1. Bases of International Marketing
Lecture 2
Bases of International Marketing

2. International Trade Theories
Classical Theory
Factor Proportion Theory
Product Life-Cycle Theory

3. Classical Theory
Related to trade partners according to economic advantage.
Produce in domestic when it is cheaper than abroad, import when it is expensive in domestic
Exclude transportation cost, marketing cost, individual firm profits.

4. Three Situations in Classical Theory
Absolute Advantage
Comparative Advantage
Equal Advantage

5. Absolute Advantage
One country has cost advantage over another country in producing of one product
And second country has cost advantage over first country in producing of another product
exchange

6. Comparative Advantage
One country has absolute advantage over another country in the production of all products, trade is better if domestic exchange ratios are dissimilar.
This country has superior advantage

8. Equal Advantage
When one country has an absolute advantage over another in production of all products but no superior advantage
No difference in exchange ratios

10. Factor Proportion Theory
Export product: very cheap input is used
Import product: very expensive input is used.

11. Product Life-cyle Theory