaning
Merchandise exports and imports	Trade in tangible commodities
Service exports and imports (invisible trade)	Trade in intangible commodities
Licensing and franchising	Allowing a foreign company to produce and sell goods using the logos and trademarks of the domestic company in return for a fee
Foreign investment	Investments that are made outside a country with the objective of earning returns

➢ Meaning

International trade refers to only the exchange of goods and services across the boundaries of countries.

➢ Characteristics of international trade

i. There must be an involvement of at least two countries between which the exchange of goods and services takes place.
ii. International trade involves payment being made and received in terms of foreign currency.
iii. It is usually a time-consuming process because of such factors as wide geographical distances, procedural formalities and barriers to trade.  
iv. A large set of legal formalities and restrictions, such as import licence and export clearance, must be completed before international trade can begin.
v. International trade is exposed to various types of risks, such as risk of loss of goods during transit, fluctuations in prices of goods and fluctuations in the exchange rate.

Points of difference	International trade	International business
Definition	Refers to only the exchange of goods and services across the international boundaries of coun…