❖ Scope of International Business
|Component of international business||Meaning|
|Merchandise exports and imports||Trade in tangible commodities|
|Service exports and imports (invisible trade)||Trade in intangible commodities|
|Licensing and franchising||Allowing a foreign company to produce and sell goods using the logos and trademarks of the domestic company in return for a fee|
|Foreign investment||Investments that are made outside a country with the objective of earning returns|
❖ International Trade
ii. International trade involves payment being made and received in terms of foreign currency.
iii. It is usually a time-consuming process because of such factors as wide geographical distances, procedural formalities and barriers to trade.
iv. A large set of legal formalities and restrictions, such as import licence and export clearance, must be completed before international trade can begin.
v. International trade is exposed to various types of risks, such as risk of loss of goods during transit, fluctuations in prices of goods and fluctuations in the exchange rate.
❖ Differences between International Trade and International Business
|Points of difference||International trade||International business|
|Definition||Refers to only the exchange of goods and services across the international boundaries of coun…|
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