GLOBAL & INTERNATIONAL

BUSINESS CONTEXTS
Module Code : OUbs 00922

LESSON 1 : Introducing International

Business Theory

Anju Mungur
Bsc , PGCE , MBA IB

DATE : 22/02/2020
UNIT 1 : TOPICS SUMMARY


Introducing Global and International Business


The Concepts and Benefits of International Trade


Distinguish between the Classical Trade Theory and the Modern Trade Theory


Discuss the relevant Theories Group under Classical Trade Theories


Elaborate the Modern Trade Theories
 Introduction
Developing a global mindset and an understanding
the diverse contexts of operating in International
Business is a critical dimensions of building
tomorrow’s business leaders.

The volume of world trade is around $8 trillion these

days..(OECD; 2017) through the process of
GLOBALISATION

A great diversity of goods and services available today a

a result of international trade.
 Definitions
Global means “all
encompassing and
worldwide“
International means
“foreign or multinational”
involve two or more
countries .
International Trade
Globalization : process by which the
world economy is becoming a single
interdependent economic system
(WBC, 2002)

International trade is the exchange of

goods and services between countries.
This type of trade give rise to a world
economy, in which prices, or supply and
demand, affect and are affected by
global events. (WBC, 2002)
INTER- CONNECTEDNESS OF GLOBAL
& INTERNATIONAL TRADE

Trading across the world

Extend their coverage beyond a single

country

Adopting global strategies

Worldwide reputation

Multilateral trade relations

Inter-cultural relations
Benefits of INTERNATIONAL TRADE
Better use of The producer try to control the cost by optimum combination of
Resources factors of production. So there is no misuse of production factors.

Economies of
The economies of production, transport, management,
Large Scale finance and advertisement are available to the producers

The import and export of goods and services introduces the taste
Cultural
and preference of one group of people to the rest of the world.
Diversity

It eliminates monopoly, sometimes goods and services can

be important and surplus can be exported. In both cases the
Monopoly. seller cannot create monopoly in the market

Employment When countries increase their export, they must manufacture

Opportunities goods, which will required more human power.
Benefits of INTERNATIONAL TRADE
Economic Due to exports both the production and per capital
Development income increases which result in economic prosperity.

International It brings friendly relations with other countries, which can lead to
Relations employment opportunities as well as educational scholarship and
many more.

Transfer to With the development trade relations they can transfer

Technology improve method, machinery for inventions and innovation.

It is beneficial to keep prices stable as a result of supply of

Price
goods in time. The surplus goods are exported and if faces
Stability
shortage the goods can be imported to maintain the price level.

When countries involve in international trading, they want to keep

friendly relations with each other in order to increase the exports and
World Peace engage the manpower in the rest of the world which is a source of
friend remittances.
 International Trade Theory

The Classical Trade Theory

Classical trade theories:
explain national economic conditions--country
advantages--that enable such exchange to
happen ..
• Mercantilism Theory
•Absolute advantage Theory
•Comparative Advantage Theory
• Heckscher – Ohlin Theory
 International Trade Theory

The Classical Trade Theory V/S The Modern Trade Theory

Modern trade theories:

explain links among natural country advantages,
government action, and industry characteristics
that enable such exchange to happen

• Product Life Cycle Theory

•Global Rivalry Theory
•Porter’s Diamond of National Competitive
Advantage