FACULTY OF ADMINISTRATIVE SCIENCES

PROFESSIONAL ENGLISH
FOR BUSINESS I

PROFESSOR : CASAFRANCA ANAYA, ROSA ANGÉLICA

COURSE : PROFESSIONAL ENGLISH FOR BUSINESS I

STUDENTS :

o RONALD MARIO MARTÍNEZ ESPINOZA

HUANCAYO - PERU
March 2018

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 TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................................ 2

VOCABULARY ........................................................................................................................................... 3
TOPIC – INTERNATIONAL TRADE............................................................................................................... 4
REAL CASE ................................................................................................................................................ 7
CONCLUSION............................................................................................................................................ 8

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VOCABULARY

 Free trade: Libre comercio

 Protectionism: Proteccionismo
 Trade barriers: Barreras comerciales
 A tariff is: Un arancel es
 A quota is: Una cuota es
 Absolute advantage: Ventaja absoluta
 Comparative advantage: Ventaja comparativa
 Infant industry: Industria infantil
 Strategic industry: Industria estratégica
 The value added: El valor agregado
 If subsidiaries: Si las subsidiarias
 Lower average: Promedio inferior
 Weakening: Debilitación
 Clusters: Es similar a un grupo
 Draw upon: Aprovechar
 Acquisition: Adquisición
 Entrepreneurial: De Emprendedor
 Copyright: Derechos de autor:
 Dumping: Dumping (consiste en vender un producto por debajo de su precio
normal)
 Generic: Genérico
 Subsidize: Subvencionar
 Trademark: Marca registrada

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TOPIC – INTERNATIONAL TRADE

TRADE BETWEEN COUNTRIES- THE BEGINNINGS

The earliest trade theorists were a group of people known as the ‘mercantilists’. Their main idea was
that a country’s wealth can be measured as the amount of gold or other precious metals held by the
country. To become richer, a country therefore simply had to accumulate gold. In the opinion of the
mercantilists, the way to do that through trading with other countries had to be to import cheap raw
materials and export final goods. As the final goods received a much higher price than the sum of raw
materials going into them – the value added within the country – the country would get a net import
of gold. If one tries to listen to trade political arguments today, most politicians will probably reveal
themselves to be mercantilists.

COMPETITIVE ADVANTAGES

Firstly, if the market is characterized by less than perfect competition firms and countries can
experience competitive advantages. Comparative advantages can come about as a result of economies
of scale. Such economies of scale can be internal that there are economies of scale within each firm as
in the next example, or external, as they are in this example. External economies of scale can arise for
a number of reasons.

1. Economies of scale in auxiliary industry. For example, if subsidiaries that deliver inputs (raw
materials, intermediate goods) have internal economies of scale, the industry as a whole can
gain lower average costs when the produced volume increases, as this will lead to lower
average costs in subsidiary firms and therefore lower prices of whatever input the subsidiary
industry produces.
2. Competition in the subsidiary industry. If output is low, the demand for raw materials and
intermediate goods used in production will be low and can be met by relatively few firms.
When production increases in an industry, the demand for raw materials and intermediate
goods also increases, which will lead more firms to produce such goods. This increases
competition in the subsidiary industry, which will in general result in lower prices. Through
lower prices on inputs, the average costs of firms are reduced as when there are economies of
scale in subsidiary industries.

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 3. Competition within the industry. Often, a lack of domestic competition can have the effect of
weakening firms’ incentives to innovate and keep costs low. Competitive advantages can arise
out of a high degree of competition in the domestic industry, which gives firms strong
incentives to cut costs and improve their products and production processes. Again, this has
the effect of lowering the average costs for all firms within an industry.
4. Industry-specific learning. Sometimes, industries that are situated in clusters the firms are
geographically close to each other - gains from producing more by learning from each other.
They will often compete for the same employees, who, when they leave one firm for another,
bring new information and ways to do things. Firms also learn from each other simply by
observing what other firms within the industry do, which will give them new ideas and ways
to cut costs.
5. Training. Firms within an industry often use the same types of employees. If the firms are
geographically proximate, they will be able to draw upon the same pool of potential
employees. Hence, if a worker has been trained in one firm, he can easily be used in another
firm within the industry, making firms’ access to labour easier and more flexible.

ADVANTAGES OF INTERNATIONAL TRADE

Increase competitiveness

Through the import or export of the products you will also increase the competitiveness within your
national market. Thus, the mere acquisition of products imported from other parts of the world at
prices that may be similar or even lower than those of their national market, will increase the existing
competition.

Job generator

The sale of products or services through foreign companies allows the creation of employment in the
place of development of commercial activity, decreasing unemployment rates in the region and
improving the living conditions of residents.

Investors for your business

If you decide to conduct international trade operations you will be attracting other people interested
in investing in your company, while considerably reducing the costs of your operations. Using
international marketing you can add value to your brand, reduce your operating costs considerably
and attract foreign investors.

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Increased profits and increased sales

Once you get to export your products to other places you can get a substantial improvement in the
sales of your products or services. This type of commercial operations in international markets will
help you obtain greater benefits, and increase the volume of sales of your products over time.

DISADVANTAGES OF INTERNATIONAL TRADE

Costs derived from licenses and other regulations

One of the most notable disadvantages of international trade is its cost. It will be essential that you
have defined your international marketing plan correctly and have studied the various taxes derived
from your commercial activity in the country in question. It must also include other possible country-
specific regulations, since there may be significant variations with respect to the country of origin of
its economic activity.

Language Difficulty

Each country has its own language and can become a barrier to defining business relationships that
are satisfactory for you.

Long-term prospects

If you want to start exporting products or services with your SME, you should know that it is a long-
term process. You will have to define those objectives you want to achieve, have an important
economic capital investment for the development of your business or small business, and even reach
strategic alliances that will allow you to achieve your goals.

Risk to natural resources

It can cause transcendental risks for the country's natural resources, such as coal, oil or other similar
resources. These resources are generally irreplaceable and their loss causes significant losses for those
countries that exhaust this source of income.

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REAL CASE

INDITEX

To finish the post we will refer to a series of Spanish companies that are triumphing, both at the state
and international level. The first to which we will refer you will know almost all of you who are reading
this post; I'm talking about Inditex. The main characteristic that has allowed Inditex to expand all over
the world efficiently, quickly and with controlled costs, is its supply chain. Through it, garments are
produced continuously, classified by size, type of garment, color and size, and often do not pass
through the warehouse, packing in the different shipping fleets ready to be sent anywhere in the
world. Amancio Ortega, the president of Inditex places great emphasis on internationalization as an
opportunity for growth for all companies.

DIA Supermarkets

Another of the Spanish companies that has achieved international sales success is the DIA
supermarket. This company has always opted to open new stores abroad through the franchise
system, thanks to which it can quickly expand looking for small investors who wish to start their own
business. In addition to its rapid expansion through the franchise regime is characterized by its low
prices around the world, which have made it very competitive with local supermarkets. If you offer
quality products at a low price it is a guarantee to open your way internationally.

Ticketbis

When we talk about internationalization, we must refer to technological companies that develop their
potential through the Internet. A startup created in 2011 that is stepping up around the world is
Ticketbis. Through it you can access the purchase and sale of tickets, from football matches to concerts,
taking advantage of the pull of new technologies. These companies grow like foam because they do
not need more than a computer and internet to market their products. So others like Groupalia, who
have not achieved such a level of internationalization but are rising like foam and if they know how to
take advantage of technological development will also reach the top.

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CONCLUSION

In the globalized world as in which we are currently living, it is necessary to have knowledge of
international markets, because the various countries of the world are going to be considered as a single
enlarged market.

Each country in the world should specialize in goods or services in which it has comparative advantages
so that it can provide for the rest of the world.

As you can see the success of international trade depends on several factors, from having a local
partner, to take advantage of new technologies, but everything happens to have entrepreneurial
capacity and be brave when marketing outside our borders.