Tara Chandy

UNIT 5 - INTERNATIONAL BUSINESS

Faculty : Ms.Tara Chandy

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Tara.chandy@mcbs.edu.om

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SELF INTRODUCTION

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PREPARE FOR LEARNING

• You will need:

• Pen / pencil
• Notepad
We start with a review of previous
class where you will be asked
questions.

Participation in class activities is

compulsory and your resubmission
chance will be bases on this.

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LEARNING AIMS

A. Examine the influences on the growth of globalization

B. Explore the structure of the global economy
C. Examine Strategic and operational approaches to developing
international business

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ASSESMENT
•2 Assignments

•P –Pass –Compulsory task

•M-Merit – Optional

•D-Distinction-Optional

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ASSESSMENT

• 2 assignments
• Assignment 1 addresses LO A
• Assignment 2 addresses LO B and LO C

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RESUBMISSION CRITERIA

• You must attempt all P tasks

• For M and D tasks 80% must be achieved.
• Attendance + class participation is the main eligibility

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UNIT 5 -INTERNATIONAL BUSINESS
LO A -Explore the international context for business operations

London
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AIMS OF A1
A. Understand globalization
B. Learn about the factors
affecting globalization

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STUDENT ACTIVITY

• Define “international business” in your own words

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INTERNATIONAL BUSINESS/TRADE

• International trade is the trade among different countries or trade

across political frontiers.

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INTERNATIONAL BUSINESS

International business is the trade in buying and selling of goods and

services between different countries.

• When a product is bought from another country, it is referred to as an

import.

• When a product is sold to a customer in another country, it is called an

export.

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GLOBALIZATION

The process by which businesses or other organizations develop

international influence or start operating on an international scale.

This Photo by Unknown author is licensed under CC BY-SA.

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GLOBALIZATION

• Globalization refers to the increased connections between people,

organizations and countries around the world.

• This has been supported through removal of trade barriers, easier travel
and improved communication networks.

• Globalization has allowed businesses to trade on an international scale.

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MAIN FEATURES OF GLOBALISATION

• Trading blocs
• International mobility of labour and capital eg EU freedom of
movement
• International currencies eg $ £
• Multinational corporations eg McDonalds, Walmart
• International business communications eg Skype, Zoom
• International payment systems eg PayPay This Photo by Unknown author is licensed under
CC BY-NC-ND.

This Photo by Unknown author is licensed under CC BY-SA.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

This is to help you for A- P1

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

1.Imports and exports

• Some governments offer subsidies to their domestic firms, so that those
firms can produce products at a lower cost than their global
competitors. Thus, the demand for the exports produced by those firms
is higher as a result of subsidies.
• Many firms in China commonly receive free loans or free land from the
government. These firms incur a lower cost of operations and are able
to price their products lower as a result, which enables them to capture
a larger share of the global market.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

1.Imports and exports

• If a country’s government imposes a tax on imported goods (often
referred to as a tariff), the prices of foreign goods to consumers are
effectively increased.
• In addition to tariffs, a government can reduce its country’s imports by
enforcing a quota, or a maximum limit that can be imported. Quotas
have been commonly applied to a variety of goods imported by the
United States and other countries.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE
1.Imports and exports

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE
1.Imports and exports

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

2.INCREASED STANDARD OF LIVING

• Due to globalization one of the advantages is that free trade between
countries is increasing because countries are effectively becoming more
self-sufficient.
• Story of US and China
• While standard of living will increase in some countries globalization has
resulted in loss of jobs due to imports that can reduce standard of living
too.

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DISCUSSION

• Consider the rural and urban

population in China
• People have moved to regions
for better standard of living

https://www.statista.com/s
tatistics/278566/urban-and
-rural-population-of-china/

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This Photo by Unknown author is licensed
under CC BY-SA.
NOT TO SHOW IN CLASS

• As the U.S is already a developed country, it takes more advantage of developing

countries such as china. China and the U.S both agreed to china joining the world trade
organisation (WTO). This was however a great impact to china because when china
opened up its markets the economics would improve. It also strengthened the
authority of the world trading system, which has been damaged by disputes between
the United States and Europe. The disadvantage to china for joining the (WTO) is that
china’s employment could have risen greatly and that competition would increase
greatly too. The US has been approaching China to unwrap its markets to American
products and services. The U.S take advantage of china because china are working less
than slave labour prices to manufacture goods for the U.S, The Chinese produce goods
cheaply, because their people are numerous and relatively poor. When this occurs the
U.S then sells the products for normal prices, so this means cheap labour and a higher
profit margin for the U.S. This is however not fair on china as it is a very poor country.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

3.WIDER VARIETY OF GOODS

• International trade brings in different varieties of a particular product
from different destinations. This gives consumers a wider array of
choices which will not only improve their quality of life but as a whole it
will help the country grow.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE
3.WIDER VARIETY OF GOODS

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

4.TECHNOLOGY
• Businesses can communicate world wide because of websites,social
media allowing people to communicate all over the world.
• This is cost efficient and easy to work.
• Instant online translation services are available if a common language is
not there for both the countries.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

5.CREATION OF EMPLOYMENT ACTIVITIES

• More employment could be generated as the market for the countries’
goods widens through trade. International trade helps generate more
employment through the establishment of newer industries to cater to
the demands of various countries.
• Even if trade does not reduce the number of jobs, it could affect wages.
• In the early 1990s, the United States was signed the North American
Free Trade Agreement (NAFTA) with Mexico, an agreement that
reduced tariffs, import quotas, and non tariff barriers to trade between
the United States, Mexico, and Canada. How did this help??
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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

5.CREATION OF EMPLOYMENT ACTIVITIES

• Being in groups like the EU helps countries to have free movement
making it easier for people to work in countries around the world.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

6.INTERNATIONAL COOPERATION BETWEEN COUNTRIES

• A country’s government can have a major effect on its balance of trade
due to its policies on subsidizing exporters, restrictions on imports, or
lack of enforcement on piracy

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6.INTERNATIONAL COOPERTAION BETWEEN
COUNTRIES

Source:
https://uk.practicallaw.thomsonreuters.com/4-617-5483? 33
transitionType=Default&contextData=(sc.Default)&firstPage=true
FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

6.TRADING BLOCS
It is a group of countries in a geographical area that get together to
protect themselves from countries outside their group working together
to make goods or services move easily and placing restrictions on the
number of goods or services being brought into the area.
Eg:EU, NAFTA,APEC

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

7.INTERNATIONAL CURRENCIES
• If a country’s income level (national income) increases by a higher
percentage than those of other countries, its current account is
expected to decrease, other things being equal. As the real income level
(adjusted for inflation) rises, so does consumption of goods. A
percentage of that increase in consumption will most likely reflect an
increased demand for foreign goods.
• A weaker currency makes imports more expensive, while stimulating
exports by making them cheaper for overseas customers to buy.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

7.INTERNATIONAL CURRENCIES

• https://www.investopedia.com/articles/forex/080613/effects-currency-
fluctuations-economy.asp#:~:text=Merchandise%20Trade,-This
%20refers%20to&text=In%20general%2C%20a%20weaker
%20currency,or%20trade%20surplus%20over%20time.

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FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

8.SPECILIZATION

Source: estni.com/international/imea?gclid=CjwKCAiAxp-ABhALEiwAXm6IyRvP--
SJDPbwmy2FqLmzhbuLEkrOQgQ339ldpiI9Kko93IrP1XkeBhoCB5sQAvD_BwE 37
FEATURES AND BENEFITS OF INTERNATIONAL
TRADE

9.TRANSPORTATION

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SO WHAT KIND OF COMPANY SHOULD YOU
SELECT FOR YOUR ASSIGNMENT SO THAT THEY
WILL TRADE WITH UK

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LEARNING TO USE TRADING ECONOMICS

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SOURCE:
HTTPS://WWW.MONDAQ.COM/INTERNATIONAL-TRADE-INVESTMENT/874542/
IMPLICATIONS-OF-BREXIT-ON-THE-BUSINESSES-IN-THE-UNITED-ARAB-EMIRATES

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SOURCE:
HTTPS://WWW.MONDAQ.COM/INTERNATIONAL-TRADE-INVESTMENT/874542/
IMPLICATIONS-OF-BREXIT-ON-THE-BUSINESSES-IN-THE-UNITED-ARAB-EMIRATES

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CHALLENGES OF
GLOBALIZATION

THINK ???

https://www.youtube.com/watch?v=JJ0nFD19eT8

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 1. Economic influence of international business
2. Political influence of international business
Challenges of Globalization
3. Population movements
4. Increase in protectionist economic policies

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POPULATION MOVEMENT

• https://www.economicshelp.org/blog/24414/labour-markets/mobility-o
f-labour/

• Read through this article to understand why might

people work in different countries or move to different
regions ?

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WEB SITES TO GET STATISTICS AND FIGURES -
STATISTICA

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WEB SITES TO GET STATISTICS AND FIGURES –
TRADING ECONOMICS

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1. International Business
2. Export
3. Import
4. Globalization

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BENEFITS OF INTERNATIONAL TRADE

1. Increased standards of living

2. Wider variety of goods and services
3. Technology transfer
4. International specialization
5. Employment opportunities
6. Cooperation between nations

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FEATURES OF GLOBALIZATION

1. Growth of trading blocs

2. Growth of international transport
systems
3. International mobility of labor
4. International currency exchange
5. Impact of technology of business
communications

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Refer Page – 6 of the reference material
shared on eduoasis

REASONS FOR
CONDUCTING BUSINESS
INTERNATIONALLY
A2. INTERNATIONAL BUSINESS

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STUDENT ACTIVITY

• Think of a local shop or a large corporation

• You are going to take turns to provide a reason why a business would
want to operate internationally

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REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

• Growth • Comparative advantage

• Additional revenue streams • Economies of scale
• Brand exploitation • Fiscal benefits
• Access to new markets • Preferred tax rates
• Diversification
• Increasing market share
• Market leadership
• Technology dominance

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Growth
• Offering goods and services to other countries give organizations chance to grow
• When businesses grow/ More sales occur

Profit is generated

Growth for the company and

associated companies

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Additional Revenue Streams

• Choosing to sell goods or services in other countries give companies more opportunities to generate
revenue which brings new income
• The more ways that an organization has to generate income the more stable the business is likely to
be
• If one revenue stream is not working properly, other revenue streams can support the business

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Brand exploitation
• Means taking brand names across different countries

Methods used:
1.Using brands for sponsorship
2.Giving licence to operate the brand in other countries

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Brand exploitation
• Means taking brand names across different countries

Methods used:
2.Giving licence to operate the brand in other countries
1.Using brands for sponsorship
Eg: General Mills

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Access to new markets

• Helps increase sales, offers opportunities to people in other countries to get products that are not
available there

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Diversification
• Means taking a new product or service to a new market
• Helps business to reduce risks or increase risk

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Increase market share and market leadership

• Having a great market share means that they have more sales in that market and
they are more dominant over the other businesses in that country
• By becoming the market leader the businesses get more control of the market and
can make sure to make changes to a particular product or service

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Technological Dominance
• Having dominance makes it hard for businesses to come into the market that you
operate
• When the business has enough sales and profit they are able to invest in good
technologies helping them to increase profit and sales
• Good technology helps decrease the costs too

Carrefour has self scanning

systems now reducing the
expense of keeping cashiers
and making the customer flow
faster

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Comparative advantage
• Means –Being able to produce goods or services across more than one
country and then sell them in another country reduces costs for business
and supports the potential for higher profits to be made

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Economies of Scale
• Means – More the product or service you sell the lower the cost per unit
• WHY ????

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This Photo by Unknown Author is licensed under CC BY-ND
REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

Fiscal benefits and preferential tax rates

• Relates to amount of spending and tax that a government of a country seeks to

make

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This Photo by Unknown Author is licensed under CC BY-ND
 Refer page 10 of the material shared on
eduoasis

FACTORS INFLUENCING
THE CHOICE OF MARKET
A2. INTERNATIONAL BUSINESS

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 What do we mean
FACTORS by this?

A business will be influenced by a choice of market:

 Type of produce
 Costs
 Size of market
 Political stability

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STUDENT ACTIVITY – HOME WORK

Top international companies: • Select one or two of these to see

• Apple Inc where these businesses trade
• LG around the world-Put in chat
• Microsoft section before next class
• P&G
• IBM
• What are the advantages and
• Nestlé
disadvantages for these
• Citigroup businesses to trade
• Pepsico internationally?-We will discuss
• Coca Cola in the next class
• Sony Corporation
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REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

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REASONS FOR CONDUCTING BUSINESS
INTERNATIONALLY

• Growth • Comparative advantage

• Additional revenue streams • Economies of scale
• Brand exploitation • Fiscal benefits
• Access to new markets • Preferred tax rates
• Diversification
• Increasing market share
• Market leadership
• Technology dominance

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This Photo by Unknown Author is licensed under CC BY-ND
:
FACTORS INFLUENCING

CHOICE OF MARKET

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FACTORS

A business will be influenced by a choice of market:

 Type of produce
 Costs
 Size of market
 Political stability

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STUDENT ACTIVITY

Top international companies: • Select one or two of these to see

• Apple Inc where these businesses trade
• LG around the world
• Microsoft
• P&G
• What are the advantages and
• IBM
disadvantages for these
• Nestlé
businesses to trade
• Citigroup internationally?
• Pepsico
• Coca Cola
• Sony Corporation
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 CHARACTERSTIC
S, ADVANTAGES
AND
DISADVANATAGE
S OF
INTERNATIONAL
MARKETS

REFER PAGE -9 OF THE MATERIAL SHARED ON

EDUOASIS

A2. International Business

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GAME

• https://www.tutor2u.net/business/reference/multinationals-and-their-
industry-matchup-activity

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76
SIMILAR GAMES

• https://www.tutor2u.net/business/reference/multinationals

• https://www.tutor2u.net/business/reference/global-food-brands-the-country-of
-origin-matchup-activity

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CHARACTERISTICS AND
FEATURE OF
ORGANIZATIONS AND
AGENCIES INVOLVED IN
INTERNATIONAL TRADE

A2. International Business

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8
TYPES OF BUSINESS
ACTIVITY
• Exporting businesses
• Importing businesses
• Multinational
enterprises
• Associated businesses

REFER PAGE – 4 OF THE REFERENCE MATERIAL SHARED

ON EDUOASIS
Shanghai
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EXPORTING
BUSINESSES

8
0
 This type of export is called
EXPORTING BUSINESSES dispatches

• UK businesses can export to the EU without any customs checks

• Following Brexit, this is likely to change
• Items can move freely between the EU countries
• If a UK businesses wants to trade with a country outside of the EU, they will
need:
• An export declaration https://www.gov.uk/guidance/making-a-full-export-declaration
• An export licence https://www.gov.uk/starting-to-export/licences
• To pay customs duties https://en.wikipedia.org/wiki/List_of_countries_by_tariff_rate
• To pay taxes within the country receiving the goods
https://wits.worldbank.org/CountryProfile/en/country/by-country/startyear/LTST/en
dyear/LTST/indicator/GC-TAX-EXPT-ZS

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STUDENT ACTIVITY
• https://tradingeconomics.com/united-kingdom/exports-by-country
- Independently, select a country and research what goods or services are provided by the UK
to that country

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• Why do you think UK government is so keen to encourage UK businesses to export
goods and services? What are the benefits of doing so?
• https://www.gov.uk/government/publications/2020-export-drive/2020-export-drive

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IMPORTING
BUSINESSES

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IMPORTING BUSINESSES

• Goods imported from the EU currently mean that businesses do not require a licence, or to pay import
duties (although VAT must be paid)
• This is likely to be changed following Brexit
• Commodities are given codes that are used to give guidelines to show how much VAT is to be paid

• Importing goods from outside the EU require:

• An import declaration https://www.gov.uk/guidance/making-a-full-import-declaration
• An import licence https://www.gov.uk/starting-to-import/import-licences-and-certificates
• Commodity codes relevant to the goods
https://www.gov.uk/guidance/finding-commodity-codes-for-imports-or-exports
• Customs duties and paid to HMRC https://www.gov.uk/trade-tariff
• VAT https://www.gov.uk/trade-tariff

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UNDERSTANDING TRADING IN THE UK

• https://merchantmachine.co.uk/uk-import-map/
• https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/a
rticles/whodoestheuktradewith/2017-02-21
• Use these web sites to determine how much the UK imports from
different countries
• Why is it important for a business to import to UK?
• Why would the UK buy goods from other countries?

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MULTINATION
AL
BUSINESSES

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MULTINATIONAL BUSINESSES

• Large corporations may operate business in a number of different

countries
• They will need to ensure that they follow the various rules for importing
relevant to each country for taxes and duties
• There will be different customs and laws for each country they operate
in

• https://www.youtube.com/watch?v=Hv-C1ZK3J_8&feature=emb_logo

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MNC

• LIST OF MULTI NATIONAL COMPANIES

https://en.wikipedia.org/wiki/List_of_multinational_corporations

• Video to understand MNC

https://www.tutor2u.net/business/reference/multinationals

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ASSOCIATED
BUSINESSES
UNIT 5 LO A.1 INTERNATIONAL BUSINESS

9
0
ASSOCIATED BUSINESS

• Businesses offer support to organisations

• Associated business may provide specialist services to a business eg
marketing or logistics
• https://www.gbsfreight.co.uk/ based in Dartford, they move freight
around the UK and the world for other businesses

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SUPPORT FOR INTERNATIONAL BUSINESS IN THE
UK

• Agencies to support international • Types of support provided:

business: • UK Export Finance Advisors
• UK Export Finance • Trade fairs
• UK Trade and Investment • Identifying trade partners
• Chambers of Commerce • Grants for international
• Regional advisory organisations promotions

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TYPES OF BUSINESS
ACTIVITY
• Exporting businesses
• Importing businesses
• Multinational
enterprises
• Associated businesses

REFER PAGE – 4 OF THE REFERENCE MATERIAL SHARED

ON EDUOASIS

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THANK
YOU
We finished learning outcome A