Types of the Business Environment
Each business is always searching for growth, which it can achieve by making its presence known in other countries (Anwar, 2017). A domestic business environment is a situation where a company conducts its operations within the borders of its country of origin. In a domestic business environment, the company and the buyer of goods and services are from the same country. Researching a business operating In a domestic environment is very easy because the business is limited to the territory. A business operating in a domestic business environment will, in most cases, have homogeneous customers. The business will always use the currency of the parent company.
An international business environment is where a business conducts business operations with customers across borders. Businesses in an international business environment sell their goods and services to customers to customers who are in different countries in the world (Singh & Delios, 2017). Researchers find it hard and expensive to conduct business research in n international business environment. Most businesses in the international business environment use many currencies and interact with heterogeneous customers.
Examples of Domestic and International Organizations
An example of an organization that operates in the domestic business environment in the United States of America may include Raley’s, a food store located in California and serves customers from the United States. Raley’s has stores located in California and serves customers in the United States. An example of a business that has expanded into international markets is McDonald’s, a fast-food restaurant with branches worldwide. McDonald’s has more than 37,000 outlets in over 100 countries.
Benefits of Expansion
There are many benefits that a company can get from global expansion. The main benefit is the growth in revenues that a company can obtain from expansion into global markets (Sukumar et al., 2021). Expansion into global markets helps an organization to get to many customers who purchase their products and services, leading to a growth in revenue. Expansion into global markets also helps a company to diversify its market by establishing outlets in different countries. If a crisis happens, such as political clashes in one country, the company’s operations will continue in other countries that maintain a flow of income.
Some of the ethical issues that a domestic company must consider while expanding into other markets include the standards and conditions of working in other countries, human rights, child labor, religion, corruption, and other factors. A company is required to comply with laws and regulations that relate to the factors (White, 2020). The company should also adhere to safety rules and regulations, civil rights, statutes in monetary retorting, and laws concerning civil rights. Different countries have different laws, and a company should be aware of them before expanding into other countries.
Domestic markets target customers within the boundaries of one country, while international markets target customers in many different countries. International markets have many benefits compared to domestic markets. An organization operating in an international market will always have branches in different countries. It will use many different currencies, while a domestic organization has branches in one country and uses only one currency. Global markets offer a bigger potential in revenues than the home market. Expanding into international markets is the most sensible thing that a company can do. When expanding into global markets, a company should consider the ethical laws present in the countries they want to expand to.
Anwar, S. T. (2017). Alibaba: Entrepreneurial growth and global expansion in B2B/B2C markets. Journal of International Entrepreneurship, 15(4), 366-389.
Jafari-Sadeghi, V., Sukumar, A., Pagán-Castaño, E., & Dana, L. P. (2021). What drives women towards domestic vs international business venturing? An empirical analysis in emerging markets. Journal of Business Research, 134, 647-660.
Singh, D., & Delios, A. (2017). Corporate governance, board networks and growth in domestic and international markets: Evidence from India. Journal of World Business, 52(5), 615-627.
White, N. D. (2020). The law of international organisations. Manchester University Press.