Explain internal and external international business in detail with pointing out the main constituent
19/June/2025 23:21
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1. Internal International Business
Definition:
Internal international business refers to the operations and activities that take place within the organization to support and manage its global business. These are the internal strategies, resources, and functions that enable a company to operate across borders.
Main Constituents of Internal International Business:
1. International Marketing Strategy
Planning how to market products globally—includes pricing, promotion, and distribution in foreign markets.
2. Organizational Structure
Designing how the company will manage its international divisions or branches, including reporting relationships.
3. Human Resource Management
Hiring, training, and managing employees for international roles, including expatriates and local staff.
4. Research and Development (R&D)
Innovating products that meet global market needs or adapting existing products to local preferences.
5. Financial Management
Managing budgets, international taxation, currency conversion, and global financial reporting.
6. Logistics and Supply Chain
Organizing the movement of goods, raw materials, and services efficiently across countries.
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2. External International Business
Definition:
External international business includes all factors and environments outside the organization that influence international trade and business operations. These are uncontrollable elements that businesses must analyze and adapt to.
Main Constituents of External International Business:
1. Political Environment
Government policies, stability, international relations, trade agreements, and regulations.
2. Economic Environment
Inflation rates, interest rates, economic growth, income levels, and exchange rate fluctuations in foreign markets.
3. Legal Environment
Foreign laws related to labor, taxes, trade restrictions, product safety, environmental regulations, etc.
4. Technological Environment
The level of technology adoption, internet access, innovation policies, and digital infrastructure in foreign markets.
5. Cultural and Social Environment
Consumer behavior, traditions, language, religion, values, and lifestyle preferences.
6. Natural Environment
Climate, geography, environmental concerns, and natural resource availability that affect product suitability and logistics.
7. International Competition
Presence of local and multinational competitors in the foreign market and their market share.
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Conclusion
Internal international business focuses on what a company controls: planning, organizing, staffing, and managing its global operations.
External international business focuses on the outside environment that the business cannot control but must analyze and adapt to.
A successful international business strategy requires a strong internal setup aligned with an accurate understanding of the external global environment.
