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Major Difference between Domestic and International Business


Domestic Business and International Business

Conducting and managing international business operations is more complex than undertaking domestic business. Differences in the nationality of parties involved, relatively less mobility of factors of production, customer heterogeneity across markets, variations in business practices and political systems, varied business regulations and policies, use of different currencies are the key aspects that differentiate international businesses from domestic business. These, moreover, are the factors that make international business much more complex and a difficult activity.

Differences between International Trade and Domestic Trade

Scope: Scope of international business is quite wide. It includes not only merchandise exports, but also trade in services, licensing and franchising as well as foreign investments. Domestic business pertains to a limited territory. Though the firm has many business establishments in different locations all the trading activities are inside a single boundary.

Benefits: International business benefits both the nations and firms. Domestic business have lesser benefits when compared to the former.

  • To the nations: Through international business nations gain by way of earning foreign exchange, more efficient use of domestic resources, greater prospects of growth and creation of employment opportunities. Domestic business as it is conducted locally there would be no much involvement of foreign currency. It can create employment opportunities too and the most important part is business since carried locally and always dealt with local resources the perfection in utilization of the same resources would obviously reap the benefits.
  • To the firms: The advantages to the firms carrying business globally include prospects for higher profits, greater utilization of production capacities, way out to intense competition in domestic market and improved business vision. Profits in domestic trade are always lesser when compared to the profits of the firms dealing transactions globally.

Market Fluctuations: Firms conducting trade internationally can withstand these situations and huge losses as their operations are wide spread. Though they face losses in one area they may get profits in other areas, this provides for stabilizing during seasonal market fluctuations. Firms carrying business locally have to face this situation which results in low profits and in some cases losses too.

Modes of entry: A firm desirous of entering into international business has several options available to it. These range from exporting/importing to contract manufacturing abroad, licensing and franchising, joint ventures and setting up wholly owned subsidiaries abroad. Each entry mode has its own advantages and disadvantages which the firm needs to take into account while deciding as to which mode of entry it should prefer. Firms going for domestic trade does have the options but not too many as the former one.

To establish business internationally firms initially have to complete many formalities which obviously is a tedious task. But to start a business locally the process is always an easy task. It doesn't require to process any difficult formalities.

Purvey: Providing goods and services as a business within a territory is much easier than doing the same globally. Restrictions such as custom procedures do not bother domestic entities but whereas globally operating firms need to follow complicated customs procedures and trade barriers like tariff etc.

Sharing of Technology: International business provides for sharing of the latest technology that is innovated in various firms across the globe which in consequence will improve the mode and quality of their production.

Political relations: International business obviously improve the political relations among the nations which gives rise to Cross-national cooperation and agreements. Nations co-operate more on transactional issues.

  • Domestic Trade
    Domestic trade is the exchange of goods, services, or both within the confines of a national territory. They are always aimed at a single market.
  • International Trade
    Trade that includes exchange of capital, goods, and services across nations is called International Trade.

Also See:

  • Functions of Money
    What are the functions of money. Functions of Money. Money performs four specific functions, each of which overcomes the difficulties of barter. The functions of money are to serve as: Unit of value, Medium of exchange, Standard of deferred payments
  • Barter Exchange System
    Prior to the introduction of money as it is known today, trade was carried out by barter, i.e. exchange of goods for goods. Due to the wasteful nature of barter, the amount of trade that could be carried out by this method of exchange was limited.

© 2009 Dilip Chandra

Comments Please

mallinath on August 06, 2015:

Thanx for good information

Dilip Chandra (author) from India on November 25, 2014:

Garo - the above information was the analysis of the author, that is me. It was gathered after reading many books of different subjects.

Garo on November 25, 2014:

please what is the sponsor of this website

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ceejay on September 23, 2014:

can you include information on the differences over domestic and foreign banking

anu on July 23, 2014:

thanks for giving some valuable information

meanguy on February 10, 2014:

can you suggest some ways in which an enterprise can deal with greater likelihood of major change in international compared to domestic marketing.

Joshua Magwesela on December 14, 2013:

Very helpful and am so thankful

rass on September 10, 2013:

need more information

jody on October 07, 2012:

1-international investment is more costly than local investment because of the unexpected taxes such as withholding taxes on dividends .

2-Reliance on foreign legal remedies: if you have a problem with your investment,you may not be able to sue the company in your home country. Then you have to rely on whatever legal remedies are available in the company`s home country.

PRIYA BANSAL on September 16, 2012:


LOKESH DADHEECH on September 15, 2012:

helpfull for my study and increment of knowledge . thanks for sharing

Md. Emtiaz Ahmed Sohan on September 03, 2012:

Thanks for the differences but need more difference points, overall good...

trupti on July 02, 2012:

need some more information

Chands on June 26, 2012:

Well done, mate! This is pretty informative. However, I do believe that there are more differences than you have mentioned.

Grace .E.Robert on June 24, 2012:

Thanks a lot. My assignment was made easy.

Ajayi Gabriel.unergraduate fedpolyede on June 03, 2012:

What a commedable write-up indeed. Despite its age,it still relevant with the current studies. Nevertheless,it will be more appreciative and helpful if research can be caried out on the similarities between the two forms of business.thanks for the good work.

Ajayi Ronke on May 30, 2012:

This is indeed a great job,but i shal be grateful if u can write something on d similarities btw d two.GOD bless

Taiwo samson on May 27, 2012:

to much, i realy apriciate this write up it help me in my assignment in school. but i will be very grate if i can see the similarity of international trade and domesric trade.

skaiser on May 02, 2012:

thanks for providing such knowledge..

Owen on April 05, 2012:

Tabulated differences would do it better for me.

pradnya zope on February 26, 2012:

thanks for giving an usefull information.can u please give me in detail the difference between international and domestic companies.

navneet rai on February 26, 2012:

it is quite and simple to understand

jacobspage from Texas on February 09, 2012:

Great info, Great HUB.

vaishnavi on January 18, 2012:

i found this topic quite interesting after reading this article thanxxx

mktmamun on January 17, 2012:

you infromation is really good.which will help me lot to make my assignment great

kavitha on January 13, 2012:

Nice work. Felt very happy by reading this. keep it up. Thank you so much..

gaurav on January 07, 2012:

thanks for giving some nice information.

Onyemalu Janevine Adaora on December 28, 2011:

Nice work. It really helped me in my International Economics Assignment. But pls I need more differences

Dilip Chandra (author) from India on December 26, 2011:

Sharath Lee, received your e-mail and i've gone through the same as well. Before you write your assignment, difference between international and domestic business, instead of directly jumping into differences between the said two, try to put some information on International business and Domestic business. Go through my articles on them. Follow the links:

Please feel free to contact me if you have any questions or comments.

roshini on December 23, 2011:

Thanks a lotttttt........ it is very usefull 4r my assignment.......

s.vijayvarman cms on December 21, 2011:

this page useful for my seminor topic thank uuuuuuuuu

Dungar on December 09, 2011:

i want more difference.

sushma sharma on November 28, 2011:

thank uuuuuu

Jobayer on October 24, 2011:

Thanks a lot.

nitsimran singh on October 21, 2011:

itzz nice.. thanks 4 info.

rakshika on October 08, 2011:


SIVA on October 02, 2011:


md fahim bin nizam on October 01, 2011:

kub nice akta assignment leklam.........thnx of google...

nancy leone on September 13, 2011:

thax so much GOD BLESS

fajfA D aaslaa on August 24, 2011:

hi like to see this site

Excellency on June 26, 2011:

Encouraging.u can do better dan dis...

NJOUFAC EMELDA on May 10, 2011:


Faith on April 14, 2011:

Usefull and helpfull info. Nice work.

nyasha on March 07, 2011:

thank you for the wonderful actually helped me than i thot.keep on helping.thank you once again

musie_melese on February 17, 2011:

much thanks for the articles u included , but somewhat need to add additional significant difference b/n them...

kanwal on February 12, 2011:

this is really helpful but i want more information

Bhavik on January 12, 2011:

nice, helped me a lot in my social studies assignment..............

ammar on October 31, 2010:


it helped me alot in my assignment :)

keep rocking :)

tipu on October 31, 2010:

enough for my assignment...thnx...:)

Avinash yagati on September 30, 2010:

very important informations thanks every body must know the basic differences between domasti and international markets.

Dilip Chandra (author) from India on August 21, 2010:

Deeksha... Also see International Trade for more information. Thanks for the comments.

DEEKSHA on August 21, 2010:

Its Really Good, But its Better to give More Information..

fareed tamim on June 04, 2010:

it help me a little bit,but you need to make more clarification, so that one can understand easily

zn on May 24, 2010:

helpful,but limited.

Abiodun. O. Blessing on April 22, 2010:

Kudos to you with this comprehensive effort you have made to put something relevating for the entire nation to see and utilized, please can you put more effort....,

Dilip Chandra (author) from India on March 27, 2010:

Nenu, Amrut, AHTSHAM and AHMER thanks for ur comments. AHTSHAM and AHMER i got ur requests, well i'll do my best... perhaps i'll open a new hub for this or else i'll publish them in my blog... i'll write that here when am done.

thank u again for ur comments.

AHMER on March 23, 2010:


AHTSHAM on March 23, 2010:

we need more comments not only comments . we want actual shape of differences with the middle line at one side show domestic and other side show international differences

Amrut on March 23, 2010:

Thank You For Giving A Nice Information.

Nenu on February 04, 2010:

Thanks For Giving Such A wonderful Peace Of Information.

I Would Like To Put it on my blog.

Keep It Up.

Dilip Chandra (author) from India on December 28, 2009:

aishwarya, Devaki, sreya - i have already added more differences.

shailesh gururani - international business hub was opened, follow the link given at the end.

murtala k ceesay and all others, thank you for your comments

murtala k ceesay on December 20, 2009:

this is really helpful in the studies of so many people around the world, thank you soo very much

sreya on November 08, 2009:

very helpful information,need some more differences..

Devaki on November 04, 2009:

Nice to see your effort. Could you please develop more differences here?

shailesh gururani on October 06, 2009:

this is really helpful but i want in detail from beginning what is international business,scope, difference and almost all topics about this

aishwarya on September 13, 2009:

we need more differences.... pls..

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