Lesson 1 IBT 2023

FOUNDATIONS OF
INTERNATIONAL BUSINESS
Internalize how the “Value of Trade” between any Two Countries depends
on the size of these Countries’ Economies
IMPORTANCE OF
INTERNATIONAL
TRADE AS
FOUNDATION OF
BUSINESS
In the early days of the United States, most families grew the
food they ate and made the clothes they wore.
As population increased production and distribution methods
improved. In the same way that people within a country are
dependent on each other for goods and services, so are
countries.
Nations that have extensive production and distribution
facilities-such as United States, Canada, and Japan and the
western Europe nations-have some level of economic
independence. However, they are still dependent on other
countries.
International trade is the purchase
and sale of goods and services by
companies in different countries.
VALUE OF TRADE BETWEEN TO COUNTRIES
Beyond the modern conveniences of

technology and the delicious food and drink
imported from around the world, international
trade creates job opportunities, contributes
positively to the economy, offers multiple
paths for companies to grow, and even helps
to improve relationships between countries.
FOUNDATIONS OF INTERNATIONAL BUSINESS
1 THE IMPORTANCE OF THE GLOBAL MARKET AND GLOBAL TRADE
2 IMPORTING AND EXPORTING IN A GLOBAL MARKET
3 STRATEGIES FOR REACHING GLOBAL MARKETS
4 FORCES THAT AFFECT TRADE IN GLOBAL MARKETS
5 REGIONAL INTEGRATION
1 THE IMPORTANCE OF THE GLOBAL MARKET AND GLOBAL TRADE

The global market and global trade are important for
3 increasing the
STRATEGIES wealth and standard
FOR REACHING GLOBALof living across
MARKETS
many nations of the world. Learn more about the

4important role of global commerce, and learn about
FORCES THAT AFFECT TRADE IN GLOBAL MARKETS
absolute and comparative advantages.

Importing is the purchase of goods from a foreign

country while exporting is when a country sells goods to
another country. Explore this business concept and the
importance of THAT
the process, examine barriersMARKETS
that exist to
4trade, and unpack the accounting of importing and
FORCES AFFECT TRADE IN GLOBAL
5 REGIONAL INTEGRATIONexporting.
In a global market, countries sell goods and services to

each other, which enables a country's businesses to expand
their operations to other countries around the world. Learn
4
about strategies
FORCES THATfor reaching
AFFECT TRADEglobal markets,
IN GLOBAL including
MARKETS
different types and examples. Explore exporting, licensing,

5franchising,
REGIONAL INTEGRATION
joint ventures, strategic alliances, foreign
direct investments, and subsidiaries.
4 FORCES THAT AFFECT TRADE IN GLOBAL MARKETS
TradeREGIONAL
in global INTEGRATION
markets is a complex situation as each
5
culture results in its own sociocultural influences. Examine
the forces that affect trade in global markets including
political and legal forces, economic and financial forces,
and physical and environmental forces.
Formal trade agreements developed through regional

integration are a vital feature of international trade. Learn
the definition of regional integration and discover its
purpose and influences on the decision-making of
businesses involved in international trade.
TRADE BUSINESS
PERCENTAGE
MAJOR FACTORS TO CONSIDER IN
Various factors drive Economic Factors
international business Social factors

activities.
Legal factors
Here are some of the major Behavioral factors

factors that businesses
Geographical factors
much focus on when entering
a foreign market:
Economic Factors
The economic factors affecting the international

business environment include target market size, the
cost involved, currency and exchange rate, inflation,
etc. All these economic factors directly influence the
profitability of international businesses. Therefore,
entrepreneurs should analyze these factors extensively
before starting with international trade operations.
Social factors
Social and cultural restrictions play a huge role in the

growth of an international business. For example, most
businesses try to avoid countries like Libya, Uganda,
Afghanistan, etc., for lack of social and political stability.
Hence, conducting thorough research on the social
environment of a country is also very important.
Legal factors
Each country has its legal framework. For international

businesses, it is mandatory to be well-versed with these
legal norms. The most essential legislative frameworks
to start a business include – labor laws, consumer laws,
data security laws, etc.
Behavioral factors
Respecting the cultural beliefs of the host country’s

customers is a must. Your potential customers can be
very sensitive toward these beliefs. Therefore, for an
international brand trying to make a mark in a new
market, knowing and respecting these beliefs is
required.
Geographical factors
Geographic factors are a key part of international

businesses. For example, factors like logistics, supply
chain needs, skills, etc., depending on geographical
aspects. Hence, geographical research can help
international businesses set-up their initial operations
seamlessly.
ADVANTAGES
DISADVANTAGES
A D V A N T A G E S
1. Advantages of specialization and division of labour
2. Availability and cheapness of commodities
3. Large scale production
4. Creation of industrial society
5. Stabilization of internal price
6. Availability of commodities whose costs of production are high
7. Improvement in transport
8. Sovereign remedy in times of war and famine
9. Development of backward nations
10. Reduces monopolistic exploitation
11. Transfer of payment
12. National well-being
13. Changes in the quality of labour and capital
14. Poor and backward nations can become rich and forward
15. Facilitates debt payment
D I S A D V A N T A G E S
1. Exhaustion of Essential Materials

2. Affects Domestic Industries
3. Lopsided Economic Development
4. Evil Effects of Dumping
5. Dependence on other Nation
6. Against national Defense
7. Instability and Economic Planning
7 KEY BENEFITS OF INTERNATIONAL
TRADE
More Job Opportunities.

Expanding Target Markets & Increasing Revenues.
Improved Risk Management.
Greater Variety of Goods Available.
Better Relations Between Countries.
Enhanced Company Reputation.
Opportunities to Specialize.
IMPORTANCE OF INTERNATIONAL
TRADE
Provides goods and services

• Some of the goods and services we are provided of come
from outside the country.
Provides employment
• Create jobs
• International trade also motivates workers to produce
the goods or services better
THANK YOU
ANG BUHAY AY WEATHER WEATHER LANG SALAMAT SA MAINIT NA
PAKIKINIG SA PABUGSO BUGSONG PAGTUTURO NA AMING GINAWA,
NAWA KAYO AY MAY NATUTUNAN SA AMING NAITURO AT ITO AY
HINDI SANA MAGING BAHA NA BIGLA BIGLA NALANG NAWAWALA.
MARAMING SALAMAT SA INYONG LAHAT
BSBA-MM F2020

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FOUNDATIONS OF

Beyond the modern conveniences of

1 THE IMPORTANCE OF THE GLOBAL MARKET AND GLOBAL TRADE

2 IMPORTING AND EXPORTING IN A GLOBAL MARKET

3 STRATEGIES FOR REACHING GLOBAL MARKETS

4 FORCES THAT AFFECT TRADE IN GLOBAL MARKETS

1 THE IMPORTANCE OF THE GLOBAL MARKET AND GLOBAL TRADE

2 IMPORTING AND EXPORTING IN A GLOBAL MARKET

many nations of the world. Learn more about the

absolute and comparative advantages.

2 IMPORTING AND EXPORTING IN A GLOBAL MARKET

Importing is the purchase of goods from a foreign

3 STRATEGIES FOR REACHING GLOBAL MARKETS

In a global market, countries sell goods and services to

different types and examples. Explore exporting, licensing,

4 FORCES THAT AFFECT TRADE IN GLOBAL MARKETS

Formal trade agreements developed through regional

Various factors drive Economic Factors

international business Social factors

Here are some of the major Behavioral factors

The economic factors affecting the international

Social and cultural restrictions play a huge role in the

Each country has its legal framework. For international

Respecting the cultural beliefs of the host country’s

Geographic factors are a key part of international

1. Exhaustion of Essential Materials

More Job Opportunities.

Provides goods and services

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