Why one should study international business | The Institute of Cost ...

Why one should study international business:

A country trades with other countries for various reasons. A country is not endowed with all types of resources. Hence, it cannot produce all commodities that it needs. It exports those commodities, which it can produce, and imports those it cannot.?

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1 Territorial specialization: Foreign trade arises for regional specialization. A country can produce those commodities at a lower cost for which it has certain specific advantages. It specializes in the production of those goods. It exports these commodities. It imports those for the production of which it has no specific advantages and so cannot produce at a low cost.

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2 Comparative cost: Foreign trade arises for comparative cost advantage of producing certain commodities in different countries of the world. A country exports those commodities for which it has comparative cost advantage and imports those for which it has not.

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Why one should study international business

3Availability of resources: A country is not endowed with all types of resources. It exports those resources, which are available in surplus quantity in the country, and imports those, which it has not.

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4 Foreign exchange: Foreign exchange means foreign money. A country gets foreign exchange by exporting and spends up foreign money by importing. Bangladesh need foreign exchange badly for it requires importing capital goods, technical know etc for industrial development. That it why, it takes exports promotion measures for earning more and more foreign exchange.

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5 Price difference: Price differences between different countries cause foreign trade. Where the price of product is high businessman tried to export there.

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6 State of Industrial Development: Many developing countries where industries have not been developed much find no other way but to import machinery, machine parts, technical know-how etc. from the industrially developed countries. These imports are required for their industrial development

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7 Extension of Export Market: Many countries of the world want to extend and explore export market for earning more and more foreign exchange. Bangladesh needs foreign exchange. So it provides export promotion measures to extend and explore market for earning more foreign exchange.

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8 Immobility of Factors of production: Factors of production like skilled labor, capital, technical know-how etc. cannot move from one country to another freely. Free entry of these factors to different countries is not allowed. Therefore, the countries particularly developing countries have to import these factors from the developed countries.?

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9 Reciprocal Assistance: Countries assist each other for industrial development. U.S.A., U.K., Germany, Japan etc. help India for its industrial development by exporting capital, know-how etc. to India. Similarly, India assist Vietnam, Bangladesh, Iran etc, for there industrial development.

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10 Invisible items of trade: Invisible items of foreign trade are transport, banking, insurance-services, and services of skilled labor etc. Countries requiring these services have to import them from the foreign countries.

Source: http://icmab.net/why-one-should-study-international-business/

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