BBA (HONS) & BBA (HONS) INTERNATIONAL BUSINESS

BIB2014 – INTRODUCTION TO INTERNATIONAL BUSINESS

MAC 2023- JULY 2023 INTAKE

EXCERSICE

Name: Mameeza Seikh

ID: 1202221007
ANSWER ALL QUESTIONS

1. List four differences between international business and business. Explain in detail
why are there such differences.
Answer:
There are several differences between international business and domestic business.
Some of the key differences are:

 Scope of operations: International business involves operations that extend beyond

the borders of a single country, whereas domestic business operates within the
borders of a single country. International businesses have to navigate different legal,
economic, and cultural environments, whereas domestic businesses have a more
homogeneous environment.
 Cultural differences: International business involves dealing with people and
organizations from different cultures, which can create communication and
operational challenges. Cultural differences can impact everything from negotiations
to marketing strategies, making it important for international businesses to have a
strong understanding of the cultural differences in the markets where they operate.
 Legal and regulatory differences: International business must comply with a range of
legal and regulatory requirements that can vary significantly from country to country.
This includes things like import and export regulations, tax laws, and intellectual
property laws. Domestic businesses also face legal and regulatory requirements, but
they are typically more consistent across regions within a country.
 Currency and financial considerations: International businesses have to deal with
currency fluctuations and different financial systems, which can impact their
profitability and financial stability. They may need to hedge their currency exposures,
and manage complex financial transactions such as foreign currency borrowing,
foreign exchange transactions, and cross-border investments. Domestic businesses
are more likely to deal with a single currency and a more predictable financial
environment.
These differences arise because international business operates across different
countries, each with its own unique environment. As a result, businesses have to
 contend with a range of factors that don't typically apply to domestic businesses,
including different languages, cultures, legal systems, currencies, and economic
conditions. All of these factors can create additional complexities and risks that domestic
businesses do not face. For example, cultural differences can impact negotiations, while
legal and regulatory differences can create compliance challenges. At the same time,
international business can offer significant opportunities for growth and expansion, which
can make it an attractive option for businesses looking to reach new markets and
customers.

2. Explain what you understand by the meaning of Transactional Company, Global

Company and Multidomestic Company.
Answer:
Transactional Company, Global Company, and Multidomestic Company are three
different types of companies that operate in the context of international business. Each of
these types of companies has different characteristics and approaches to doing business
internationally.

 Transactional Company: A transactional company is a business that operates

internationally primarily by engaging in individual transactions with customers or
suppliers in different countries. In other words, this type of company focuses on specific
transactions, such as importing goods from one country and exporting them to another.
The primary goal of a transactional company is to maximize profits through efficient
transactions, rather than by developing a long-term presence in foreign markets. This
type of company may have limited investments in foreign markets and may not have a
strong commitment to building relationships with customers and suppliers in those
markets.

 Global Company: A global company is a business that operates internationally with a

unified strategy and approach across all countries where it operates. This type of
company seeks to create a consistent brand and customer experience across all
markets. A global company may centralize many of its functions, such as marketing and
product development, to ensure consistency across markets. Global companies often
invest heavily in research and development to create products that can be sold globally.
They may also have a strong commitment to corporate social responsibility and
sustainability. Examples of global companies include Coca-Cola, McDonald's, and IBM.

 Multidomestic Company: A multidomestic company is a business that operates

internationally by adapting its strategy and approach to the specific markets where it
operates. This type of company recognizes that customer preferences, cultural norms,
and legal and regulatory environments vary from country to country, and adjusts its
operations accordingly. A multidomestic company may have decentralized functions,
such as marketing and product development, to ensure that it can tailor its offerings to
local markets. Examples of multidomestic companies include Nestle, Unilever, and
Procter & Gamble.
These three types of companies represent different approaches to operating in the global
marketplace. Transactional companies focus on individual transactions, while global
companies seek to create a consistent experience across all markets, and multidomestic
companies adapt their approach to local markets. Each approach has its own advantages
and disadvantages, and companies may choose the approach that best fits their business
model, goals, and resources

3. Company conducting international business will experience many external problems

that will impact on their international business. Elaborate FOUR (4) external factors
that can contribute to the problems.
Answer:
When conducting international business, companies are often faced with various external
factors that can impact their operations and success. Here are four external factors that can
contribute to problems for international businesses:

 Political Instability: Political instability can be a major problem for companies

operating internationally. Changes in government or political unrest can lead to
changes in laws and regulations, including trade policies and tariffs, that can
impact a company's ability to operate in a particular market. In addition, political
instability can create economic uncertainty, which can impact demand for a
company's products or services.
 Economic Factors: Economic factors such as currency fluctuations, inflation,
and changes in interest rates can all impact international business operations.
For example, a sudden drop in the value of a country's currency can make it
more expensive for a company to import goods or pay local staff. In addition,
changes in interest rates can impact the cost of borrowing money, which can
impact a company's investment decisions. international businesses must comply
with various legal and regulatory requirements in the countries where they
operate. These requirements can vary significantly from country to country,
making it challenging for companies to maintain compliance. For example,
intellectual property laws may be weaker in some countries, which can make it
more difficult to protect a company's proprietary technology and products.
 Sociocultural Factors: Sociocultural factors such as language, religion, and
cultural norms can impact how a company is perceived in different markets.
Failure to understand and adapt to these factors can lead to marketing and
communication missteps that can damage a company's reputation. In addition,
companies may also face challenges in finding local staff who are familiar with
the culture and language of the country where they operate.
 Geographical conditions: Business operations are influenced by a country's
climate, geography, seaports, and natural resources. The kinds of crops that can
be cultivated are restricted by extremely hot temperatures. Additionally, it limits
the kinds of enterprises that can run in that environment. Tropical fruit must be
grown in a hot, sunny climate, which is unsuitable for a ski resort. The quantity of
land that may be used for crops is constrained by mountainous terrain, which
presents mining prospects. A country with numerous rivers or seaports can easily
ship goods for international trade. Lack of natural resources forces nations to rely
on imports.
 4. Identify and explain in detail the Four (4) features of culture and code each with an
example.
Answer:
Culture is a complex concept that includes a wide range of behaviors, beliefs, values,
and customs that shape the way people think and act within a society. Here are four
features of culture and examples to illustrate each one:

 Learned: Culture is learned through socialization and is passed down from

generation to generation. Individuals learn about their culture through observation,
imitation, and interaction with others in their community. For example, children learn
about their culture by observing and imitating the behavior of their parents, teachers,
and peers.
 Interrelated: The various aspects of culture are interrelated and influence one
another. For example, language and communication patterns are closely tied to
cultural values and beliefs. Cultural norms also shape the way people communicate
and interact with one another. In some cultures, direct communication is preferred,
while in others, indirect communication is the norm.
 Tangible: Culture is tangible and visible in a variety of ways, including art,
architecture, music, and food. These tangible expressions of culture provide a
window into the values and beliefs of a society. For example, traditional Mexican
cuisine reflects the country's cultural heritage, with ingredients and dishes that have
been passed down for generations.
 Shared: Culture is shared by members of a society and provides a sense of
belonging and identity. Shared cultural practices and beliefs create a sense of
community and help to define social roles and relationships. For example, the
importance of family is a shared value in many cultures, providing a sense of identity
and belonging for individuals within that community.
In summary, culture is learned, interrelated, tangible, and shared. Understanding these
features is crucial for individuals and organizations that operate across different cultures,
as it can help them navigate cultural differences and avoid misunderstandings. By
recognizing and respecting cultural differences, individuals can build stronger
relationships and promote more effective communication across cultures.

5. Cultural differences among countries can contribute blunders and misunderstanding

which could affect the flow of the business. Elaborate what can the companies
involved in the international do to overcome the misunderstanding.
Answer:
Cultural differences can be a significant barrier to effective communication and can lead to
misunderstandings in international business. To overcome these challenges, companies
involved in international business can take the following steps:

 Cultural Training: Companies can provide cultural training for their employees who
are working in foreign countries. This training can help them to understand the
cultural differences and avoid any cultural faux pas. For example, they can learn
about the appropriate way to greet people, the importance of body language and eye
contact, and the meaning of different gestures.
 Language Skills: Companies can also provide language training to their employees
who are working in foreign countries. This can help them to communicate more
effectively and understand the cultural nuances of the language. For example, in
 some cultures, the use of formal language is preferred, while in others, a more casual
approach is acceptable.
 Local Partner: Companies can also partner with local businesses or consultants
who are familiar with the cultural norms and practices of the country they are working
in. This can help them to navigate any cultural differences and avoid any
misunderstandings. For example, a local consultant can help a company to
understand the local customs and business practices.
 Flexibility: Companies can also be flexible and open-minded in their approach to
international business. They can be willing to adapt to the local culture and customs,
rather than trying to impose their own way of doing things. For example, they can be
open to different business hours or working practices.
In conclusion, cultural differences can be a challenge in international business, but with
the right approach, companies can overcome these challenges and build stronger
relationships with their foreign partners. By providing cultural training, language skills,
partnering with local businesses, and being flexible, companies can avoid
misunderstandings and promote effective communication across cultures