Chapter 6 International Business Course Instructor- Jamee Ahmad

International Business-The performance of business activities across national boundaries Doing business in international sector by considering export, import, cultural variation, exchange of currency, taxation, transportation and by appreciating other country’s demand, taste, culture etc

Absolute advantage- When a country can produce a product more efficiently than any other nation Having total advantage of producing which gives the seller a comfort of having the full market in control

Comparative advantage- When a country can produce one product more efficiently and at a lower cost than other products, in comparison to other nations It’s the ability to produce any product better compared to competitors, in a lower cost than others & be more efficient than competitors in producing it

Basic concepts of international Business 1. Export- Selling domestic made goods in another country -Selling in another country by considering the taste, policy, currency exchange, demand of that country to gain money, good relation and more businesses

Basic concepts of international Business cont.. 2. Import- Purchasing goods made in another country - Brining or buying something from a foreign country, medium of exchange is US Dollar or same currency used among trading nations, mostly required opening LC via bank , paying tax to the govt, sometimes dealing with quota system

3. Balance of trade – The difference (in dollars) between the amount a country exports & the amount it imports Bangladesh & India having trade among each other, but if Bd starts importing more then it exports then its bad for economy as our dollars are getting out of our hand more than we are earning, so the balance is destroyed and Bd would be facing trade deficit

4. Balance of payments- The total flow of money into & out of a country. Its determined by measuring few factors such as balance of payment, foreign trade, foreign investment , foreign aid, military spending & money spent by tourists in other countries A country has favorable balance of payment if more money is inflowing than out flowing If outflow is more than inflow than its unfavorable balance of payment

5. Exchange Rate- the rate at which one country’s currency can be exchanged for that of another country. Governments, market conditions and some other factors determine exchange rates Devaluation by any government reduces of value of money and revaluation by govt increase the value of the country's currency

6. Fixed exchanged rate- An unvarying exchanged rate set by government policy Example- China holding a particular price of their currency against US Dollar, they don’t change it doesn’t matter what happens, their decision doesn’t change based on revaluation or devaluation

7. Floating exchange rate- An exchange rate that fluctuates with the market conditions. Example- Bangladesh’s taka's value changes depending on factors like our production rate, GDP, GNP, foreign aid, ROI etc

Barriers to International Business Cultural & social barriers Political barriers Tariff & trade retractions (Import tariff, quota, embargo)