4.1.2 International Trade and Business Growth

• What does international trade involve?

  Exchange across borders
• Selling domestic products abroad is called export
• The trade balance measures the difference between a country's exports and imports.
• What is one key benefit of international trade for businesses?

  Market expansion
• Producing goods in large quantities for multiple markets allows economies of scale
• Diversification in international trade reduces risk by spreading sales across different regions.
• Match the business benefit with its example:

  Market expansion ↔️ Clothing company selling in Asia

  Increased efficiency ↔️ Car manufacturer producing for multiple markets

  Diversification ↔️ Agricultural business exporting crops

  Access to resources ↔️ Importing minerals from Africa
• Steps for a clothing company to expand into Asia through international trade:

  1️⃣ Conduct market research

  2️⃣ Identify target markets

  3️⃣ Develop a market entry strategy

  4️⃣ Establish distribution channels

  5️⃣ Promote products in Asia
• What happens to revenue if the USD/EUR exchange rate improves from 0.8 to 0.9 when exporting from the U.S. to Europe?

  Revenue increases
• A trade surplus occurs when a country's exports exceed its imports.
• Foreign exchange is the mechanism for converting currencies
• Which country is an example of exporting cars to China in international trade?

  Germany
• A trade deficit indicates that a country's imports are greater than its exports.
• Converting U.S. dollars to Euros facilitates transactions between the U.S. and Europe
• Match the benefit of international trade with its example:

  Market expansion ↔️ Clothing company selling in Asia

  Increased efficiency ↔️ Car manufacturer producing for multiple markets

  Diversification ↔️ Agricultural business exporting crops

  Foreign exchange gains ↔️ Favorable USD/EUR rate
• Steps for a business to reduce risk through international trade diversification:

  1️⃣ Identify multiple target markets

  2️⃣ Adapt products to each market

  3️⃣ Establish sales channels

  4️⃣ Spread marketing efforts

  5️⃣ Monitor market trends
• How does international trade contribute to competitive advantage for businesses?

  Unique product features
• Profits from favorable currency fluctuations are called foreign exchange gains.
• What is an example of a business expanding into a foreign market through international trade?

  Clothing company in Asia
• Mass production for multiple countries leads to economies of scale
• Match the benefit of international trade with its impact on business growth:

  Market expansion ↔️ Increases sales and customer base

  Increased efficiency ↔️ Reduces average production costs

  Diversification ↔️ Mitigates market-specific risks

  Competitive advantage ↔️ Enhances market position
• Offering superior products or services in foreign markets allows businesses to gain a competitive edge.
• What does international trade lead to in terms of production costs?

  Economies of scale
• Diversification in international trade reduces risks associated with market-specific economic downturns
• What does international trade provide access to that may not be available locally?

  Raw materials, labor, technology
• Offering superior products in foreign markets allows businesses to gain a competitive advantage.
• Favorable currency fluctuations can boost revenues when exporting goods
• What is an example of market expansion in international trade?

  Clothing company extends reach to Asia
• Unique product features can enhance a business's competitive advantage
• Order the economic factors affecting international trade:

  1️⃣ GDP and per capita income

  2️⃣ Exchange rates

  3️⃣ Tariffs and quotas

  4️⃣ Trade agreements
• International trade is influenced by economic, political, cultural, and legal factors.
• Exchange rates impact the pricing and competitiveness of international trade
• What do intellectual property rights protect in international trade?

  Brands and inventions
• International trade involves the exchange of goods and services across national borders.
• Import refers to buying goods and services from other countries
• What does the trade balance measure in international trade?

  Difference between exports and imports
• International trade reduces production costs through economies of scale
• Access to resources through international trade can include raw materials and technology not available locally.
• How does international trade enhance a business's competitive advantage?

  By tailoring products to foreign preferences
• What is one way international trade lowers production costs?

  Economies of scale