INTRODUCTION TO INTERNATIONAL

BUSINESS AND TRADE

INTERNATIONAL BUSINESS AND TRADE

INTRODUCTION
▸ Globalization - the deepening relationship and broadening interdependence
among people from different parts of the world, and especially among
different countries.

▸ International Business - all commercial transactions between two or more

countries, whether they involve private or public properties.
INTRODUCTION TO INTERNATIONAL BUSINESS AND TRADE

WHAT IS INTERNATIONAL BUSINESS?

▸ Domestic Transaction - is the selling of items produced in the same country.

▸ International Transaction - is the selling of items produced in other countries. These items contribute to
the global economy.

▸ Bene ts for Business:

▸ Access to markets

▸ Cheaper labor

▸ Increased quality of goods

▸ Increased quantity of goods

▸ Access to resources
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INTERNATIONAL BUSINESS AND TRADE

THE FIVE P’S OF INTERNATIONAL BUSINESS

▸ Product

▸ Price

▸ Proximity

▸ Preference

▸ Promotion
INTERNATIONAL BUSINESS AND TRADE

NEED FOR INTERNATIONAL BUSINESS

▸ Offers consumer new choices

▸ Permits the acquisition of wider variety of products

▸ Facilitates the mobility of labor, capital, and technology

▸ Employment opportunities
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COST OF INTERNATIONAL TRADE

▸ Offshore Outsourcing - occurs when businesses decide to produce all or part
of their goods in countries where labor costs are lower.

▸ Human Rights Issues and Labor Abuses - some workers in poor countries face
labor exploitation, such as physical and sexual abuses, forced con nement, non-
payment of wages, denial of food and health care, and excessive working hours.
INTERNATIONAL BUSINESS AND TRADE

BARRIERS TO INTERNATIONAL BUSINESS

▸ Tariffs, also called as custom duties - are a form of tax on certain types of imports.
Finished imported goods include tariffs, which increase their prices.

▸ Non-tariff barriers - are controls or standards for the quality of imported goods set
so high that foreign competitors cannot enter the market.

▸ Landed Cost - is the actual cost of an imported purchased item, composed of the
vendor cost, transportation charges, duties, taxes, broker fees, and any other
charges.

▸ Excise Tax - is a tax on the manufacture, sale, or consumption of a particular product

within a country.
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FLOW OF GOODS AND SERVICES

▸ Balance of Trade

▸ Trade De cit - a country pays more for imports than it earns from exports.

▸ Trade Surplus - a country earns more from exports than it pays for imports.
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APPROACHES OF INTERNATIONAL BUSINESS

▸ Ethnocentric Approach - under this approach, target market is own country. Excessive
production will export due to change in customer taste or preferences.

▸ Polycentric Approach - under this approach, the companies customizes the marketing mix
to meet the taste, performance, and needs of the customers of each international market.

▸ Regiocentric Approach - under this approach, the company operating successfully in a

foreign country thinks of exporting other neighboring countries of the host country.

▸ Geocentric Approach - under this approach, the company analyses the tastes, preference
and needs of the customers in all foreign markets and then adopts a standardized
marketing mix for all the foreign markets.
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