Question

1. State and Discuss at least two differences between conducting business domestically versus internationally.

Answer 1

The 2 differences are discussed as below:

a) Understanding culture: While doing business in a foreign nation it is imperative to understand the nature of the people and whether or not the goods and services will be accepted by the common population. Let us take an example to discuss this. For instance if a firm plans to open up a clothing business, then the tradition of the place has to be in consonance with the clothes. Not every culture accepts all kinds of clothes and wearables. Another example would be the food industry. Certain ingredients and condiments used in the preparation of an item may be banned in some region and thus proper substitutes has to be used so as to maintain the flavour of the food and be accepted by the society.

b) Currency transactions: Different countries have a different Currency for transaction. Thus, a business has to look into proper methods for accounting and absorb inflation shocks. Businesses have to look deeply so that interest rate changes do not affect the business too adversely.