LESSON 1

ISMAELA M. BAWICA
INTERNATIONAL BUSINESS AND TRADE
UNIT I: OVERVIEW AND INTRODUCTION

01 02 03 04
International Globalization and Import and Political
Business reasons for Export and the Differences and
Defined Globalization Circular Flow of Culture in
Income International
Business
OVERVIEW AND INTERNATIONAL
BUSINESS AND TRADE
INTRODUCTION
INTERNATIONAL BUSINESS DEFINED
 Any business that involves operations in more than one country can be
called an International Business.
INTERNATIONAL BUSINESS DEFINED
 It is related to the trade and investment operations done by entities
across national borders which create a globalize economy giving
businesses a globalized market.
 DIFFERENCE OF INTERNATIONAL
BUSINESS TO DOMESTIC BUSINESS
INTERNATIONAL DOMESTIC
INTERNATIONAL DOMESTIC
GLOBALIZATIO
N AND INTERNATIONAL
BUSINESS AND TRADE
REASONS FOR
GLOBALIZATIO
N
REASONS OF GOING
GLOBAL

1. First-mover
advantage – it refers
to getting into a new
market and enjoy the
advantages of being
first. It is easy to
quickly start doing
business and get early
adopters by being
first.
REASONS OF GOING GLOBAL
2. Opportunity for growth –
potential for growth is a very
common reason of
internationalization. Your market
may saturate in your home
country and therefore you may set
out on exploring new markets.
REASONS OF
GOING GLOBAL
3. Small local
markets – start-ups
in Finland and
Nordics have
always looked at
internationalization
as a major strategy
from the very
beginning because
their local market is
small.
REASONS OF GOING GLOBAL
4. Increase customers – if customers are
in short supply, it may hit a company’s
potential for growth. In such a case,
companies may look for
internationalization.
REASONS OF GOING
GLOBAL

5. Discourage local
competitors –
acquiring a new
market may mean
discouraging other
players from getting
into the same
business-space as
one company is in.
ADVANTAGES OF INDUSTRIAL BUSINESS
AND TRADE
INTERNALIZATION
ADVANTAGES

1. Product flexibility
 International
businesses having
products that don’t
really sell well
enough in their local
or regional market
may find a much
better customer base
in international
markets.
ADVANTAGES
2. Less competition
 Competition can be a local
phenomenon.
 International markets can have
less competition where the
businesses can capture a
market share quickly.
ADVANTAGES
3. Protection from national trends and events
 Marketing in several countries reduces the
vulnerability to events of one country.
ADVANTAGES
4. Learning new methods
 Doing business in more than one
country offers great insights to
learn new ways of accomplishing
things
IMPORT AND
EXPORT AND
INTERNATIONAL
THE CIRCULAR BUSINESS AND TRADE

FLOW OF
INCOME
IMPORT AND EXPORT
IMPORT
 A commodity, article, or service brought in from
abroad for sale
 An import is a good or service brought into one
country from another. The word "import" derives
from the word "port" since goods are often shipped
via boat to foreign countries.
EXPORT
 A commodity, article, or service sold abroad.
 An export is a function of international trade
whereby goods produced in one country are
shipped to another country for future sale or
trade.
CIRCULAR
FLOW
INCOME
 POLITICAL INTERNATIONAL

DIFFERENCES BUSINESS AND TRADE

AND
CULTURE
SYSTEM

POLITICAL ECONOMIC LEGAL

SYSTEM SYSTEM SYSTEM
POLITICAL
SYSTEM
The system of Government in a Nation.

Two Dimensions of Political

System
Collectivism and Individualism
Democratic or Totalitarian
POLITICAL SYSTEM
COLLECTIVISM
 refers to a political system that stresses
the primacy of collective goals over
individual goals.
 When collectivism is emphasized, the
needs of society as a whole are generally
viewed as being more important than
individual freedoms.
INDIVIDUALISM
 refers to a philosophy that an individual
should have freedom in his or her
economic and political pursuits.
 Individualism stresses that the interests
of the individual should take precedence
over the interests of the state
 In modern times, socialists have picked up
the collectivist mantle
 Modern socialists trace their intellectual roots to Karl Marx
(1818–83).
 Marx argued that the few benefit at the expense of the many
in a capitalist society where individual freedoms are not
restricted.
COLLECTIVISM  According to Marx, the pay of workers does not reflect the
full value of their labor. To correct this perceived wrong,
Marx advocated state ownership of the basic means of
production, distribution, and exchange (i.e., businesses).
His logic was that if the state owned the means of
production, the state could ensure that workers were fully
compensated for their labor. Thus, the idea is to manage
state-owned enterprise to benefit society, rather than
individual capitalists.
 COLLECTIVISM
Two broad camps of
socialists
1.Communist – socialism
could be achieved only through
violent revolution and
totalitarian dictatorship
2.Social democrats –
achieving socialism by
democratic means, turning their
backs on violent revolution and
dictatorship
INDIVIDUALISM
Two Main Principle of
Individualism
1.Emphasis on the importance
of guaranteeing individual
freedom and self- expression
2.The welfare of society is
best served by letting people
pursue their own economic
POLITICAL
self-interest, as opposed to
some collective body (such as
SYSTEM
government) dictating what is in
society's best interest
 DEMOCRACY TOTALITARIANISM

 refers to a political  It is form of government

system in which in which one person or
government is by the political party exercises
absolute control over all
people, exercised
either directly or
spheres of human life
and prohibits opposing
POLITICAL
through elected
representatives
political parties.
Major Forms of SYSTEM
Totalitarianism
1. Communist
totalitarianism
2. Theocratic
totalitarianism
3. Tribal
totalitarianism
4. Right-wing
totalitarianism
ECONOMIC SYSTEM
 An organized way in which a state
or nation allocates its resources
and apportions goods and services
in the national community.

Types of Economic System

1. Market Economy
2. Command Economy
3. Mixed Economy
MARKET
ECONOMY
 All productive activities
are privately owned, as
opposed to being owned
by the state.
 The goods and services
that a country produces
are not planned by
anyone.
 Production is determined
by the interaction of
supply and demand and
signaled to producers
through the price system.
COMMAND ECONOMY
 The government plans the goods
and services that a country
produces, the quantity in which
they are produced, and the prices
at which they are sold.
 Consistent with the collectivist
ideology, the objective of a
command economy is for
government to allocate resources
for “the good of society.”
MIXED
ECONOMY
 A mixed economy,
certain sectors of the
economy are left to
private ownership
and free market
mechanisms while
other sectors have
significant state
ownership and
government
planning.
LEGAL SYSTEM
refers to the rules, or laws, that regulate
behavior along with the processes by which the
laws are enforced and through which redress for
grievances is obtained.

Three Main Types of Legal Systems or Legal

Traditions Use Around The World:

 Common Law
 Civil Law
 Theocratic Law
COMMON LAW
 Law based on tradition, precedent, and custom.
 Tradition refers to a country's legal history,
 Precedent to cases that have come before the courts in the past, and
 Custom to the ways in which laws are applied in specific situations.
CIVIL LAW

 Based on a detailed set

of laws organized into
codes.
 When law courts
interpret civil law, they
do so with regard to
these codes.
THEOCRATIC
LAW
 Law is based on
religious teachings.
CULTURE
A system of values and norms that are shared
among a group of people and that when taken
together constitute a design for living (Hofstede,
Namenwirth, and Weber)

Determinants of Culture

Religious and
Social Structure Language Education
Ethical Systems
 SOCIAL STRUCTURE
REFERS TO ITS BASIC SOCIAL ORGANIZATION.

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RELIGIOUS AND
ETHICAL SYSTEMS
1. Religion – a system of
shared beliefs and
rituals that are
concerned with the
realm of the sacred.
2. Ethical Systems – refer
to a set of moral
principles, or values,
that are used to guide
and shape behavior.
Most of the world's
ethical systems are the
product of religions.
RELIGIONS OF THE WORLD
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
5. Confucianism
6. Language
7. Education
LANGUAGE
EDUCATION

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  https://www.tutorialspoint.com/internation
REFERENCES
al_business_management/introduction.ht
m
 https://www.investopedia.com/terms/i/imp
ort.asp
 http://www.businessdictionary.com/definit
i
on/economic-system.html
 International Business by Charles W.L.
Hill
END OF LESSON 1
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