Local, National & Global Business: Definitions & Examples

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  • 0:01 Types of Businesses
  • 0:24 Local Business Characteristics
  • 1:49 National Business…
  • 3:02 Global Business…
  • 4:15 Lesson Summary
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Lesson Transcript
Instructor: Deborah Schell

Deborah teaches college Accounting and has a master's degree in Educational Technology.

A business can sell its products and services to consumers in one city or local area, one country, or around the world. In this lesson, you will learn about local, national, and global businesses.

Types of Businesses

Let's meet Janette. Her Introductory Business teacher just assigned a project where she must explain and find examples of local, national, and global businesses, but she's not sure she understands the differences between them. Let's help Janette understand the differences between these types of businesses and look at some examples so that she can finish her project.

Local Business Characteristics

A business can choose to sell its products to customers in its own community, its own country, or on another continent. A local business is one that sells its products and services to consumers in its own city, town, or geographic area. A one-person barber shop would be an example of a local business, as the barber would only offer his/her services to individuals in that community.

A local business benefits from knowing the wants, needs, and culture (i.e. the beliefs and customs) of its community, and it supplies goods and services that the citizens in that community would buy. For example, The Grounds of Alexandria is a café that operates in New South Wales (Australia). It offers fresh, local ingredients for the meals it serves. Since it only has one location, it can focus on the needs and wants of the local community.

Since local businesses have few locations, they often find it difficult to compete with larger, global companies, especially when it comes to price. Many local businesses focus on providing exceptional customer service as a way to encourage customers to return. For example, The Grounds of Alexandria café offers a shuttle service to and from its café on weekdays.

Now that Janette understands what a local business is, she has made a list of those that she is familiar with, including her hairdresser, her doctor, her dentist, and her piano teacher. She had no idea there were so many local businesses in her community.

National Business Characteristics

A national business is one that operates within the borders of a particular country. Like a local business, a national business understands the culture of the country and develops products and services to satisfy its market. For example, Doughnut Time is a doughnut shop that operates throughout Australia. It has created doughnuts that appeal to its market and includes Nutella and vegan varieties. Since the company began in Australia, its owners know what the market is looking for, and they provide products that will sell well.

Since a national business has more locations than a local business, it can be more competitive with its pricing. This is because it buys its raw materials, or things like flour and sugar that are used to make doughnuts, in greater amounts. The more it buys, the lower the cost will be. Like a local business, a national business understands the wants and needs of its consumers, and it provides products and services that will satisfy customer demand. A national business also has access to a larger market as it is selling its products and services across the country, instead of in just one city.

Janette didn't think too much about her favorite doughnut shop. She enjoyed doughnuts for her birthday at home and also when she went on holiday. She now knows that they have shops everywhere in the country.

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