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Difference between Domestic Business and International Business

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  • Difficulty Level : Hard
  • Last Updated : 06 Oct, 2022
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1. Domestic Business: Domestic business refers to the business where economic transactions are conducted within the geographical boundaries of one country. The buyer and seller in domestic business belong to the same country. It is limited to the territory. In the domestic business, it is very easy to conduct business research. The nature of customers in domestic business is homogeneous. In this currency of parent/home country is used for doing business. 

2. International Business: International business refers to the business where economic transactions are conducted across borders with several countries in the world. The buyer and seller in international business belong to different countries. It is quite wide. In international business, business research is very expensive and hard to conduct. The nature of customers in international business is heterogeneous. In this different types of currencies of different countries are used for doing business. 

Differences between Domestic Business and International Business are as follows:

Basis

Domestic Business

International Business

Nationality of Buyers and SellersBoth buyers and sellers belong to the same country. It makes it easier for both parties to understand each other and enter into business deals.Both buyers and sellers belong to different countries, which makes business dealings relatively difficult due to differences in their languages, attitudes, customs, etc.  
Nationality of other StakeholdersStakeholders(employees, suppliers, creditors, etc.,) are from one nation. Stakeholders(employees, suppliers, creditors, etc.,) are from different nations.
Mobility of Factors of ProductionDegree of mobility of factors of production(land, labour, etc.) is more as compared to international business.Degree of mobility of factors of production(land, labour, etc.) is less as compared to domestic business.
Nature of CustomersCustomers are homogeneous in their taste, preferences, consumption patterns and buying behaviour.Customers are not homogeneous due to different socio-cultural backgrounds, tastes, fashions, languages, beliefs, customs, etc.
Business Systems and PracticesBusiness systems and practices are homogeneous within a country.Business systems and practices are less homogeneous as there is difference in development level, infrastructure, market facilities, etc. 
Political System and Risks Domestic business firms are familiar with political system of their country. As a result, they are in a better position to understand and predict its impact on business. International business faces difficulties in understanding and coping with different political systems of every country.
Business Regulations and Policies Rules, laws or taxation policies of a single country prevail in domestic business.Rules, laws or taxation policies of various countries prevail in the case of international business. 
Currency usedCurrency of domestic country is used. Currency of more than one country is used. 
RiskIt involves comparatively less degree of risk. It involves a high degree of risk.
Order processing timeThere is a less time gap in order and supply of goods.  There is a wide time gap between order and supply of goods.
Effect on Foreign ReserveIt has no effect on the foreign reserves of a country.It has a direct impact on the foreign reserves of a country.
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