More and more of the world’s largest businesses now operate internationally, meaning that they do business (produce and sell) in more than one country.
On the other hand, there are also many very small businesses and micro businesses that operate only in a very small part of the country, or even only in one city.
Let’s take a look now at the classification of businesses by the area where businesses operate.
Local businesses
Local businesses operate in a small and well-defined part of the country, usually in the area where their owners live. They do not have expansion as a business objective, neither they make any attempt to expand across the whole country or find more customers. They are fine and comfortable operating locally. For example, small construction companies offering house renovations, carpenters, single-branch convenience stores, hairdressing businesses and beauty salons, small language schools, etc. Their main business objective is to make sufficient profit for the owner to sustain his/her family.
National businesses
National businesses have many branches in one country and operate across most territory of their native countries. However, they make no attempts to establish business operations in other countries. They are fine doing business only in their own country. The main business objectives for national businesses includes maintaining sales revenue and market share. For example, large car-retailing firms, retail shops with many branches selling goods in just one country, logistics and security companies, national banks such as Bank Pekao, the third largest commercial bank in Poland.
International (multinational) businesses
International businesses, also called multinational companies, operate in more than one country. They are more than just importers and exporters. They have their headquarters in one country, but offices, factories and assembly plants in other countries to produce goods and provide services anywhere in the world.
Most head offices though are located in Western European countries, USA, the UK, Singapore or Tokyo while production functions and main operations are based in less-developed countries due to cost-saving initiatives (e.g. outsourcing manufacturing to South-East Asian countries).
The growth of such huge businesses can be explained in a way that these firms have benefited greatly from the freedoms offered by globalization.
The biggest multinationals such as Coca Cola or McDonald’s generate annual sales revenues and have wealth that exceeds the size of many countries’ entire economies.
