International Business refers to business transactions i.e manufacturing and trading, carried on beyond the boundaries of one’s own country. International business takes place beyond boundaries of one’s own country and there is participation by people and organisations from different countries. International business includes merchandise exports and imports, service exports and imports, foreign investments, licensing and franchising. Foreign investments can be direct and portfolio investments. Direct investments takes place when a company directly invests in properties to undertake production and marketing of goods and services in foreign countries. Porfolio investment refers to an investment that a company makes in another company by acquiring shares or providing loans and earns dividends or interest on shares or loans, respectively. International business offers benefits under two categories –benefits to nations and benefits to firms. Benefits of international trade to nations are earning foreign exchange, promoting global understanding, increasing standard of living, stability in prices etc. Benefits to firms include prospects of higher education, technological upgradation, improved business vision etc. Problems of international business are due to different currencies in business transactions, customer heterogeneity, blocking up of capital etc. Domestic business takes place within the geographical boundaries of a country and international business takes place beyond the geographical boundaries of a country. International trade comprises of exports and imports of merchandise only. It is also called ‘visible trade’ because it involves tangible goods. International trade is a part of international business.
Export trade refers to selling of goods and services produced in the home country to markets abroad. Import trade refers to buying of goods and services from other countries. Import procedure deals with process of purchasing goods from foreign countries. World Trade Organisation was set up on 1st January 1995 by replacing GATT. It regulates trade between member countries and creates such an environment in which these nations come forward to WTO for redressal of their grievances. It supervises various operations of the revised Agreements & Ministerial declarations relating to goods, services and Trade related intellectual property rights. It lays down a code of conduct for reducing trade barriers
Role of WTO are supervising and liberalizing international trade, laying down code of conduct , promoting international peace etc