International business is a business activity carried out between one country and another. We need to learn why it is necessary to do business between countries, as well as things that can encourage and hinder the ongoing International Business. then what exactly is international business which is often where countries are interconnected.
INTERNATIONAL BUSINESS PROPERTY
International Business is a business activity that is carried out across national borders. The business transactions carried out by a country with other countries are often referred to as International Business (International Trade). International Marketing or International Marketing is a business transaction carried out by a company in one country with another company or individual in another country. Although basically there are two definitions that distinguish two International Business transactions, including:
1. International Trade (International Trade)
International trade is a transaction between countries carried out in the traditional way by export and import. With this transaction there will be “BALANCE OF TRADE BALANCE”. The trade balance surplus shows the condition where the country has a greater export value compared to the value of imports made from its trading partner countries. If the other conditions are constant, the flow of cash into the country will be greater with the outflow of cash with the outflow of cash to the trading partner country. The size of cash inflows and outflows between countries is called “BALANCE OF PAYMENT” or “BALANCE OF PAYMENTS”. The balance of payments which is experiencing a surplus is said to be that the country is experiencing COUNTRY EXCHANGE DEVELOPMENT. Conversely, if the country deviates its trade balance, the import value exceeds the export value it can do with that other country. On the contrary, the country will experience its balance of payments devisit and will face COUNTRY REDUCTION.
2. International Marketing
What is often referred to as International Business (International Business) is a situation where a company can be involved in a business transaction with another country, another company or the general public abroad. Then the businessman will be free from trade barriers and import duty tariffs because there are no export-import transactions. The products being marketed are not only goods but can also be services. This transaction can be reached in various ways including:
• Licensing
• Franchising
• Management in Home Country by Host Country
• Joint Venturing
• Multinational Corporation (MNC)
All forms of international transactions will require payment, often referred to as Fee. International trade with international companies is often considered the same, but the description above is different. The difference lies in the treatment where international trade is carried out by the State while international marketing is an activity carried out by the company. Activities that are more active and more progressive than international trade.
REASONS TO IMPLEMENT INTERNATIONAL BUSINESS
A country or a company conducts international business transactions both in the form of international trade which has several considerations or reasons. Includes economic, political or social cultural considerations even on the basis of military considerations. International business cannot be avoided because there is not a single country in the world that can fulfill all the country’s needs from goods or products produced by the country itself. This is due to the uneven distribution of resources from both natural capital and human resources. Unequal resources will result in a good advantage of a country that has certain resources. This situation determines the conduct of business or international trade and has several reasons for conducting international business including:
1. Specialization between nations – nations
In relation to its advantages and disadvantages, a State must determine strategic choices to produce a strategic commodity, namely:
1) Make maximum use of the power that turns out to be truly superior so that it can produce it more efficiently and most cheaply among other countries.
2) Focus on commodities which have the smallest weaknesses among other countries.
3) Concentrate its attention on producing or controlling the commodity which has the highest weakness for the country.
The three strategies are closely related to the existence of two concepts of excellence that are owned by a State rather than another country in one particular field, namely:
• Absolute advantage (absolute advantage) A country can be said to have an absolute advantage if the country holds a monopoly in producing and trading the product. This can be achieved if there are no other countries that can produce these products so that the country becomes the only producing country due to its natural conditions, such as mining, plantation, forestry, agriculture and so on. Absolute advantage can be obtained from a country that is capable of producing the cheapest commodity among other countries. Excellence in general will not be able to last long because technological advancements will quickly overcome more efficient production methods and lower costs.
• Comperative advantage This concept of excellence is a more realistic concept and is widely found in international business. A situation where a country has a higher ability to offer these products compared to other countries. High ability to offer a product can be manifested in various forms, namely:
1. A) Lower cost or bid price.
2. b) Superior quality even though the price is more expensive.
3. c) Continuity of better supply.
4. d) Good business and political relations stability.
5. e) The availability of better supporting facilities such as training and transportation facilities.
A country will concentrate on producing and exporting commodities which have the best comparative advantage and then importing commodities which have the worst comparative advantage or the greatest weakness.
2. Consideration of business development
Companies that are already engaged in certain fields in a domestic business often try to develop their markets abroad.
This raises several considerations that encourage a company to carry out into the international business:
1) Utilize the capacity of the idle engine that is owned by a company.
2) Domestic products have experienced a level of clarity and have even experienced a phase of decline (decline phase) while those outside the country are actually developing (growth)
3) Competition that occurs within the country is even sharper than competition for these products abroad.
4) Developing new markets (abroad) is easier than developing new products (within the country).
5) The potential of the international market is wider than the domestic market.