International business examples and what makes them successful
Updated 30 September 2022
International business is a very broad area that involves a wide array of commercial transactions between countries. These transactions can take place between individuals, companies or government entities, and involve almost all types of goods and services. Knowing how businesses expand their operations internationally can help you to create strategies or identify international companies that are worth joining. In this article, we provide a list of international business examples and share what makes an international business successful.
International business examples
Most international businesses expand their operations across borders using a number of methods. Key international business examples to note include:
Licensing represents one of the simplest ways for companies to distribute and sell products across the international market. If a company standardises its products and has full ownership rights, they're eligible for licensing. Licenses come in a variety of forms, including copyright agreements, trademarks and patents. Some goods and services are subject to licensing agreements more frequently than others. Books, movies and albums, for example, are typically distributed internationally via licensing agreements.
Importing and exporting
Imports and exports are fundamental to the smooth running of the world's economy, allowing citizens of different countries to enjoy a rich array of goods and services. Residents from the UK, for example, are only able to enjoy exotic fruits as they're imported from countries with warmer climates. Imports represent the goods that flow into a country for consumption by its citizens, while exports represent the goods sold to foreign countries.
Exporting goods is a fantastic growth strategy, as it allows businesses to capture many more customers, build sustainable growth, spread risk and enhance production efficiency. It's important businesses ensure that they're compliant with international regulations and pay a range of costs, such as shopping and logistics fees, before they start trading across borders.
Some businesses choose to extend their international influence via outsourcing. This practice involves handing out contracts to overseas organisations for carrying out certain business functions, such as bookkeeping, marketing or IT troubleshooting. Businesses can benefit from outsourcing if the cost of carrying out such processes is cheaper in another country. For example, companies in developed countries, such as the UK, the US and Australia, often outsource certain functions to organisations in countries where labour costs are cheaper.
Offshoring is similar to outsourcing in that it involves moving certain business functions overseas for foreign workers to take on. But it's slightly different in that it relates to expanding the premises of the company to include an overseas office or offices. Rather than contracting another company to take on certain responsibilities, offshoring ensures that these responsibilities are still overseen and controlled by the business itself.
Franchising is like licensing and represents a relatively simple way for businesses to expand their influence overseas. To start franchising, a parent organisation confers the right to conduct business using its brand name and products to another company. In such a relationship, the parent company is the 'franchiser', while the overseas company is the 'franchisee'. Many of the most famous food and drinks outlets in the world have developed from a franchising model. For example, KFCs and McDonald's have made effective use of franchising so their outlets can be found all across the world.
International joint ventures
Joint ventures represent contracts between two businesses hoping to enter into a mutually beneficial relationship. One of the companies is an international company, while the other is local to where business transactions take place. Under such an agreement, both parties contribute to the management and equity of the company, with profits shared out in line with pre-agreed terms. Ventures and partnerships can be profitable if both parties have something unique to offer.
For example, a local company may have a valuable network of customers and suppliers within their country, while an international business may have capital and cutting-edge technologies on its side. Joint agreements are often subject to government restrictions and international laws, so it's important both sides take these into account before making a deal.
Foreign direct investment
Individuals or companies can invest in businesses located overseas in a practice known as foreign direct investment. Usually, the investing company hands over more than just capital. They may also wish to share technologies, processes and management resources with the business they're investing in. Foreign investment often takes the form of a merger, joint venture, subsidiary company or associate company, with the investor side using its wealth and influence to grow and increase profitability.
Multinational companies are ventures that are set up across multiple countries from their conception. A good example of such a business is Coca-Cola, which has impressive profit-making potential. With multinationals, operations are typically managed independently within each country, with every state having its own set of employees and offices. Most multinational companies attune to their local context, with individual branches ensuring that they tailor their goods and services to local needs and traditions.
What makes a successful international business?
Running an international business can be very profitable. As such, working for an international business can bring about plenty of exciting career opportunities, particularly if you're strategy-minded and keen to drive growth within the company. There are many different factors that can determine whether a business is successful on an international scale. Considering these can help you to ensure that an international business branch you work with or help to set up can last long term. Below are some of those factors:
The social and political health of a country
It's important to consider the social and political contexts of different countries when setting up an international business. Setting up new outlets in places with significant social unrest or even armed conflict could significantly harm a company's profit-making potential and could upset current workers. It also introduces elements of risk that may not be worth it long-term.
Geographical issues and logistics
Sometimes, countries with certain geographical features aren't suitable for international business transactions. Say, for example, you sell a product that has to stay in very cold conditions. Exporting these goods to a tropical climate may require very expensive transport and storage facilities that simply aren't worth the investment. Similarly, some parts of the world may not have the kind of internet connectivity necessary for certain types of tech products to work.
Every country has its own set of cultures, beliefs and behavioural trends. If international companies ignore how demographics differ between countries, they could lose business and face significant reputation damage. For example, McDonald's does not sell beef burgers in India due to the country's high proportion of Hindu citizens that believe cows are sacred animals.
Laws and policies can differ significantly between countries. As such, it's important international companies ensure that their operations abide by local laws and guidelines. The most important legislation to look for tends to involve consumer protections, domestic security, corporate compliance and employee protection. While it may take a while to sift through the relevant laws and requirements, failure to comply could result in serious financial ramifications.
The state of the world economy can significantly affect whether companies choose to operate in certain countries. Issues such as currency value, inflation, set-up costs and market size can all impact the viability of a business in a particular location. It's important for senior leaders of an international business to consider such economic factors before expanding into new territories.
The digital revolution has transformed the commercial landscape, allowing businesses to sell goods and services around the world on a tight budget. As e-commerce gains popularity across the globe, many international companies are using the web to enhance their profitability and attract new customers. Effectively leveraging social media and other forms of online advertising within new countries can help to rapidly expand a company's presence in those territories.
Sophisticated analytics programs have made it easier than ever to track the success of new business initiatives and marketing campaigns. As such, international companies and those hoping to expand their influence overseas can benefit from keeping track of business success and altering strategies wherever necessary. The more quickly businesses can catch problems, the fewer resources they're likely to waste.
Please note that none of the companies mentioned in this article are affiliated with Indeed.
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