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Trade can be undertaken within the geographical limits of the countries or beyond the boundaries. The trade which takes place within the geographical boundaries of the country is called domestic business, whereas the trade which occurs between two countries is called international business. Entities engaged in international business often face more difficulties than entities which conduct domestic business even though an international business enjoys a large customer base as it operates in multiple countries. Here is a comparison which compiles the important differences between domestic and international business.
Different countries have different languages. This factor can and often does act as a barrier to trade. Traders who sell abroad may have to employ language specialists and incur additional expenses through the necessity of having special forms, labels, instructions, etc. printed.
In the case of domestic trade, there is a fair amount of mobility of labor and capital, but the immobility of labor and, to a smaller extent, of capital is found in the case of international trade.Labor and capital are fairly mobile within the country, but they cannot freely move between two countries.
The natural and economic conditions are, so far as international trade is concerned, not the same in all countries. Some countries have greater natural advantages in producing jute or tea, and some in making machines or electronic goods. It leads to the international specialization or division of labor. International trade is based on this international specialization. But, the natural and economic conditions do not, so far as domestic trade is concerned, vary much in different parts of a country.
Monetary, banking, currency systems and economic policies of different countries also differ.International trade is governed by these differences. But, such restrictions（except minor restrictions like entry tax, restrictive inter-state movement of essential goods such as rice or wheat, etc.）do not, as a rule, exist between different regions of a country and so do not affect, in a large measure, domestic trade.
Each country has a different currency, which is a different type of money acceptable only within its own frontier. In India, the currency is the rupee, in France the Euro, while in the United States it is the dollar. If an Indian importer buys goods from a French manufacturer, then payment must be made in Euro which has to be purchased in the foreign exchange market. Such a procedure is both time-consuming and cost-raising than any payment made in the home country.Furthermore, foreign exchange rates often vary and an adverse movement in the conversion rate may involve a trader in a loss.
As far as payment is concerned, there may be more delay and less certainty in foreign trade than in case of domestic trade. An exporter has to obtain payment from a debtor who may live on the other side of the world and about whom has very little knowledge. The exporter will be reluctant to ship the goods without reasonable and reliable way of payment, while the importer will not wish to pay without some guarantee for receipt of the goods. In domestic trade, a manufacturer may often get cash on delivery or quick payment from a wholesaler.
The risks involved in transporting goods increase with the distance and the frequency with which the goods are handled. Hence, there is greater chance of loss, damage or delay when sending goods to countries abroad.
Certain goods may be subject to heavy duties or tariffs. This often makes it almost impossible for exports to compete in price with home products. Furthermore, exports may be limited by quotas imposed by importing countries. Even if exporters consider they can compete（in spite of customs duties）they have to ensure that the correct duty is paid. Duties vary according to the way that goods are classified and strict penalties apply to false declarations. Hence, a correct understanding of the classifications is absolutely essential. Finally, exporters run the risk that duties and quotas may be changed suddenly so that their market in a particular country may be suddenly lost, either partly or fully.
At home, a manufacturer may be protected from foreign competition by duties or quotas imposed by the government. Hence, the competition may be restricted to other home manufacturers. However, in foreign markets, the manufacturer may have to face competition from producers in that market as also from other foreign exporters.
Exporters have to consider the customs and habits of the countries to which they sell goods.For example, foreigners may like their goods in different dimensions or different kinds of packages from those suitable in the home market. Similarly, attention has to be given to various methods of trading adopted in foreign markets.
For example, at home manufacturers may leave the provision of spare parts and after-sales service to others, but if no such facilities are available abroad, importers must contact other firms themselves to get such facilities. Thus, international trade involves much greater risks and difficulties than domestic trade.
Comparison Chart Between Domestic Trade and International Trade
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