1. INTERNATIONAL BUSINESS

2. International Business
- the transfer of:
1. resources
2. goods
3. services
4. knowledge
5. skills
6. or information across national boundaries
- all commercial transactions that take place between two or more regions,
countries and nations:
1. private and governmental
2. sales
3. investments
4. logistics
5. transportation

3. International Business
 International Transactions
 International Trade
 International Investment
 International Firm
 Multinational Enterprise (MNE)
- often called as Multinational Company (MNC) or Transnational Company
(TNC)
Examples:
1. Philippine Airlines (PAL)
2. Philippine National Bank (PNB)
3. Convergys Corporation
4. Ayala Land, Inc.
5. STI Colleges
6. National Power Corporation (NAPOCOR)
7. Mercury Drug
8. Universal Robina Corporation
9. Gerry’s Grill

4. International Trade Theories
1. Mercantilism
- Is the economic doctrine that government control of
foreign trade is of paramount importance for ensuring
the military security of the country.

5. International Trade Theories
2. Absolute Advantage
- Refers to the ability of a party (an individual, or firm,
or country) to produce more of a good or service than
competitors, using the same amount of resources.

6. International Trade Theories
Example of Absolute Advantage:
Party B has the absolute advantage.
Party A can produce 5 widgets per hour with 3 employees.
Party B can produce 10 widgets per hour with 3 employees.
Party Widgets per
Hour
Number of
Employees
A 5 3
B 10 3

7. International Trade Theories
3. Comparative Advantage
- Refers to the ability of a party to produce a particular
good or service at a lower marginal and opportunity
cost over another.

8. International Trade Theories
Example of Comparative Advantage:
Maid has the comparative advantage.
John Maid
Earns $300/hour Works $25/hour
1 hour to clean 8 hours to clean
Absolute advantage Comparative advantage
He loses $300 Profit $100

9. International Trade Theories
4. Factor Proportions Theory
- Trade theory holding that countries produce and
export those goods that require resources (factors)
that are abundant (and thus cheapest) and import
those goods that require resources that are in short
supply.

10. International Trade Theories
5. Vernon’s Product Life-Cycle Theory
- Theory suggests that early in a product's life-cycle all
the parts and labor associated with that product come
from the area in which it was invented.

11. International Trade Theories
5. Vernon’s Product Life-Cycle Theory
Five Stages:
• Introduction
• Growths
• Maturity
• Saturation
• Decline

12. International Trade Theories
6. New Trade Theory
- A collection of economic models in international
trade which focuses on the role of increasing returns
to scale and network effects, which were developed in
the late 1970s and early 1980s.

13. INTERNATIONAL BUSINESS

14. International Trade Patterns
Service Trade
- Encompasses the import and export of financial
services, information services, the provision of
education and training, travel and tourism,
healthcare, consulting and advisory services, and so
on.

15. International Trade Patterns
Trade Measurement
- Refers to all transactions in which the price of the
commodities or goods is based on measurement of
quantity or quality.

16. International Trade Patterns
Trade Balance
- The calculated exports minus imports of goods and
services.