FACULTY OF COMMERCE

Trade Theory and Practices

SUBMITTED TO:

Prof. Salmaan Zohaib

SUBMITTED BY:

“BS. COMMERCE”

Submitted Date:30/JAN/2020
FACULTY OF COMMERCE
Trade Theory and Practices
GROUP MEMBERS
• Ahmad Ali
G1F17BSCM0025
• Fatima Zahra
G1F17BSCM0002
• Sherbano
G1F17BSCM0018
• Momina
G1F17BSCM0023
• Ayesha
G1F17BSCM0006
DEDICATION
It’s Start in the name of Allah Almighty, who is over creator and my
strong pillar, my source of inspiration, wisdom, knowledge and
understanding. He Has-been the source of my strength and on His wings
only have I soared.

I dedicate this Report to the founder of Shakta Khoum.

“Imran Khan Niazi”
“May ALLAH PAK grant him a long life”
ACKNOWLEDGEMENT

First of all, we would like to thank Almighty Allah for giving us the ability and
strength to complete this project report. Secondly, we are also thankful to our
respective parents for providing us with the opportunity to receive higher education
in such an accomplished institution (UCP) that required us to carry out such
projects that expand the dimensions of our mind. We are definitely not forgetting
to recognize the efforts and support of our Respected Teacher SIR SALMAAN
ZOHAIB, without whom this project would not have been possible. Who give us
the opportunity to work on a project. Our special thanks to the group members who
have whole-heartedly work for the completion of this report. All of us have earned
a valuable and worthy experience during the project.
 Norway
Norway has a total area of 385,207 square kilometers (148,729 sq. mi)
and a population of 5,312,300 (as of August 2018). The country shares a
long eastern border with Sweden (1,619 km or 1,006 mi long). Norway is
bordered by Finland and Russia to the north-east, and the Skagerrak
strait to the south, with Denmark on the other side.
 Norway Trades
The country is among top 2 exporters of oil and the second largest natural gas
and seafood exports in the world.
• Natural resources identify global business opportunities.
• Economy increased in 1905 when it won the freedom from Sweden.
• One of the world richest countries & it’s the top ranking countries to
live in.
• The country of Norway is also rich in its natural resources.
• Norway has a very open economy, trade representing 68.5 % of GDP
(2018- world bank). Traditionally, the country exports energy-intensive
products and imports high –technology items.
 Michael porter’s diamond model

• Michael porter’s diamond model (also known as the theory of national

competitive advantage of industries) is a diamond-shaped frame work
that focuses on explaining why certain industries within particular
nation are competitive internationally, whereas others might not.
 Competitive Advantage of Nations
Michael Porter's Diamond Theory:
“believes that there are four main factors that make up national
competitiveness”
Factor Endowments:
• Natural resources
A simple example of a factor endowment with respect to land would be the
presence of natural resources such as oil.
• Locations
The location where the trade in running or begins to run have to see the
resources, capital, market etc.
• Advantages
A comparative advantage exists when the opportunity cost of specialization is
lower than that of other nations.
• Infrastructures
Factors also might influence a country's comparative advantage in practical terms,
such as a highly developed financial system.
• Skilled labor
A highly skilled labor force is more expensive and more productive than an
unskilled labor force. For example, as China's labor force has grown more skilled,
wages have risen and China has begun specializing in more complex manufactured
goods.
Highest Natural Resources Industries
 Seafood:
 Norway is known as the second largest exporter in the Seafood industry.
 Seafood industry catches maximum about 2.5 and 3 million tons of fish per
year.
 Provides many job opportunities

Specific Advantages:
 World's largest joint marketer of seafood, making the seafood industry the
economic backbone of many Norwegian coastal regions.
 Seafood 3rd largest export item
 Norway’s vibrant seafood industry contributes a large amount to the
country’s economy 2008 - marked a new export height for the industry.
 Demand Conditions
 Tons of seafood (good climate, can always be grown)
 Exports seafood and have a good sense of control and demand for the
international market.

Petroleum
 discovering of oil resource in 1969 in the Ekofisk by the Phillips Petroleum
Company
 Began to produce oil and natural gas production since June 1970.
 second world producer in the world during the mid-1990s.
 the second-largest net exporter of gas
 seventh-largest exporter of oil in the world.
 employed estimated of 140,000 people.

Advantage:
 Does not have to rely on other countries imports in oil or gas.
 Growth in employment, which will help the economy
 Norway is more compatible in the global market.

 Demand Conditions
 Norway's natural resource is oil = competitive advantage
 Exports more oil than they import, they have to fill the demand
 Feed the demand = benefits their economy + strengthens their industry and
their intentional relationship with other countries.

Strategy, Structure, Rivalry

 Norway produces oil cheaply.
 Export more oil than they import (absolute advantage)
 Employment opportunities in the oil sector
 Strategies - improve the oil industry to have an effective way to feed the
never ending demand for oil.
 Factor Endowments & Industries and Related
Industries:
They have a rivalry with other top oil countries like Saudi Arabia but since
Norway grows a lot of the oil within their own country, they have a good
sense of control and create a good sense of demand for their competitors.
They export a lot of oil than they import which gives them a great advantage
in the global market. They also produced a lot more oil than they import,
which allows Norway to be seen as a top exporter of oil because they have
so much of it. Their strategies are to always improve their oil industry to
make it more effective and more efficient to feed the never ending demand
for oil. Norway will always employ people in the oil sector to make the oil
sector run more efficiently, it’s their largest export so therefore it must run
efficiently or else Norway’s economy will take a great hit.

Norway borders Finland, Russia and Sweden by land and Denmark, the
United Kingdom, Iceland and Greenland by sea.
 The top export destinations of Norway are the United Kingdom ($21.4B),
Germany ($16.4B), the Netherlands ($7.88B) and France ($7.5B), Sweden ($9B),
Sweden ($5.1B), the United States ($1.5B).

Share of oil in the world market

Share of sea food in the world market
 About to know:
The first discoveries of oil and gas reserves in Norway were made in the
North Sea in the 1960s. Since that time this industry has grown to
become a very important contributor to nation’s overall economy. 
This particular industry is so important that it accounts for almost half of
Norway’s total exports and some twenty percent of its national GDP
(gross domestic product).

This is the with the benefits of Norwegian Seafood around the world. It including
distributing information, conducting studies, monitoring markets and advertising to
promote Norwegian seafood overseas, while researching and developing insight
and new routes to market.
Reference
Prezi. 17 January 2020. Prezicom. [Online]. [26 January 2020]. Available from:
https://prezi.com/ankavx9cpawc/norway/
Feenstra, R. C., et al. (2005). World Trade Flows, 1962–2000. NBER working
paper 11040

Oec, D.A.V.E.L.A.N.D.R.Y. 2018. Looking for commercial partners in Norway?

List your company on Macro Market IMPORTER
EXPORTER. . Profile/country/nor. [Online]. [26 January 2020]. Available from:
https://oec.world/en/visualize/tree_map/hs92/export/nor/show/2709/2017/
Investopedia. Apr 16, 2015. ECONOMICS MACROECONOMICS How do
"factor endowments" impact a country's comparative advantage?. [Online]. [26
January 2020]. Available from:
https://www.investopedia.com/ask/answers/041615/how-do-factor-endowments-
impact-countrys-comparative-advantage.asp

C.L., Illsley 2019, What Are The Biggest Industries In Norway?, WorldAtlas,
viewed 26 January 2020, <https://www.worldatlas.com/articles/which-are-the-
biggest-industries-in-norway.html/>.