INTRODUCTION TO IB, DIFFERENCE BETWEEN INTER AND INTRA, THEORIES OF INTERNATIONAL BUSINESS ETC.

1. INTERNATIONAL BUSINESS
F. JOSEPHINE LENTA,
ASSISTANT PROFESSOR,
DEPARTMENT OF COMMERCE,
COLLEGE OF SCIENCE AND HUMANITIES,
SRM IST
RAMAPURAM

2. UNIT 1
 BASIC CONCEPTS OF TRADE AND THEORY

3. TRADE
The act or process of buying, selling, or exchanging
commodities, at either wholesale or retail, within a
country or between countries: domestic trade;
foreign trade. the act of buying, selling, or exchanging
stocks, bonds, or currency.

4. INTER TRADE:
Inter trade refers to thepurchase or sale of goods or services
outside geographical boundaries. It is a means of global economic
interaction between the buyers andsellers of different countries.
INTRA TRADE
Intra-trade is trade between economies belonging to the same
group. Accordingto UNCTAD,extra trade is the trade of economies
in the same group with all economies outside the group. It
representsthe difference between the total trade and the internal
trade of a group.

5. CHARACTERISTICS OF INTERNATIONAL BUSINESS
 FOREIGN EXCHANGE
 VARIETY OF GOODS
 FOREIGN EXCHANGE MODELS
 IMPROVE REGIONAL COOPERATION
 MAINTAINS FAVOURABLEBoP
 INCREASE IN COUNTRY”S MONETARYVALUE

6. Absolute Advantage
It was developed by Adam Smith
Absolute advantageis the ability of an individual, company,
region, or country to produce a greater quantity of a good or
servicewith the samequantity of inputs per unit of time, or to
produce the same quantity of a good or serviceperunit of
time using a lesserquantity of inputs, than its competitors.

7. Pros and Cons of Theory of Absolute Advantage
 Pros
Simple illustration of why countries can benefit bytrading
on their advantages
.
 Cons
•Lacksthe explanatorypower of the theory of comparative
advantage.
•Does not account for costs or barriersto trade.
•Has been used to justify exploitative policies.

8. Comparative Advantage
The law of comparative advantage is popularly
attributed to English political economist David
Ricardo
Comparative advantageis an economy's ability to produce a
particular good or serviceat a lower opportunity cost than
its tradingpartners. Comparative advantageis used to
explain why companies,countries, or individualscan
benefit from trade.

9. Heckscher-Ohlin Model
The Heckscher-Ohlinmodel is an economic theory that
proposes that countries export what they can most
efficiently and plentifully produce.
The model emphasizesthe export of goods
requiring factors of production that a country has
in abundance. It also emphasizesthe import of
goods that a nation cannot produce as efficiently.