International Trade

Question 1

What is international trade?

Answer 1

It relates to the process of a business or country buying and selling products to and from other countries. (Importing and exporting)

Question 2

Advantages of international trade

Answer 2

1. Growth - expanding to new international markets allows businesses to grow more easily and quickly , either providing them with cheaper materials or access to more customers.
2. Increasing sales and profits - having access to cheaper materials or a larger amount of potential customers is likely to increase the chance of business making more sales and profits

Question 3

Disadvantages of international trade

Answer 3

1. Cultural barriers - it’s very important that businesses have a good understanding of different cultures when undertaking international trade.
2. Local taxes - each country has its own taxes and tax rates. Businesses operating in an international environment must pay each of these taxes.
3. Increased competition and a wider market to deal with

Question 4

How the marketing mix would be affected by international trade

Answer 4

Product - changes in the plug, units of measurement may differ, change in legal, traditional and cultural requirements.
Price - needs to reflect what the foreign market can pay, cover tax, transport costs, exchange rates.
Place - transport to move the goods, secure packaging, some countries shops close for temperature.
Promotion - advertising must be global, appropriate language and cultural differences.