Globalization and international business both are interlinked in the sense that without globalization international business is not possible and without international business, globalization won’t be that effective but when it comes to their meaning, purpose, and intent they both are completely different from each other. In order to have a better understanding of both the terms let’s look at some of the differences between globalization and international business –
Globalization VS International Business
Meaning
Globalization refers to that process by which nations buy and sells goods or services with each other without any restrictions besides human beings can freely move from one place to another whether their purpose is to do business, service, or travel. In simple words, in the case of globalization, the whole world is like a big family where there are no formalities and restrictions and people and nations benefit from trading with each other. While international business refers to that term in which the companies do business outside the domestic place of business to profit from doing business across nations. In simple words in when the company sells its products or services in more than one nation then that company is doing international business.
Broad and Narrow
Globalization is a broad term in the sense that when one talks about globalization than he or she is not talking about one company or one individual or one nation rather one is talking about the whole world and international business is a part of the overall globalization process while international business is a narrow term in the sense that when one talks about international business than one is talking about a particular company and not about the whole country.
Decision Making
In the case of globalization, the decision and policies with regard to globalization is made by the governments of the country and people living in the country and companies doing business in the country just have to follow the policies of the government while in the case of international business the decision making with regards to whether the company wants to expand its operations across nations lies with the top management of the company. In simple words, while globalization affects all people and companies in the same manner but when it comes to international business it affects only one company and its employees who have decided to do international business and other companies remain unaffected.
Monetary Aspect
In the case of globalization the country which exports earn foreign exchange which then can be used for the betterment of the nation by the government while in the case of international business the company doing international business earns profits that are used by the companies for themselves and its shareholders. In simple words, while globalization benefits the nation as a whole but international business benefit only the company doing international business.
Guiding Factors
In the case of globalization, the guiding factors behind globalization are countries political relations with other nations, social and economic factors, foreign reserves impact of globalization, and other macroeconomic factors while guiding factors behind the international business are company’s goals, return on capital employed, consumer taste, technology, supply chain management, and other such microeconomic factors.
Permanency
In the case of globalization it being a country matter is permanent in nature in the sense that a country won’t stop doing international trade with countries overnight as it is a long term process which is being built over past many years while international business is a company matter and that is the reason why it is not permanent in nature because the company can stop doing international business overnight as per the wishes of top management and shareholders of the company.
As one can see from the above that both globalization and international business are different from each other and that is the reason why they both require a different approach as well as a methodology while deciding about anything related to globalization as well as international business.