INTERNATIONAL BUSINESS BASICS NOTES

WHAT IS INTERNATIONAL BUSINESS?  Refers to business activities needed to create, ship, and sell goods and services across national borders.  The United States conducts trade with over 180 counties!

ABSOLUTE & COMPARATIVE ADVANTAGES Absolute AdvantageComparative Advantage  When a country can produce at a lower cost than other countries.  May be rich in resources  Coffee  Oil  When a country specializes in making a product better that other countries.  Country will focus on producing their strength  Autos  Fabrics

TRADING AMONG NATIONS  Imports – items brought from one country to another  Exports – goods and services sold to other countries.

MEASURING TRADE RELATIONS BALANCE OF TRADEBALANCE OF PAYMENTS  TOTAL IMPORTS - TOTAL EXPORTS (+) Trade Surplus – more exports (-)Trade Deficit – too many imports  Foreign Money Coming In - Domestic Money Going Out (+) Favorable – more money in (-) Unfavorable– too much paying out

FACTORS INFLUENCING EXCHANGE RATES Balance of Payments Favorable = constant or rising value Economic Conditions Inflation and high interest rates can drop the value Political Stability Unstable politics can put value at risk

THE GLOBAL MARKETPLACE Location Climate Terrain Resources Geography Technology Education Inflation Exchange Rate Economic Factors Language Family Religion Customs Traditions Food Cultural Government System Political Stability Trade Barriers Regulations Political