BBB 4M UNIT 1 LESSON 3 READING: What is International Trade?

What Is International Trade? International trade encompasses all commercial transactions that occur between two or more countries. These transactions can be between private individuals, companies, or governments. Over the past few decades, international trade has grown drastically due to some of the factors discussed below.

  1. Rapid increase/expansion of technology
    In the last century, technology has changed dramatically. Not only has this resulted in more efficient production of goods, but also enables easier communication between trading partners. Several decades ago, the global market did not have fax machines or the Internet to facilitate trade and the modes of communication available were often cost-prohibitive.
  2. Liberalization of governmental policies
    Every country restricts the movement across its borders of goods and services and resources (workers and capital). As countries become more interdependent and realize the benefits of international trade, these policies are diminishing.
  3. Development of institutions to support international trade
    There has been a proliferation of businesses that support international trade. Global businesses need the support of international courier systems, efficient mail systems, domestic and international banks to receive payments and exchange various currencies, and so forth. Without these businesses, companies could not operate as efficiently as they do in today’s international market.
  4. Increased global competition
    New products quickly become known in the market. Think of all the items you buy (clothes, food, furniture etc.) and now think of where these products came from! It’s amazing how much competition exists in the global market. If companies want to build market share and profitability, they must also join the global arena.

Trade Barriers:

There are, however, some factors that have resulted in a reduction of free trade among countries. These are referred to as trade barriers, restrictions that reduce free trade among countries.

Trade barriers include:

  • Import taxes, which increase cost of foreign products
  • Quotas, which restrict the number of imports
  • Laws, which prevent certain products from coming into a country.
Assignment 1
Discussion

Do you feel that international trade has benefited you? How? Give examples. If you feel international trade has not benefited you, explain your view.

Discuss this issue with your teacher and classmates.

Assignment 2 – Go Big Or Go Home

You will research 2 companies within the same industry and compare/contrast them. Your final task is to write a memo to your boss suggesting either an expansion into a new market or a new international strategy. The choice is yours!

Task # 1: Find a Domestic Company

You are to think of a company that only operates within Canada.

You might think of a company that you know of already and research it to make sure their operations are within Canada. Write one paragraph describing the business you’ve chosen. (location, products/services sold, years of operation etc.)

Task # 2: Find an International Company

Now, choose an international company that is within the same industry as the domestic company you’ve chosen. This company must operate in several different geographical areas around the world. You may wish to go to their website for corporate information.

Write one paragraph describing this business. (areas of global operation, products/services sold, years of operation etc.)

Task # 3: Putting It All Together- Domestic Profile

You will research the domestic company and organize your findings. Feel free to use point form.

Task # 4: Putting It All Together- International Profile

You will now make a second table, similar to the task above, and input the information in point form.

Task # 5: Your Final Thoughts

You have a choice in your final task. You may choose option 1 or option 2. Hand in your memo along with your two research grids and two paragraphs summaries!

Domestic Company Memo:
Option 1

You work for the domestic company researched above. You are to write to your boss about either a) going international or b) staying domestic. Tell your boss in your memo why you feel the company should follow your particular strategy. If your strategy is to go international, realize that your boss may be reluctant. You will need to mention some of the risk items and address how you can minimize these risks. If your strategy is to remain a domestic operation make sure to include solid reasoning as to why you would pass up new markets.

International Company Memo:
Option 2

You work for the international company researched above. You are to write your boss about a new operational strategy that you have developed. You are to suggest a new geographical market and provide rationale to your boss as to why you feel this would be a good market to expand into. Address issues such as political risk, target markets, business contacts, ease of transportation, consumer tastes, market research etc….

Be as creative as you wish! You may need to go on the Internet to find information about the new market you have chosen.

1. Persuasive Memo Example

Your Name
Your Address
Your Town, Your State Zip Code/Postal Code
Memo
To: Name(s) of recipients
CC: Name(s) of people receiving carbon copies
From: Name of sender
Date: Month, day, year
Re: Need for New Memo Format
I've noticed we don't seem to be able to communicate important changes, requirements and progress reports throughout the company as effectively as we should. I propose developing one consistent memo format, recognizable by all staff as the official means of communicating company directives.

While I know this seems like a simple solution, I believe it will cut down on needless e-mail, improve universal communication and allow the staff to save necessary information for later referral. Please talk among yourselves to determine the proper points of memo writing and return the input to me by 12 p.m. on September 30. I will then send out a notice to the entire staff regarding the new memo format.

Thank you for your prompt attention to this matter.

GO BIG OR GO HOME MARKING RUBRIC

Categories / Level 1
(50 - 59%) / Level 2
(60 - 69%) / Level 3
(70 - 79%) / Level 4
(80 - 100%)
Knowledge/Understanding
Describes two company profiles. / describes two company profiles in limited detail / describes two company profiles in some detail / describes two company profiles in considerable detail / describes two company profiles in considerable detail
Thinking/Inquiry
Compares and contrasts two companies. / compares and contrasts two companies in limited detail / compares and contrasts two companies in some detail / compares and contrasts two companies in considerable detail / compares and contrasts two companies in extensive detail
Communication
Insert text here / demonstrates limited use of business communication techniques / demonstrates some use of business communication techniques / demonstrates considerable use of business communication techniques / demonstrates extensive use of business communication techniques
Application
Uses information technology to create a memo. / Uses information technology to create a memo. / Uses information technology to create a memo. / Uses information technology to create a memo. / uses information technology to create a memo that very appropriate