Uneven Availability of Factors of Production:
The availability of various factors of production namely, land, labour, capital and technology for producing goods and services differ among different countries.
Cost Benefit :
Production cost varies significantly among the countries due to difference in socio economic, geographical, demographical, technical and political environments prevailing there in.

When the firm of a country imports goods for the purpose of exporting the same goods to the firms of some other country with or without making any change in the goods meant for export it is known as entrepot trade.

When a business firm of a country purchases goods from the firm of another country it is called as Import Trade.

When the firm of a country sells goods and services to a firm of another country it is called as export trade.

International business denotes all those business activities which take place beyond the geographical limits of the country.

The following are the special features of Entrepot trade :
(i) Import duty is not levied on such goods
(ii) These goods are reprocessed and repacked for re-export
(iii) Such goods are kept in the Bonded warehouse till they are re-exported.

It can be established under three different ways namely,
(i) Foreign Investors buying an interest in local company
(ii) Local firm acquiring an interest in the existing foreign firm
(iii) Both the foreign and local firms jointly forming a new enterprise.

Limitations:
1. Economic Dependence
2. Inhibition of Growth of Home Industries
3. Import of Harmful Goods
4. Shortage of Essential Goods in Home Country
5. Misuse of Natural Resources
6. Political Exploitation
7. Rivalry among the Nations
8. Invasion of Culture

Necessity for Entrepot Trade:
1. A country cannot import goods directly from the others because of the following reasons.
2. The country may not have any accessible trade routes connecting the importing country.
3. The goods imported may require further processing or finishing before exporting, and these facilities may be lacking in the exporting or importing country.
4. There may not have any trade agreement between both the country.
5. Importer and exporter may not share good economic relation with each other.

1. to raise national income and standard of living
2. to enable even distribution of natural resource
3. to enable even distribution of agricultural products
4. to enjoy the fruits of development of science and technology
5. to share the benefits of low cost of production

The following are the features of international trade.
(i) Involvement of countries:
International business can take place only when transactions occur across different countries
(ii) Use of Foreign Exchange:
Where countries trade with one another, it has to exchange the goods and services on the basis of foreign currency
(iii) Legal obligations :
(1) Foreign trade is to be conducted strictly in accordance with the export and import policy of the country concerned.
(2) The consent of the government is to be mandatorily obtained with reference to export «and import of certain goods and services.
(3) Thus, government intervention is direct in respect of international transactions
(iv) Exposure to risk:
International business imposes huge risks on parties thereto due to long distances, fluctuation of value of currency, obsolescence, sanctions, war, etc.
(v) Heavy documentation work:
International business necessitates fulfilment of a lot of formalities. Parties to international business have to execute a number of documents in the matter of conducting international business.
(vi) Difference in Economic environment:
The economic environment of countries involved in international business differs significantly in terms of legal frame work, institutional setup, monetary fiscal, and commercial policy, resources availability, production, techniques, etc.

S.No Basis Domestic Business International Business 1 Meaning Domestic business refers to business transactions involved within the geographical boundaries of a country International business refers to the business transactions involved beyond the boundaries of a country  2 Participants in business People/organizations within the country participate in business activities People/organizations outside the country participate in business activities 3 Mobility of factor of production The factors of production i.e. labour capital, technology, material, etc. move freely within the boundaries of the country The factors of production i.e. labour, capital technology, material, etc. move across the boundaries of the country. 4 Nature of consumers Consumers are relatively homogenous in nature in terms of culture, behaviour, taste, preferences, legal system, customs and practices, etc Consumers are relatively heterogeneous in nature in terms of culture, behaviour, taste, preferences, legal system, customs and practices, etc. prevailing across the countries 5 Business systems Domestic business is governed by the rules, laws, policies, taxation system,etc. of a single country. International business is governed by rules laws and policies, tariffs and quotas, etc. of multiple countries 6 Currency used Domestic business transactions are settled by local currency of a country International business transactions are settled by foreign currencies. 7 Mode of transport The goods involved in domestic business are mainly transported by roadways and railways. The goods involved in international business is mainly transported by water and airways 8 Risk exposure The risks involved in domestic business are relatively less The risk involved in international business are more due to distance, difference in socioeconomic and political conditions, change in foreign exchange values, etc. 9 Scope of market The scope of market is limited to national boundaries of a country. The scope of international business is very wide and extends beyond the frontiers of a country 10 Payment of Excise duty Payment of excise duty involves simple procedures and it is relatively low in domestic trade. The process of payment of excise is complicated in international business and the rate of excise duty is relatively high

Disadvantages:
(i) Economic dependence:
(1) International Trade is more likely to make the country too much dependent on imports from foreign countries.
(2) The former may not take any efforts to produce goods and services indigenously to substitute imported goods and becoming self sufficient.
(3) As a result, the importing country may become economically slave to exporting country and end up becoming colony of exporting country.
(ii) Inhibition of growth of home countries:
(1) International business may discourage the growth of indigenous industries.
(2) Unrestricted imports and severe competition from foreign companies may ruin the home industries altogether.
iii) Import of Harmful Goods:
International business may lead to import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well-being of people.
(iv) Shortage of essential goods in home country:
Moreover, the export of essential commodities out of the greed of earning more foreign exchange may result in an absolute shortage of these goods at home country and people may have to buy these commodities at an exorbitant price in the local market
(v) Misuse of natural resources:
(1) Excessive export of scarce natural resources to various countries across the world may lead to faster depletion of the resources.
(2) This in turn may bring about ecological disaster in the country from which it is exported.
(vi) Political exploitation:
(1) International business may create economic dependence among the countries which may threaten their political independence.
(2) The MNC s may influence the policy decision of the government to their favour.
(3) In due course of time they may dictate terms to administrators of nation by the strength of their money power.
(4) For Example Britishers came to many countries as mere traders and ultimately colonized those countries and ruled them for centuries.
(vii) Rivalry among the nations:
(1) Acute competition for exports may lead to rivalry among the nations.
(2) This may lead to conflict of interest among the countries, and end up in wars among them.
(viii) Invasion of culture:
(1) International business may result in invasion of country's culture.
(2) Younger generation is more likely to imitate foreign culture and buy goods and services beyond their means to gain acceptance in the affluent section of society.
(3) This will ruin the conventional life style of the society.

(i) Geographical specialisation :
(1) Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land so on.
(2) Some countries are rich in mineral resources, hydro-electric power, metallic resources and so on while some other countries may possess advanced technique of manufacturing, efficient working population, capital equipment and so on.
(3) International business is required to exchange the surplus resources resulting from geographical specialisation for deficit resources in other countries.
(ii) Optimum use of natural resources:
(1) International business operates on as simple principle what your country can produce more efficiently and trade the surplus production with other countries, to procure what they can produce more efficiently.
(2) This enables the countries to optimally utilise the scarce resources available with them
(iii) Economic development :
(1) International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent and so on.
(2) For Example: China, India, Brazil and South Korea which were once slow in their economic development are achieving faster economic development due to international business.
(3) Even the developed countries like Japan, USA, UK, etc have achieved remarkable economic progress through the import of raw material and exports of manufactured goods.
(iv) Generation of employment:
(1) International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.
(2) It provides direct employment to those people who are hired by export and import firms and generates indirect employment to number of intermediary firms like, clearing and forwarding agent, indent houses, transport organizations, outsourcing agencies, etc.
(v) Higher standard of living:
(1) On account of international business, the citizens of the country can buy more varieties of goods and services which cannot be produced cost effectively within the home country.
(2) This exchange of goods and services among the countries enhances the  standard of living of people.
(vi) Price equalisation :
(1) International business helps to stabilise the prices of various commodities which are fluctuating on a daily basis in the world market.
(2) Whenever the price of a commodity rises sharply in a particular country, the same commodity is imported from some other foreign countries to prevent the sharp rise in prices in the home country.
(vii) Prospects for higher profit:
(1) International business helps the firms which produce goods in excess to sell them at relatively higher price to various countries in the international market.
(2) This enables them to earn higher profit.
(viii) Capacity utilisation:
(1) International business enables the firms across the country to sell their goods and services on a larger scale in the international market.
(2) As a result their machinery and equipment are used to their full capacity.
(3) In short, very prospect of selling goods in international market besides selling goods in home market keep the machinery, tools, equipment and factory fully engaged all throughout the year.
(ix) International peace:
(1) International business makes countries across the world become inter-dependent while they are independent in their functioning.
(2) This facilitates the exchange of culture, ideas, mutual understanding.
(3) It develops and strengthens cultural and social relations among the people of different countries.
(4) All these collectively contribute to maintain international peace.