International Trade

1. What is International Trade?

The exchange of goods and services between countries.

2. What are exports?

Goods or services sold to another country.
Example: UK selling cars to the US.

3. What are imports?

Goods or services bought from another country.
Example: UK businesses buying raw materials from China.

4. What is the Balance of Payments (BoP)?

Exports minus imports, measuring a country’s trade position.

5. Why do countries engage in international trade?

To access more goods, services, resources, and markets while spreading risk.

6. What is specialisation in trade?

Countries focus on producing goods efficiently, benefiting from economies of scale.

7. How does international trade reduce seasonality?

Selling products globally ensures year-round demand.
Example: Selling summer products in Australia during UK’s winter.

8. What is free trade?

Trade with no government restrictions (e.g., tariffs, quotas).

9. What is protectionism?

Government actions that restrict trade to protect domestic industries.

10. What are tariffs?

Taxes on imports to make foreign goods more expensive.
Example: US tariffs on Chinese EVs.

11. What are quotas?

Limits on import volumes to protect local businesses.
Example: Thailand’s corn import quota on China (54,440 tonnes).

12. How does government legislation affect trade?

Strict laws or regulations can discourage imports.
Example: EU health regulations affecting non-EU exporters.

13. What are domestic subsidies?

Government payments to local businesses to reduce costs.
Example: EU farming subsidies.

14. What are embargoes?

Total bans on specific imports/exports (often political).
Example: UK embargo on Syrian oil.

15. What is a trading bloc?

A group of countries that trade freely while restricting non-members.
Example: EU, NAFTA.

16. What is a preferential trade area (PTA)?

Lower tariffs on selected goods between member countries.

17. What is a free trade area (FTA)?

No tariffs between members, but each country sets its own external tariffs.

18. What is a customs union?

Free trade between members + common external tariffs.

19. What is a common market?

Free trade + movement of labour and capital between countries.

20. What is an economic union?

A common market with shared economic policies.

21. What are the benefits of trading blocs?

✅ Increased trade & economies of scale
✅ Easier access to labour & resources
✅ Favourable tax & labour cost differences

22. What are the drawbacks of trading blocs?

❌ Reduces trade with non-members
❌ Some members have less influence
❌ Can harm domestic industries

23. What are cultural differences in trade?

Different countries have unique preferences and customs.
Example: McDonald’s removing beef from menus in India.

24. What are language barriers in trade?

Poor translation can harm marketing.
Example: HSBC’s slogan “Assume Nothing” translated as “Do Nothing.”

25. What is an unintended meaning in marketing?

A business message misinterpreted due to cultural differences.
Example: Coca-Cola’s name in China initially meant “Bite the Wax Tadpole.”

26. What is inaccurate translation in marketing?

A miswritten slogan that confuses consumers.
Example: Ford’s Belgian slogan: “Every car has a high-quality corpse.”

27. What is inappropriate branding & promotion?

Ignoring cultural sensitivities can harm a brand.
Example: Pepsi’s China ad promised to “Bring Ancestors Back from the Dead.”

28. What is Ansoff’s Matrix?

A model for business growth strategies.

29. What is market penetration?

Selling existing products in existing markets.

30. What is product development?

Creating new products for existing markets.

31. What is market development?

Expanding existing products into new international markets.

32. What is diversification?

Selling new products in new markets (most risk).

33. How did Starbucks expand into China?

Adapted to cultural preferences by introducing tea-based drinks.

34. Why does international trade matter?

✅ Drives economic growth
✅ Improves resource & technology access
✅ Creates new jobs & market opportunities
✅ Strengthens global relationships

35. What are the risks of international trade?

❌ Trade imbalances & job losses
❌ Cultural & language barriers
❌ Protectionist policies limiting free trade