INTERNATIONAL BUSINESS AND TRADE

MIDTERM PERIOD
WHAT ARE THE OPPORTUNITIES IN
INTERNATIONAL BUSINESS?
International business also increases
competition in domestic markets and
introduces new opportunities to foreign markets.
Global competition encourages companies to
become more innovative and efficient in their
use of resources. For consumers, International
business introduces them to a variety of goods
and services.

HOW CAN INTERNATIONAL TRADE AFFECT

THE PHILIPPINE ECONOMY?
International trade though has also its own
disadvantages…it can lead to
over-specialization, for example, with workers
losing their jobs when world demand for their
product falls or when goods for domestic
consumption can be produced more cheaply
abroad.

HOW CAN I START TRADING BUSINESS IN

PHILIPPINES?
Basic requirements and procedure in
registering a sole proprietor business:
 1. Register a business name at Department
of Trade and Industry come-up with three(3)
business names such as….
2. Registration with Barangay…
3. Register your business in the Mayor’s
office
4. Register your business in the Bureau of
Internal Revenue (BIR)

TOP 9 PROBLEMS FACED BY

INTERNATIONAL MARKETING
⚫ Tariff barriers. Tariff barriers indicate taxes
and duties imposed on imports.
⚫ Administrative policies: advertisements: -
bureaucratic rules or administrative
procedures - both in guest countries and host
countries - make international (export
and/or import) marketing harder. Some
countries have too lengthy formalities that
exporters and importers have to clear.
⚫ Considerable diversities - different
countries have their own unique civilization
and culture. They pose special problems for
international marketers.
⚫ Political instability or environment -
political atmosphere in different courtiers
offer opportunities or pose challenges to
international marketers. Governments in
different nations have their priorities,
 philosophies and approaches to the
international trades.
⚫ Place constraints (Diverse Geography) -
trade in foreign countries of far distance itself
practically difficult. In case of perishable
products, it is a real challenge. Exporting and
importing products via sea route and making
arrangements for effective selling involves
more time as well risks.
⚫ Variations in Exchange Rates - every
nation has its currency that is to be
exchanged with currencies of other nations.
Currencies are traded every day and rates
are subjects to change.
⚫ Norms and ethics challenges - ethics
refers to moral principles, standards, and
norms of conduct governing individual and
firm’s behaviour. They are deeply reflected in
formal laws and regulations. In different parts
of the world, different codes of conduct are
specified that every international business
player has to observe. Corruption is another
issue relating to business ethics.
⚫ Terrorism and racism - terrorism is a global
issue, a worldwide problem. People of the
world are living under constant fear of
terrorists attracts anywhere in the world. To
trade internationally is not economically risky,
but there is the threat to life. Racism also
restricts international trade activities.
⚫ Other difficulties
Besides these problems, there are many
obstacles in international markets such as:
a. Changing ecological environment and
global warming
b. Difference in weathers and natural
climates
c. Inappropriate or inadequate role of
international agencies supporting and
regulating international trades.
d. Natural and man-made calamities
e. Difference in currencies, weights,
standards, measures, and marketing methods
f. Protectionist approach of some countries
g. Economic crisis across the globe

WHAT IS INTERNATIONAL BUSINESS

EXAMPLES?
Some such examples are
⚫ Amazon - international shipping made easy
through the Amazon Global program.
Amazon global ships millions of products to
over 100 countries.
⚫ Citigroup - citicorp contains two core
businesses, Global Consumer Banking and
Institutional Clients Group. Citi Branded
Cards is the world’s largest credit card
issuer.
⚫ Coca-cola company, etc - is an American
multinational beverage corporation
 headquartered in Atlanta, Georgia. The
Coca-Cola Company has interests in the
manufacturing, retailing and marketing of
nonalcoholic beverage concentrates and
syrups.
These companies have independent
operations in each country, and each country
has its own set of offices, employees, etc. In
fact, even the products and marketing
campaigns are customized as per local needs.

WHY SHOULD I STUDY INTERNATIONAL

BUSINESS?
In a nutshell, students need to develop a
global perspective in order to be successful in
business. Studying international business
allows you to see how globalization has
brought about an increasing “connectedness”
of businesses, markets, people and information
across countries.

HOW DO INTERNATIONAL
ORGANIZATIONS HELP OUR COUNTRY
ECONOMY?
Their functions include maintaining
standards to ensure safety, helping developing
countries achieve economic security, and
establishing norms regarding how countries
make trade agreements and resolve conflicts.
WHAT ARE THE EFFECTS OF
MULTINATIONAL CORPORATIONS IN THE
PHILIPPINES ECONOMY?
Western businesses with Philippine offices
may have a huge competitive advantage over
their non-remote office peers. The available tax
cuts, rewards, and numerous other benefits
offered by the Philippine government make
establishing an overseas office easier than
ever.

WHAT ARE THE FOUR MAIN TYPES OF

INTERNATIONAL BUSINESS STRATEGY?
The two dimensions result in four basic
global business strategies:
1. Export - are explained as the goods and
services manufactured in one country and
acquired by citizens of another country. The
export of god and service can be anything. This
trade can be done through shipping, e-mail,
transmitted in private luggage on a plane.
2. Standardization - the goal of
standardization is to ensure uniformity to
certain practices within the industry.
Standardization focuses on the product
creation process, operations of businesses,
technology in use, and how specific
compulsory process are instituted or carried
out.
 3. Multi-domestic strategy- is a strategy by
which companies try to achieve maximum local
responsiveness by customizing both their
product offering and marketing strategy to
match different national conditions.
4. Transnational strategy - is a set of
planned actions defined by a company to have
operations in markets abroad. This term
generally applies to the method and structures
that allow a firm to initiate and maintain
functions in foreign countries while preserving
central coordination at one specific location.
International business strategies must
balance local responsiveness and global
integration.

4 TYPES OF INTERNATIONAL BUSINESS

⚫ EXPORTING: exporting is often the first
choice when manufacturers decide to
expand abroad.
⚫ LICENSING: licensing is another way to
expand one’s operations internationally.
⚫ FRANCHISING: advertisements - a
franchise is a type of license that grants a
franchisee access to a franchisor’s
proprietary business knowledge, processes
and trademarks, thus allowing the franchisee
to sell a product or service under the
franchisor’s business name.
⚫ FOREIGN DIRECT INVESTMENT (FDI)- is
an investment if the form of a controlling
ownership in a business in one country by an
entity based in another country. It is thus
distinguished from a foreign portfolio
investment by a notion of direct control.

WHAT ARE THE 3 FORMS OF BUSINESS?

1. SOLE PROPRIETORSHIP - is an
unincorporated business with only one
owner who pays personal income tax on
profits earned. Sole proprietorship are easy
to establish and dismantle, due to a lack of
government involvement, making them
popular with small business owners and
contractors.
Therefore, the owner’s equity section of
the balance sheet includes only one
items-the equity of the owner. However, the
owner’s equity can be broken down into
three accounts to record different types of
equity transactions.
⚫ Retained earnings - represents the
accumulation of net income earned over the
business’ existence.
⚫ Owner’s Contributions - used to record the
capital contributions made by the owner.
⚫ Owner’s Draws - used to record the capital
withdrawals made by the owner.
2. PARTNERSHIP - a legal form of business
operation between two or more individuals
who share management and profits. The
federal government recognizes several types
of partnerships. In a general partnership, the
partners manage the company and assume
responsibility for the partnership’s debts and
other obligations.
Accountants use the term partners’ equity
instead of owners’ equity and usually lists
separately the amount of each partner’s
equity in the business. Similar to the sole
proprietorship, the partner’s equity can also
be broken down into three accounts, for each
partner, to record different types of equity
transactions:
Partner 1 equity:
⚫ Partner 1 retained earnings
⚫ Partner 1 contributions
⚫ Partner 1 draws
Partner 2 equity:
⚫ Partner 2 retained earnings
⚫ Partner 2 contributions
⚫ Partner 2 draws
Total Partners’ equity
⚫ Partners’ retained earnings
⚫ Partners’ contributions
⚫ Partners’ draws
3. CORPORATION - sometimes called a C
corp, is a legal entity that’s separate from its
owners. Corporations can make a profit, be
taxed, and can be held legally liable.
Corporations offer the strongest protection to
its owners from personal liability, but the cost
to form a corporation is higher than other
structures.
In the case of large corporations, this
clearly would be impractical because these
businesses may have several million
individual stockholders (owners). owners
equity (also refereed to as stockholders’
equity or shareholders’ equity) is presented
in two amounts.

OWNERS’ EQUITY:
⚫ Capital stock - represents the amount that the
stockholders originally invested in the business in
exchange from shares of the company’s stock.
⚫ Retained earnings - the balance represents the total net
income of the corporation over the entire lifetime of the
business, less all of the dividends ti its stockholders (a
dividend is a distribution of profits to stockholders). in
short, retained earnings represents the earnings that
had been retained by the corporation to finance growth.
Your business structure affects how much you pay in
taxes, your ability to raise money, the paperwork you
need to file, and your personal liability. You need to
choose a business structure before you register your
business with the state. Most businesses will also need
to get a tax ID number and file for the appropriate
licenses and permits.