Module 1 Flashcards
is a company which provides goods and services to a local population. The term may also be used to describe a franchise or corporate branch operating within a local area.
Local Business
refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transactional scale.
International business
International business is also known as __________.
globalization
is the exchange of capital, goods, and services across international borders or territories. It is the exchange of goods and services among nations of the world.
International trade
also known as International trade
Global trade
is simply the import and export of goods and services across international boundaries.
Global trade
refers to the shift toward a more integrated and interdependent world economy.
Globalization
Globalization has several facets, including the ____________ and ____________ .
globalization of markets and globalization of production
refers to sourcing goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital)
globalization of production
The increase of international trade over the years has been a result of the _____________ .
globalization process
In International trade, both ______ and _______ can now choose from a wider range of products and services.
consumers and companies
Also, globalization refers to the interdependence between countries arising from the integration of different aspects of the economy, such as ________ .
Trade
Importance of International Trade between countries is an Important factor in:
(1) Raising living standards
(2) Providing employment
(3) Enabling consumers to enjoy a greater variety of goods
is anything used by society as a medium of exchange, and is widely acceptable for the payment of goods and services without questioning the integrity of the person offering it.
Money
was the first stage of monetary development. It is the direct exchange or swapping of goods for goods, services for services, goods for service, or services for goods.
Barter System
Society abandoned the barter system for the following reasons:
(1) Difficult to look for the person who has the things you need and who also wants the things you are offering for exchange.
(2) There is no common denominator to measure the value of goods and services sought for exchange.
(3) Most of the goods traded have unequal values.
(4) It is time consuming, cumbersome and very inconvenient for individuals to use the barter system.
(5) It lacks generalized purchasing power.
What are the two ways of keeping money for future use:
(1) By saving
(2) By investing
By saving, the productive way of keeping money for future use is by ______ it in a bank.
depositing
The ______ makes money out of other people’s money by lending it to others for productive purposes.
bank
By investing, investment in business has three divisions, namely;
(1) Industrial business
(2) Commercial business
(3) Servicing business
is concerned with the manufacture of goods, examples, oil industry and fishing industry.
Industrial business
is concerned with bridging the gap between the producer and consumer. It deals with the distribution of goods.
Commercial business
is concerned with the rendering of services such as restaurant, tailoring and banks.
Servicing business
Basic similarities of International and Domestic Trade
(1) Both deal in the same objects of exchange, that is, goods and services
(2) Both kinds of trade are carried on by individuals and business firms
(3) Both domestic and international trade are stimulated by the desire for profit.
Striking differences of International trade and Domestic Trade:
(1) Independence Currency System
(2) Tariffs and Other Trade Restrictions
(3) Movement of Labor and Capital
(4) Nature of the market
Purchases and sales of goods within a domestic market are, as a general rule, negotiated with money or currency that is uniform in all parts of the country.
Independence Currency System
The existence of tariffs constitutes another difference between domestic trade and international trade.
Tariffs and Other Trade Restrictions
Within a country, labor and capital are relatively mobile. In the particular case of labor, it is customary to observe that young people generally move from regions of least labor opportunities.
Movement of labor and capital
Differences in the habits and tastes of the people, in their language and business customs, make the carrying of foreign trade a more complicated pursuit than domestic trade.
Nature of the market
Important bases of International Trade
(1) Difference in Environmental Conditions
(2) Stage of Economic Development
(3) Population Distribution
(4) Transportation and Communication Facilities
(5) Price Structure
As already indicated, no nation is self sufficient.
Difference in Environmental Conditions
Broadly speaking, countries, the world over may be classified as failing under two categories: the underdeveloped and the highly developed.
Stage of Economic Development
described as the poor countries
underdeveloped
frequently referred to as the rich countries
highly developed
The character as well as the density of population affect greatly the flow as well as the direction of international trade. Some countries which have relatively small populations like Australia and Canada are able to produce surplus goods in excess of the requirements of their people.
Population Distribution
In the days of ancient civilization, trade did not assume consideration importance because of the lack of surpluses and the lack adequate transportation facilities. Early trade was limited almost entirely to people near the great natural highways of the earth and to commodities of great value per unit of weight.
Transportation and Communication Facilities
If trade is legally free to move, it is because of the difference in money costs and and money prices of goods in different countries which determines their movement.
Price Structure
