IMPORTANCE OF INTERNATIONAL

TRADE

ABOUT THE COURSE 6 units covering:

Introduction of international trade, theories, trade trends, policies, organizations and impact on economy

DEFINITION OF INTERNATIONAL BUSINESS

All commercial transactions—including sales, investments, and transportation—that take place between two or more countries

REASONS THAT FIRMS ENGAGE IN INTERNATIONAL BUSINESS Expanding sales: cars, automobiles,

electronics Acquiring resources: FMCG cos, fuel

producers Minimizing risk: financial cos

MODES OF OPERATION IN INTERNATIONAL BUSINESS Merchandise exports and imports Service exports and imports

Tourism and TransportationService Performance: banking, insurance,

engineering, management, interest and dividend

Asset Use Investments: FDI(controlling interest)

and FII(non controlling interest)

Components of GDP (fc) at constant prices, base year: 2004-05 (Rs Bn)

Year Agriculture & allied activities

Industry Services GDP at Factor Cost

1950-51 1450.52 310.26 968.42 2796.18

1950-51 in % 51.88 11.10 34.63 100.00

2012-13 7536.10 10421.85 37096.40 55054.37

2012-13 in % 13.69 18.94 67.41 100.04

TYPES OF INTERNATIONAL ENTERPRISES Collaborative arrangements Strategic Alliance Multinational Enterprise (MNE)

COLLABORATIVE ARRANGEMENTS Used to define: Companies that work jointly under long

term contractual arrangements New alliance

STRATEGIC ALLIANCE Same as collaborative agreement but

often reserved to refer either to an agreement important to one partner

Or an agreement that does not involve joint ownership

Joint work but identity apart

MULTINATIONAL ENTERPRISE (MNE) It takes a world wide view.. And is willing to consider market and

production locations anywhere in the world.

RECAP IB Why are firms interested in IB How can firms get FDI What is more important FDI or FII… 2 pros and cons of FDI and FII