The rapid development of science and technology has an impact on the progress of the fields of communication, transportation, and information. Along with these conditions, the world's population continues to grow, while natural resources or factors of production tend to be limited. Each country has limitations and strengths so that it encourages existing business activities in a country to expand overseas. Domestic business that has been carried out by national companies has begun to be abandoned to move on to business on an international scale or in other words companies have begun to engage in international business.
The notion of international business has been advanced by many experts as follows.
Rugman and Hodgetts (1995)
International business is the study of transactions taking place across national borders for the purpose of satisfying the needs of individuals and organizations.
Griffin and Pustay (1996)
International Business is any business transaction between parties from more than one country is part of international business.
Ball and Wendell (2004)
International business is a business whose activities cross national borders. This definition includes not only international trade and regulation abroad, but also the service industry that is developing in fields such as transportation, tourism, banking, advertising, construction, retail trade, wholesale trade, and mass communication.
Thus, international business can be interpreted as activities in the form of business transactions between more than two countries involving individual individuals, corporate individuals, corporate groups, or international agents and also interpreted as studies that study these activities (Rusdin, 2002 ).
How is international business distinguished from domestic business? In connection with these two terms, Griffin and Pustay (1996) suggest the following.
Simply put, domestic business involves transaction occurring within the boundaries. More substantively, international business can differ from domestic business for a number of reasons, including the following:
- the countries involved may use different countries, forcing at least one party to convert;
- the legal system of the countries may differ, forcing one or more parties to adjust their behavior to comply with local law; occasionally, the mandats of the legal system may be incompatible;
- the cultures of the countries may differ, forcing each party to adjust its behavior meet the expectations of the other;
- the availability of resources differ by country; one country may be rich in natural resources but poor in skilled labor.
Thus, a simple domestic business is a business that involves transactions in a unity. In more detail the difference between international business and domestic business lies in the issue of currency, the legal system, and the culture and availability of different resources between one country and another.
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International business is a business practice that involves all of these considerations because it involves several countries. Meanwhile, domestic business is a business activity that occurs in a country where the use of currency, culture, legal system, and its sources is relatively the same. |
In relation to the understanding of international business, there are terms that are sometimes linked or perceived the same as international business, even though the essence is different. The terms referred to as follows.
- Domestic business is business activity that is clearly aimed at domestic business activities. A company engaged in domestic marketing may do this consciously as the chosen strategy or may subconsciously focus on the domestic market with the intent of avoiding the challenge of learning how to market overseas.
- International business: going further than domestic business and not just export marketing, but further involved in the marketing environment in the country where the company does business.
- Multinational business: in multinational business, international marketing organizations begin by focusing on the utilization of company experience and products. The company is aware of the diversity and uniqueness of the environment in the country, determines a new role for itself, and adapts the company's marketing to the unique needs and desires of the country's customers.
- Global / transnational business, which is a business that focuses on the utilization of assets, experiences, and products of companies globally and makes adjustments to what is truly unique in each country (Rusdin, 2002).