Business
Business refers to the activities of trading or exchanging goods, providing services in order to
earn profit, maximizing wealth and for the welfare of the society. An organization or
entrepreneurial entity engaged in commercial, industrial, or professional activity is another
definition of business. Businesses may be for-profit or non-profit entities with a charity goal or
a commitment to advancing a social cause.
The business aim is the driving force behind the company's continued existence and operations.
It is the cause for the company's existence. While the majority of people assume that generating
a profit is the primary purpose of any firm, there are additional objectives such as employee
welfare, societal welfare, economic progress, etc.
International Business vs Domestic Business
International Business
Domestic Business
i. The term "International Business" refers
i. The term "Domestic Business" refers to
to economic transactions involving
economic transactions that take place
several countries around the world and
inside a country's geographical and
taking place outside the geographical
political borders.
and political boundaries
of the country in question.
ii. In international business, the transactions
ii.
happen within the same company
In domestic business, the transactions
are not
which means that goods and raw
materials move between the parent
company and its
subsidiaries or
affiliates. It is called Intra-Firm
transactions.
iii.
International Business deals with
iii.
Domestic Business deals with a single
multiple currencies as different
currency which is the currency of the
countries are involved and they have
host country.
different currencies.
iv.
Involves International Human
Relationships as the people of the
iv.
Does not need to involve
International Human Relationships as
organization overseas have different
the employees of the firm are from
culture, perspective.
the host country or adjusted to the
culture, environment of the country.
v.
Business Research are relatively
v. Business Research can be conducted
difficult to conduct as there is more
easily as there is only one country to
than one country to cover and
research on.
different kinds of people.
vi. The customers in international
vii.
vi.
The customers in international
business are Heterogeneous as
business are Homogeneous as the
different countries has different
culture, beliefs, preferences etc. are
culture, beliefs, preferences etc.
frequent among the customers.
Starting an international business is
vii.
relatively harder as the approach
Starting a domestic business is
relatively easier.
towards international market, the
entry point etc. needs extensive
research.
viii.
ix.
International business involves more
viii.
Domestic business involves less
restrictions than domestic business as
restrictions than international
different countries have different
business as the business does not have
regulations in place in terms of
to deal with other countries
overseas business.
regulations.
Usually requires more capital
ix.
investment for starting up an
Requires less capital investment than
International Business.
International Business than Domestic
Business.
x.
The quality standard for the products
x.
The quality standard for the products
or services offered are usually much
or services offered are usually lower
higher than Domestic Business.
than International Business.
Why do we study International Business?
i.
Offers general business knowledge: First of all, the study of international business
provides us with understanding of general business activities such as accounting,
finance, people, and marketing amongst other things in case of operating an
international business.
ii.
Provides opportunity to explore and work with diverse set of people: One of the
most significant advantages of studying international business is the opportunity to
interact and collaborate with a varied range of individuals in a variety of settings. It
offers us the chance to meet and work with new people and interact with various parts
and people of the globe, gain knowledge or experience a variety of culture, beliefs,
perspective, social norms etc.
iii.
Provides knowledge about possible entry points: The study can explore various
ways that can be used to expand a business to other countries around the globe such as
Joint Venture, Partnership, Exporting etc. The knowledge can be used to research and
determine a suitable entry point.
iv.
Perspective of Globalization: This study allows us to understand how globalization
has led to a greater "connectedness" of organizations, markets, people, and
information throughout nations.
v.
Helps adopting of business polices, perspective: As an International Business
operates in multifaceted, multicultural environments, the study will help us to know
how to examine and adopt to different issues, practices, problems and solutions in
foreign countries.
vi.
International Human Relationships: The study can teach us International Human
Relationships which is a vital part in case of a business operating in different
countries as the people of the organization overseas have a variety of culture,
perspective, social norms and so the handling of these HR will vary too.
General Agreement on Tariffs and Trade (GATT)
 History
The origin of General Agreement on Tariffs and Trade (GATT) can be traced back to the 1944
Bretton Woods Conference, which created the post-World War II financial system and two
essential institutions which are the International Monetary Fund and the World Bank. In
addition to that the conference attendees advocated for the development of a third leg of the
system, the International Trade Organization (ITO).
The United States and the United Kingdom spearheaded the effort to adopt a charter for the
ITO at the newly established United Nations. The conclusion of these discussions was the
signing of the Havana Charter in March 1948. The Havana Charter was never implemented, in
part because the United States Senate refused to accept it. The result was that the ITO did not
survive.
In the meanwhile, parallel negotiations on a multilateral agreement for the reciprocal
elimination of tariff barriers were held. On November 30, 1947, the GATT was signed as a
result of these discussions. On January 1, 1948, a sufficient number of signatory parties,
including the United States, ratified the GATT, enabling it to enter into force under a "Protocol
of Provisional Application" while deliberations on the ITO charter continued. The GATT
survived the disintegration of the ITO, but it lacked a strong institutional structure, since the
negotiators had expected that the agreement will be absorbed by the ITO.
Despite structural shortcomings, the GATT was able to function as a de facto international
organization, sponsoring eight rounds of global trade discussions. Between 1987 and 1994, the
Uruguay Round led to the Marrakesh Agreement, which established the World Trade
Organization (WTO). The WTO incorporates the ideas of the GATT and provides a more
robust institutional framework for implementing and extending them.
 Functions
 To aid in the global economic recovery by re-establishing and liberalizing global
trade.
 To remove tariffs, quotas, and other trade barriers that can help open up markets
for more products and services from other countries.
 Abolish or reduce the most costly and unwelcome parts of the pre-war
protectionist period such as limitations on international commerce and quotas.
 Establishing arbitration framework for international commercial disputes.
 To allow some international agreements to remove tariff barriers.
World Trade Organization (WTO)
 History
The World Trade Organization (WTO) is the successor of the General Agreement on Tariffs
and Trade (GATT), which was founded in 1947 in anticipation of being superseded by the
International Trade Organization (ITO). ITO could not survive, but GATT liberalized
international trade over the following 50 years. The WTO superseded GATT as the global trade
organization in 1995, and the present set of regulations comes from the Uruguay Round of
GATT discussions from 1986 to 1994. GATT trading laws created between 1947 and 1994
(including those agreed during the Uruguay Round) remain the fundamental rule book for
international goods trade.
 Functions
 Enforces rules for international trade
 Negotiates and monitors trade liberalization
 Resolves trade disputes
 Increases decision-making transparency
 Cooperates with other major international economic institutions
 Helps developing countries benefit from the global trading system
International Monetary Fund (IMF)
 History
The collapse of international monetary cooperation during the Great Depression resulted in the
formation of the IMF, which intended to boost global economic growth and reduce poverty.
The formation of the International Monetary Fund (IMF) happened in 1944 during the Bretton
Woods Conference. At the Conference, 45 government delegates discussed a framework for
postwar international economic cooperation.
The International Monetary Fund started it activity on December 27, 1945, with 29 member
nations that consented to be bound by this treaty. Its financial activities started on March 1,
1947. Currently, 189 nations are members of the IMF.
 Functions
The IMF focuses primarily on monitoring the international monetary system and providing
loans to member nations. The functions of IMF cam be classified into three main functions
which are:
 Regulatory functions: According to the Articles of Agreement, in addition to its
regulatory role, the IMF concentrates on implementing a code of conduct for exchange
rate policies and limitations on payments for current account operations.
 Financial functions: To help member nations deal with short-term and medium-term
imbalances in their Balance of Payments (BOP), the International Monetary Fund
(IMF) offers financial assistance and resources.
 Consultative functions: The International Monetary Fund (IMF) serves as a hub for
international cooperation among its member nations. In addition to this, it serves as a
resource for advice and technical support.
World Bank
 History
The World Bank is a member of the United Nations' development group and is a global
financial organization. In 1944, the World Bank was founded as a single entity in Bretton
Woods, United States. The governments of the United States and the United Kingdom were
instrumental in establishing the World Bank. John Maynard Keynes and Harry White came up
with the concept for the Bank. During World War II, the European business elites either
supported the Nazis or were forced to escape. As the perceived leaders of the Nazi resistance,
socialists and communists had a high degree of credibility. To avoid the rise of the leftists in
Western Europe, it was vital for the United States and the United Kingdom to restore the
economic classes to power. This necessitated the construction of robust institutions that would
support policies favoring the growth of private companies. Fear of a post war economic
downturn contributed to the establishment of the World Bank.
The priorities the World Bank have varied throughout time, and this is reflected in its financing.
During its first decade of existence, it assisted in the rebuilding of Europe. In the 1950s and
1960s, its portfolio was dominated by investments in industry and infrastructure. In the 1970s,
the Bank used more direct strategies to decrease poverty. In the 1980s, structural modifications
were prioritized. In the 1990s and 2000s, sustainable development
became a priority. Currently, lending is predicated on a national partnership structure and the
alignment of projects to eleven main themes (rural development, human development,
environmental management, etc.) specified by the bank. Since its foundation, the World Bank
group has made pledges totaling 1,067 billion USD and has extended loans totaling 150 billion
USD to 35 nations. It presently commits over 60 billion USD annually.
 Functions
 The vast knowledge of the world bank and the financial resources aid the
impoverished nations in increasing their economic development, eliminating
poverty and improving their quality of life.
 It assists the war-ravaged nations by providing rebuilding financing.
 It assists poor nations by providing development loans.
 It also offers loans to different governments for irrigation, agriculture, water supply,
health, education, etc.
 It encourages international investments by insuring loans to other entities.
 It also offers economic, monetary, and technical guidance to member nations for
any of their initiatives.
 By implementing different economic reforms, it fosters the growth of of-industries
in developing nations.
United Nations
History
As the Second World War continued, the United Nations emerged gradually.
The representatives of Great Britain, Canada, Australia, New Zealand, and the Union of South
Africa, as well as the exiled governments of Belgium, Czechoslovakia, Greece, Luxembourg,
the Netherlands, Norway, Poland, and Yugoslavia, signed a declaration on June 12, 1941 at St.
James' Palace in London. A few words in this document, known as the Declaration of St.
James's Palace, are noteworthy. In times of conflict and peace, we seek to collaborate with
other free nations towards this aim. "The only true foundation for enduring peace is the willing
cooperation of free peoples in a world where everyone can enjoy economic and social stability
without fear of invasion."
Soon after, Roosevelt and Churchill met in Newfoundland's Placentia Bay to sign the Atlantic
Charter. Roosevelt and Churchill issued their joint proclamation on August 14, 1941. On "some
similar ideals in their respective countries' national policies" that they thought would lead to "a
brighter global future"
On January 1, 1942, representatives of 26 countries fighting the Rome-Berlin-Tokyo Axis
signed the Declaration by the United Nations to demonstrate their solidarity. This essential pact
required the signing nations to provide their full military strength to the war effort and
prohibited them from negotiating a separate peace accord. During this event, the term "United
Nations" was formally employed for the first time.
In October 1944, China, the United Kingdom, the Soviet Union, and the United States met in
Dumbarton Oaks to explore international relations. The discussion concluded with a proposal
for the organizational structure of the worldwide organization. According to the Dumbarton
Oaks agreement, the United Nations was to consist of four principal bodies: the General
Assembly, the Security Council, the International Court of Justice, and the Secretariat. A UN
Economic and Social Council, which would report to the General Assembly, was also
envisioned. Four major international powers presented the Dumbarton Oaks plan to all
governments and peoples for their consideration and deliberation.
The last concerns were resolved at the Yalta Conference, which summoned the San Francisco
Conference.
Functions
 Consider and offer suggestions about the broad principles of cooperation for the
maintenance of international peace and security, disarmament etc.
 Discuss any issues pertaining to international peace and security and make
recommendations on it, unless a dispute or situation is already being considered by the
Security Council.
 Discuss, with the same exclusion, and provide recommendations on any matters within
the scopes of the Charter or affecting the authorities and functions of any organ of the
United Nations.
 Promote international political cooperation, the development and codification of
international law, the realization of human rights and fundamental freedoms, and
international collaboration in the economic, social, humanitarian, cultural, educational,
and health fields by initiating studies and providing recommendations.
 Make suggestions for the peaceful resolution of any circumstance that might harm good
ties between nations.
 Receive and evaluate reports from the Security Council and other UN organizations.
 Consider and approve the United Nations budget and determine the financial
evaluations of Member States.
 On the suggestion of the Security Council, elect the temporary members of the Security
Council and the members of other United Nations committees and institutions, and
select the Secretary-General.
-- THE END --