The main problems in international business are as follows:
- Distance barrier : International business is
carried across the borders of the country. When the markets are far moved by distance, the transportation cost becomes high and the delivery time tends to become longer. As a result, there is an increase in cost of product. .
- Differences in language : An international businessman often encounters the problems arising out of differences in language. Even when the same language is used in different countries, the same words or terms may have different meanings.
- Cultural differences : Cultural differences
constitute one of the most important problem in international business. Many domestic markets, are not free from cultural diversities.
- Political and legal differences : Political and legal differences also act as a major hurdle in international business. The complexity generally increases as more countries are included in the company’s portfolio.
- Difference in currency : The currency varies from nation to nation. This may cause problems of exchange rate fluctuations and currency convertibility. The monetary system and regulations may also vary from nation to nation.
- Economic differences: The economic environment may change from country to country which is a major hurdle in international business.
- Trade restrictions : Trade restrictions, particularly imports controls, form a very important problem which is faced by businessmen.
- Excessive documents : Several documents are required to be filled in case of the company dealing in international business.