International business involves commercial transactions across national borders. Countries trade to gain access to resources they cannot produce themselves, giving them a comparative advantage. There are benefits to absolute and comparative advantage. Exports are domestic goods sold abroad while imports are foreign goods purchased domestically. Trade barriers include cultural, political, and tariff differences between countries. Common approaches to international business are exporting, licensing, joint ventures, trading companies, countertrading, direct ownership, and multinational corporations.

1. International Business

2. Definition
What is International Business?
The performance of business activities across national boundaries referred as
International Business.

3. Why firms conduct International
Business?
A country with a surplus of some product may decide to sell this surplus to other
nation for earning foreign currency what enables them to buy other product they
can not produce. This scarcity of resource is the major reason why nation trade with
each other.

4. The Advantages
Absolute Advantage
A nation has a absolute advantage if it can
produce a product more efficiently than
any other nation.
Comparative Advantage
When a country can produce one product
more efficiently and at a lower cost than
other products, in comparison to other
nation.

5. Basic Concepts

6. Export
Selling domestic-made
goods in another
country
Import
Purchasing goods made
in another country
Balance Of
Trade
The difference between
the amount a country
exports and imports
Balance Of
Payments
The total flow of money
into and out of a country
Exchange
Rate
The rate at which one
country’s currency can
be exchanged with
another country

7. The Barriers

8. Barriers to International Business
1. Cultural and Social Barriers
2. Political Barriers
3. Tariffs and Trade Restriction

9. Cultural and Social Barriers
A nation’s culture and social forces can restrict international business activities. Culture
consists of a country’s general concepts and values and tangible items such as food,
clothing and buildings.

10. Political Barriers
The political climate of a country can have a major impact on international business.
Nations experiencing political unrest may change their attitude towards foreign firms at
any time.

11. Tariffs and Trade Restrictions
Tariffs and trade restriction are also barriers to international business. A nation can
restrict trade through import tariffs, quotas and embargoes and exchange control.

12. The Approaches

13. Approaches to International Business
1. Exporting
2. Licensing
3. Joint Venture
4. Trading Companies
5. Countertrading
6. Direct Ownership
7. Multinational Corporations

14. The End
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