Different Theories: International Business

1. Explain further the term “Balance of Trade” in the theory of Mercantilism.

The balance of trade in the theory of mercantilism is favorable for the economy of each and every country because the outflows of goods balances its inflow in a certain country. One country must have more export than its’s imports. It should be a supplier of raw materials or other manufactured products to different countries. The more exports a country made the more income and better economy it will incur. This means that the more exports it made the more jobs it will create for the people of a country and more countries will become its ally. It is will be balance if the imports are lesser. Importation means that a specific country will buy products from other countries. It is normal for a country that it will decide not to spend a lot of money just to have a little benefit. And of course it is better to support its own local products than to import from other country. So in mercantilism the balance of trade is very important for each and every country in order to have a more favorable economy.

2. Why is it that Ricardo views that exporting countries should create the products and services to the most efficient manner?

Exporting means sending or selling of goods or services from a home country to another country in exchange of money. So Ricardo views that exporting countries should create products and services to the most efficient manner because it will eventually create a win-win situation for both the exporting importing countries. The products or services should be made efficiently meaning waste of raw materials, human effort, money or time is a big no. The inputs should be processed or handled effectively by the people of exporting country, they should be focused and manage their time the best they could. They should act professional and there should be an increase of production so that the more product they will made the more income an exporting country may incur and this will have a positive income to its economy. And of course if the products are made efficiently that outputs should be handled with care and have the best quality they can offer to the importing country.

3. In Human Capital Approach, they specified the importance of human resource in IBT, Why?

In doing a business, man power is one of the top most priority because without human resource a business will not foster or continue. So especially in the international business and trade human resource is very important because without them there will be no products that will be exchanged internationally. Remember that not all countries are advanced and human made products are still one of the higher source of supplies all over the world. Human power cannot only use in the development or processing of product but also in exchanging ideas or concepts in the international business and trade. The heads of this human power sometimes are the ones who deals with the clients or other traders. Skilled or unskilled laborers are very important. So the human capital approach focuses on the human labor.

4. What might be the implication of knowing the IPLC in IBT?

Because of knowing the international product life cycle theory in the international business and trade it will somehow modernize the trades in between the nations around the globe. The products or exchange are innovated and be modernized that will be offered not only in the country of its origin but also to other countries who wanted to try such products. For example, these days there are different gadgets or other products that being exported and imported in different countries. Honestly people or consumers are fun of new trend products and this means that more supplies will be made because there will be more demand. IPLC will make the IBT stronger, it will further connect the world and the alliance of the countries will have a wider horizon.