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Importance of International Trade

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.

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Importance of International Trade

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  1. Importance of International Trade

  2. About the Course • 6 units covering: • Introduction of international trade, • theories, • trade trends, • policies, • organizations and • impact on economy

  3. Definition of International Business All commercial transactions—including sales, investments, and transportation—that take place between two or more countries

  4. Reasons That Firms Engage in International Business • Expanding sales: cars, automobiles, electronics • Acquiring resources: FMCG cos, fuel producers • Minimizing risk: financial cos

  5. Modes of Operation in International Business • Merchandise exports and imports • Service exports and imports • Tourism and Transportation • Service Performance: banking, insurance, engineering, management, interest and dividend • Asset Use • Investments: FDI(controlling interest) and FII(non controlling interest)

  6. Types of International Enterprises • Collaborative arrangements • Strategic Alliance • Multinational Enterprise (MNE)

  7. Collaborative Arrangements • Used to define: • Companies that work jointly under long term contractual arrangements • New alliance

  8. 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

  9. Multinational Enterprise (MNE) • It takes a world wide view.. • And is willing to consider market and production locations anywhere in the world.

  10. 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

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