BUS 1 INTERNATIONAL

BUSINESS AND TRADE

CHAPTER 1-3
 CHAPTER 1

INTERNATIONAL
BUSINESS
AND TRADE
STRATEGIC MANAGEMENT
Strategic management is the body of knowledge that answers questions
01 about the development and implementation of good strategies and is mainly
concerned with the determinants of firm performance

Entrepreneurship, in contrast, is defined as the recognition of

02 opportunities and the use or creation of resources to implement
innovative ideas for new, thoughtfully planned ventures
 WHAT IS
INTRAPRENEURSHIP?
 INTRAPRENEURSHIP
is a form of entrepreneurship that takes place
inside a business that is already in existence.
 DIFFERENTIATE
ENTREPRENEUR AND
INTRAPRENEUR
 Who Is Interested in
International Business?
 STAKEHOLDERS
OVERVIEW
A stakeholder is an individual or organization
whose interests may be affected as the result
of what another individual or organization
does. Such international business
stakeholders include employees, managers,
businesses, governments, and
nongovernmental organizations.
STAKEHOLDER
ANALYSIS
Stakeholder analysis is a technique you use to identify
and assess the importance of key people, groups of
people, or institutions that may significantly influence
the success of your activity, project, or business. In the
context of what you are learning here, individuals or
organizations will have an interest in international
business if it affects them in some way— positively or
negatively.
THANK
YOU!
 CHAPTER 2

INTERNATIONAL
TRADE AND
FOREIGN DIRECT
INVESTMENT
LEARNING OBJECTIVES
⚬What is international trade theory?
⚬How do political and legal factors impact
international trade?
⚬What is foreign direct investment?
⚬Compare and contrast different trade
theories

Presentation by Margarita Perez

WHAT IS
INTERNATIONAL
TRADE?
 INTERNATIONAL TRADE
TRADE is the concept of exchanging goods
and services between 2 people or entities.
INTERNATIONAL TRADE is then the
concept of this exchange between people and
entities in two different countries.
 DIFFERENT INTERNATIONAL TRADE
THEORIES
The main historical theories are called classical and are from the perspective of a
country. The began to shift to explain trade from a firm rather than a country
perspective. These theories are referred to as modern and are firm based or
company based.
CLASSICAL COUNTRY-BASED
MODERN FIRM- BASED THEORIES
THEORIES
Country Similarity
Mercantilism
Product life cycle
Absolute Advantage
Global strategic rivalry
Comparative Advantage
Porter’s national competitive
Heckscher-Ohlin
advantage
 MERCANTILIS
M
This theory states that a country’s wealth was
determined by the amount of its gold and silver
holdings. Mercantilists believed a country
should promote exports and discourage imports.
 ABSOLUTE
ADVANTAGE
Adam Smith, offered a new trade theory
which focused on the ability of a country to
produce more efficiently than another
nation. He also stated that “A nations
wealth shouldn’t be judged by how much
gold and silver it had but by the standard
 COMPARATIVE
ADVANTAGE
Occurs when a country cannot produce
a product more efficiently than the other
country, however, it can produce the
product better and more efficient than it
does to other goods.
 Hekscher-Olin
This theory states that countries would produce
and export goods that required resources or
factors that were in great supply. This theory is
also called factors proportions theory.
 MODERN THEORIES
COUNTRY SIMILARITY
THEORY
Companies first produce for domestic
consumption. When companies explore
exporting, the companies may find markets
that look similar to their domestic one. This
theory states that most trade in manufactured
goods will be between countries with similar
capita incomes.
PRODUCT LIFE CYCLE
Product life cycle has 3 distinct stages,
• NEW PRODUCT, (2) MATURING
PRODUCT (3) STANDARDIZED
PRODUCT.
This theory assumed that production of the
new product will occur completely in the
home country of its innovation.
 MODERN THEORIES
GLOBAL STRATEGIC
RIVALRY THEORY
This theory focuses on Multi-
National companies and their
effort to gain a competitive
advantage against other global
firms in the industry.
PORTER’S NATIONAL
COMPETITIVE ADVANTAGE
This theory stated that a nation’s
competitiveness in an industry
depends on the capacity of the industry
to innovate and upgrade. It focuses in
explaining why some nations are more
competitive in certain industries.
 HOW DO GOVERNMENT
INTERVENE IN TRADE?
• TARIFFS 6. ANTIDUMPING
• SUBSIDIES RULES
• IMPORT QUOTAS 7. EXPORT FINANCING
• CURRENCY 8. FREE-TRADE ZONE
CONTROLS 9. ADMINISTRATIVE
• LOCAL CONTENT POLICIES
REQUIREMENTS
 FOREIGN DIRECT
INVESTMENT
Refers to an investment in or the acquisition of foreign
assets with the intent to control and manage them.
Government want to be able to control and regulate the
flow of FDI so that local political and economic
concerns are addressed.
 MANY CONSIDERATIONS
INFLUENCE ITS DECISIONS:
• COST 7. POLICY
• LOGISTICS 8. EASE
• MARKET 9. CULTURE
• NATURAL RESOURCES10. IMPACT
• KNOW HOW 11. EXPATRIATION OF
• CUSTOMERS AND FUNDS
COMPETITORS 12. EXIT
HOW GOVERNMENTS DISCOURAGE
OR RESTRICT FDI
• OWNERSHIP RESTRICTIONS
• TAX SANCTIONS
HOW GOVERNMENTS ENCOURAGE
FDI
• FINANCIAL INCENTIVES
• INFRASTRUCTURE
• ADMINISTRATIVE PROCESSES
THANK
YOU!
 CHAPTER 3

CHANGING OF
PROFILE OF
GLOBAL BUSINESS
ENVIRONMENT
LEARNING OBJECTIVES
⚬Enable the reader to understand
the evolution of international
trade and why it is here to stay,
despite the challenges; and
⚬Explain the benefits of Joint
Venture, Off shoring and
outsourcing
Presentation by Margarita Perez
Adam Smith’s wealth of Nations
Smith changed the basic economic thinking in
international trade. Smith’s concept was known
as LAISSEZ-FAIRE which means for state to let
the people do as they freely choose. This was
used as the response or solution of the
government on the cause of commerce.
 What is the
“NAVIGATION
ACTS”?
What is the work of GATT or
the “GENERAL
AGREEMENT OF TARIFFS
AND TRADE”
What is the work of IMF or the
“INTERNATIONAL
MONETARY FUND”
 WHAT IS HEGEMONIC
STABILITY THEORY?
Argues that international economic openness
and stability is more likely where there is a
single dominant state and this thinking became
the most prominent approach among political
scientists for explaining patterns of economic
relations among the advance capitalist
countries.
 IN-GROUPS AND OUT-GROUPS

IN-GROUPS OUT-GROUPS
Refers to what we intuitively feel
Refers to “THEY”
to be “WE”
People are we-versus-they creatures.
 BREXI
T
It is an Abbreviation of 2 English words
Referred to as the referendum decision by the
people of UK to withdraw its membership from
the European Union (EU).
 BUSINESS EFFECTS
If Britain withdrawn from EU
can remain to be in a single
market. But Brexit can make
britain unwelcome in the
customs union.
 CREATION OF JOBS

Brexit will affect the creation of Jobs in

britain since the number of immigrants
in Britain is still high.
Free movement of people will cease
from happening also because of brexit
 Positive effects
Brexit allows another countries not around Europe
to export to them and start trading with Britain.
Britain will be capable of receiving more tariff
revenue from different countries that wish to import
goods to britain.
WHY DOES STATES
RESTRICT
INTERNATIONAL
TRADE?
THANK
YOU!
• What is the title of the book that was written by Adam Smith?
• In France, smith’s concept is also called?
• It is intended to promote the self-sufficiency of the british empire by restricting
colonial trade to England.
• TRUE or False, Traditional Revolution brought human to a more sophisticated
production, distribution and consumption
• World Bank is a short term of an organization called?
• It marks an important staging post in the shift between moral internationalism
and institutional internationalism
• It argues that international economic openness and stability is most likely when
there is a single dominant state.
• They promotes global economic growth and financial stability by providing loans
to countries that are experiencing economic distress
• It is established to supervise and liberalize world trade
• It is designed to eliminate and reduce quotas, tariffs and subsidies