International
Business and Trade
INTRODUCTION
Trade and international business has been the core of every
economy in the world. There is no country which level of
development been achieved without committing a large
section of its economy in trade and international business;
China for example did transform its economy into the second
most developed in the world by enormously engaging in the
production and sale of manufactured products and do
businesses overseas.
South Korea also followed the same path and so with
Singapore. But why commit more resources for international
business and trade. The local economy is so restricted, there
is not much opportunity to grow and earnings are so limited.
In order to overcome this problem, countries need to export
more and engage more commercially with the outside world.
The arena of international management has never
offered so many opportunities and challenges to individual
managers, businesses, governments, and the academic
community alike. The expansion of the global market has
created a need for managers who are familiar with the
problems of international trade and finance such as culture,
political structure, foreign exchange, geographical terrain,
time, food and technology.
Globalization is an accepted phenomenon of the 21st
century. As goods and services increasingly move across
international borders ever greater expertise is required to
make such activity as smooth as possible. Failure of World
Trade Organization talks means that barriers and challenges
to that free and smooth flow of trade remain. One sure way of
overcoming obstacles is to be in possession of the right
knowledge, organizational strategies and competent team
and leader to carry out various trade activities in the global
arena.
COURSE OUTCOMES:
After successfully completed this module, students will be able to:
▪ Understand the international business environment
▪ Analyze the factors influencing international business and trade
▪ Analyze the implication of globalization to international business and
trade
▪ Evaluate a business scenarios that provides international business
and trade opportunities ▪ Design effective and efficient strategy
appropriate for an organization to enter international market.
LESSON I: DEFINITION OF
INTERNATIONAL BUSINESS
International Business refers to
business activities among
various business entities world-
wide that involved trading of
goods, services, technology,
capital and/or knowledge
across international boundaries
and borders.
DIFFERENCE BETWEEN
INTERNATIONAL BUSINESS AND
INTERNATIONAL TRADE
International Trade is an industrial
concept or category. An international
business constitutes one of the many
component parts that make up
international trade.
International Business refers to
international trade whereas a global
business is a company doing business
across the world.
THE IMPORTANCE OF
INTERNATIONAL BUSINESS AND
TRADE
• The importance of international trade for
different countries is that it is an important
factor in raising living standards, providing
employment and enabling consumers to
enjoy a greater variety of goods.
• International Business on the other hand
takes the job of facilitating export and import.
FACTORS AFFECTING INTERNATIONAL BUSINESS
1. POLITICAL
This is the politics of the host government towards
your business. Normally a foreign business must not
involve itself whatsoever in any politics in its host
country because it detriments its business interest.
2. ECONOMIC
These are the economic factors which may impact
the operation of your business abroad like: the level
of inflation, debts, unemployment, exchange rate,
commodity prices especially oil, and trading of
securities.
3. LEGAL
These are laws that may hamper business
operations anti-trust law in the US, Laws on
intellectual property rights, laws on corrupt practices,
etc. If you think your business cannot deal with
these laws legally then never attempt to open a
branch in that certain country.
4. SOCIAL
The firm needs to investigate the social conditions in
a country where you desire to open a business. Like
in Saudi Arabia where the social norms are so strict
which are all based on Islamic teaching thus quite
difficult for you to open a business there.
5. ENVIRONMENTAL
This includes both physical, business and peace and
order conditions if such are conducive to business.
6. TECHNICAL
This is the technology which your firm possesses if
such is at grade against other firms in the industry.
ELECTRONIC FUND TRANSFER
With direct deposit or electronic funds transfer (EFT), the
general public, government agencies, and business and
institutions can pay and collect money electronically, without
having to use paper checks. Direct deposit (EFT) is safe,
secure, efficient, and less expensive than paper check
payments and collections.
TECHNOLOGICAL INNOVATION
A technological innovation is a new or improved product or
process whose technological characteristics are
significantly different from before. Implemented
technological product innovations are new products
(product innovations) or processes in application (process
innovations) that have been brought to market.
CUSTOMER DEMANDS
A demand arises after a customer desires something and
has the ability and willingness to buy. Lowering a price
can increase demand by making the price affordable, but
the desire must already exist in the customer before you
can turn that desire into demand.
TAXATION LAWS
Tax law in the Philippines covers national and local taxes.
National taxes refer to national internal revenue taxes
imposed and collected by the national government
through the Bureau of Internal Revenue (BIR) and local
taxes refer to those imposed and collected by the local
government.
BENEFITS OF INTERNATIONAL BUSINESS AND TRADE
INCREASED REVENUES
ENHANCES COMPETITION
IMPROVEMENT IN PRODUCT
QUALITY
LOW CAPITAL COST
BETTER RISK MANAGEMENT
BENEFITING FROM CURRENCY
EXCHANGE
ACCESS TO EXPORT FINANCING
WIDER MARKET FOR DOMESTIC
PRODUCT
WHAT DO YOU UNDERSTAND BY REVENUE?
Revenue growth refers to an
increase in revenue over a
period of time. In accounting,
revenue growth is the rate of
increase in total revenues
divided by total revenues from
the same period in the previous
year. Revenue growth can be
measured as a percent increase
from a starting point.
WHAT IS INCREASED REVENUE?
Revenue growth is an increase in
the amount of money a company
earns from sales over a period of
time. This can be measured as an
absolute number or a percentage of
the company's total revenue. For
example, if a company earned
$50,000 in revenue in 2019 and
$100,000 in 2020, its revenue
growth would be 100%.
