Before discussing the scope and importance of International business let’s first discuss what do we mean by “Business”- It is the activity of making, buying or selling goods and services to earn profit. Now, let’s put a little light on the term “International Business”- It comprises of all commercial transactions (Private, Government, Sales, Investments, Logistics & Transportation) that takes place between two or more Countries/Nations, in simple words outside the national borders. It is an extremely significant aspect of any modern economy, and will become integrated into core business strategy as technology continues to progress. For E.g. Mahindra&Mahindra Ltd. ventures into Singapore and establishes a manufacturing facility for production of its cars, that case there is a cross-border business between an Indian Enterprise and Singapore.
Proceeding further let’s understand the scope of International Business concerning India. As we all know India is the fastest growing economy and is a hotspot for the global investors. India received USD 27.2-billion foreign investment in the first half of 2019 and the pace is said to have sustained thereafter. The government of India is keen on promoting “International Trade & Business” to improve international relations and to make India a globally competing economy. Therefore,it can be concluded that there is a immense potential for International Business in India and same is discussed below-
a) Overcoming Limitation of Domestic Market- In a country like India where 22% population (2012 GoI Data) is living below poverty line there is a weak buying sentiment and low-demand for luxurious products. With International Business an enterprise can endeavour into the developed countries and flourish with their flagship luxurious products. For E.g. Centralised Air Conditioners and Dishwashers are not in big demand in India but an organization which is into this business can venture to International Borders and can overcome the low demand of national market.
b) Monopoly- As in the domestic country the product/service offered by an enterprise might be very easily available, but the scenario may not be the same everywhere. In a country other than the domestic country where the product has not yet been introduced, a company can make use of this opportunity and can be the first entrant to gain monopoly of that market. For E.g. VoLTE 4G is not yet introduced in countries like Somalia, Central Africa, etc. Therefore, companies like Jio, Airtel who have pioneered the 4G spectrum can enter into these countries and be the only players in the market.
c) Increased Revenue- One of the top advantages of international business is that a company can enlarge its number of probable clients. Each country they add to their list,it will open up a new path to business growth and will lead to increased revenues.
d) Technology Advancement- An enterprise operating in a developing country with minimal technology advancement can venture into a developed and robust country with a much more improved technology which can help in improving way and quality of production. For E.g. Infosys was developed in India but later entered the United States of America and is now a key player in providing software solutions with superior technology.
Conclusion– In a nut-shell International Business is integrating the nation’s economy with the global economy. Measures like Liberalisation, Privatisation &Globalisation policy 1991, Foreign Direct Investment’s, Free Trade Agreement, Preferential Trade Area, etc. have pushed International business to a certain degree but still a lot of robust measures are to be adopted to fully promote International Business in India. In the next 5 years the scope of International Business will be doubled as the government strives to make India a global economy and the global customers & demand is thriving.