Types of International Business

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The commercial transactions basically include sales, investments, logistics, transportations, and other related activities.

It is generally made up of transactions and collaborations that are concocted and carried out across the national borders to gratify the strategic content and aims of business companies, organizations, and investors.

There are two major types of international business. These are the trade and investments. Trade which is also referred to as commerce is the exchange of products and goods that are carried from one nation to another. In the old days, transporting these goods was very difficult which restricted this certain type of international process. However, with the improvement of transportation networks, today’s trading process takes place even with the neighboring continents. One fundamental advantage of foreign trade is described in the principle of the comparative advantage. This principle states that a country can still gain from trading certain products even if its trading partner can create those products more cheaply. The comparative advantage occurs when each trading partner has a product that will make a better price in another state than it will at home.

The other major type of international business is the investment. Investment is normally defined as that act of spending or saving money for future financial profit. It includes the importing of durable goods such as cars from another country. There is also the direct foreign investment which is carried out in different forms. This includes the wholly owned auxiliary and joint ventures. Other minor types of international business are management contracts, licensing, and franchising.

Purposes for international business also vary from the entity whose managing it. Normally, most private companies commence such transactions in the international business for profit gain. On the other hand, government typically carries out these transactions for political reasons.

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Types of International Business

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