1. Module: BHS 0003 - International Business
Term 1 Lecture 1
Tutor: Dr. Kalim Siddiqui
Room: BS2/03
e-mail: k.u.siddiqui@hud.ac.uk
Learning Outcomes:
Study Pack – Reading List
Access to unilearn
Scheme of work
Course Assessment, Module Specs.
Survey of the material to be covered
Classical Trade theories

2. • Module Code BHS 0004
• MODULE TITLE International and Pacific Asian Business
• Module Leader Dr. Kalim Siddiqui
• Module Scheme HUBS Undergraduate Scheme
• School involved in delivery Huddersfield University Business School
• Name of Pathway (s) BABS Part time & 33.24 pathways
• Module Status Transferable
• Module Type Optional
• Module Rating Honours 20 credits
• Learning Methods Lectures: 24 hours
• Tutorials: 24 hours
• Self directed study 152 hours
• Pre-requisites BFE116 : Introduction to Economics
• Recommended Prior Study None
• Co-requisites None
• Professional Body Requirements None
• Barred Combinations International and Pacific Asian Business
• Module Aims
• To develop the students’ understanding of the developments in International Business which
have led to international specialisation and the growth of international firms.
• To increase the students’ awareness of the international context within which international
companies operate and to appreciate the impact of foreign direct investment on the
international economy.
• Module Synopsis
• The module develops the economics of trade and location, examines the growth of multinational
corporations, and considers methods of market entry.
• The module considers the significance of the international environment for international
business and the responses to and impact on that environment by international firms.

3. • Outline Syllabus
• The foundations of international business and trade, Theories of trade and location,
Models of trade and location, Barriers to trade and an introduction to customs
Unions, The international company and internalisation, Models of international
company strategy, Methods of international market entry: Exporting, licensing, joint
ventures and foreign direct investment, The structure of the world economy,
classifying countries
• National business environments, opportunities for and impact of international
business, Developments in the international trading environment, the impact of
protection, the importance of G.A.T.T and the W.T.O., the impact of trading blocs, the
response of international business, The international financial environment and its
implications for international business: the determination of exchange rates, currency
areas, European monetary union
• Learning Outcomes
• Knowledge and Understanding
• On completion of the module the students will be able to demonstrate understanding
of:
• The importance of international trade and location
• The main theories which explain international trade and the nature of international
specialisation
• Generic international business strategies
• The nature and significance of the international environment for international
business
• The impact of international business on the international environment
• Potential conflicts between international businesses and national governments and
the role of international institutions

4. Ability
On completion of the module the student will be able to:
Compare and analyse international competitive environments
Interpret, evaluate and apply appropriate theories
Propose and defend international business strategies and methods of entry, based upon
analysis of the environment and the firm specific advantages of the company
Assessment Strategy
Evidence
By coursework and exam the weighting will be:
Coursework (2,500-3000 words) 50%
Open book examination (2 hours) 50%
Learning Strategy
Lectures will be used to provide basic information. Tutorials will be used to extend
student knowledge of theory and its relation to practice. Case studies will be used where
appropriate to facilitate understanding.
Indicative References
Hill, C., International Business (2nd Ed) McGraw Hill 2001
Grimwade, N., International Trade (2nd Ed) Routledge 2001
Daniels, J D, Et al, International Business: Environments and Operations (9th Ed)
Prentice Hall 2000
Meier, G M., The International Environments of Business, Oxford 1998

5. • Course Structure
• 1 Lecture per week and
• 1 Tutorial per week (review questions and case
studies)
• Assessment –
– 1 assignment 2500 words and also
– 2 hours Exam based on term 2 materials

6. • Why International business is different?
• International business differs from domestic business
in that a firm operating across borders must deal with
the forces of three kinds of environment:
– Domestic
– Foreign &
– International
• Forces in the environments:
• All the forces surrounding and influencing the life and
development of the firm.
• Uncontrollable forces:
• External forces over which management has no direct
control, although it can exert an influence

7. • International business is the conducting of business activities
that involve the transfer of resources, goods, services,
knowledge, skills or information across national boundaries.
• International business is more complex than domestic business
owing to differences in environments & operational requirement
• If an international business is not run effectively, the benefit of
doing business internationally may turn into a drawback
because of the costs & difficulties of managing activities in
multiple locations.
• Firms activities & exchanges that involve the crossing of
national boundaries are called international transactions.
• International trade occur when a company export & import
to/from other country.
• International investment occurs when the company invest
resources in business outside home country.

8. • International trade:
• Intention is to provide an overview of current thinking
about international trade.
• Why do countries engage in trade?
• What benefits does trade bring to countries?
• What product will a country exports and import?
• What determines the products in which a country
specialises?
• We will identify some of theories which economists
have developed in an attempt to answer these
questions.
• Firms engage in foreign markets because it is
profitable to do so.

9. • Why do nations trade?
• This question is important proposition of
predicting the direction, composition and
volume of goods traded.
• International trade theory attempt to address.
• The period leading up to industrial revolution,
international trade was largely conducted under
the authority of the governments.
• The goals of trade were, therefore, the goals of
government.
• As early as in the 15th century the benefits of
trade were clearly established in Europe.
• As nation state expanded their influence across
the globe in the creation of colonial system.

10. • To maintain and expand European control over
colonies, the European governments needed large
armies, fleets and huge military spending.
• Trade was seen quick way to make huge profit
needed for the expanding armies.
• Colonialism associated with the exploitation of
occupied people.
• Colonialism also later on provided the supply of raw
materials needed for new industries in Europe.
• For example, Once India became British colony, only
after that India was forced to become supplier of raw
cotton for newly growing textile industries in
Lancashire &also
• Colonies became market for British manufactured
goods, which was essential component for the
successful development of modern industries in UK

11. • Trade is the voluntary exchange of goods/services
between organizations and countries.
• Parties must believe they will gain from the exchange.
• International trade has important direct & indirect
effects on national economies.
– exports spark additional economic activity in the domestic
economy (creates jobs, income etc.)
– imports can pressure domestic suppliers to cut their prices
and improve their quality.
– Failure to respond to foreign competition may lead to shut-
down companies & job losses
– important to consumers, businesses, workers and scholars,
who have attempted to develop theories to design policies
they hope to benefit their countries.

12. Classical Trade Theories –
• The first theories of international trade developed
with the rise of European nations in the 16 th Century.
• Mercantilism – it is a 16th century economic ideas that
maintains that a country’s wealth measured by its
holdings of gold & silver.
• Mercantilists argue that a country’s goal should be to
enlarge holdings of gold and silver.
• It was popular with manufacturer. They were given
export subsidies.

13. • However, subsidies are paid by tax payers.
• Government import restrictions hurt consumers in the
form of higher prices.
• During the age of colonization, burden of
mercantilism were often shifted onto their colonies.
• Great Britain’s mercantilists policy was a major contributor to
the political unrest in its North American colonies in 1770s.
• Merchants in the colonies resented British tax and
regulations that hindered the growth of American firms &
protected British industries.
• Boston tea party and similar incidents led to arm conflict and
ultimately to independence of American colonies.

14. • Mercantilism –
• Mercantilists ideas were developed during the 15 th -16th
century, they argued that a country wealth is
measured by the holdings of precious metals such as
gold and silver.
• They said that a country’s goal should be to enlarge
these holdings by promoting exports and discouraging
imports.
• These ideas were practised by the European
governments in the 16th century.
• The logic was if foreigners buy more goods and pay in
gold then the difference may enable you to amass
more treasure.
• Mercantilism – an economic ideas based on belief that
a nation’s wealth depends on accumulated treasure
(e.g. gold).

15. • Mercantilists say that country should export
more and import less.
• These trade theories were formed 1500-1800
• Mercantilism holds that a government can
improve the economic well being of the
country by encouraging exports and stifling
imports.
• The result is a positive balance of trade that
leads to wealth (gold) flowing into the country.
• For instance, a country suffered as
“unfavourable” balance of trade – that is, its
exports were less than its imports

16. • By hoarding to gold and silver means,
according to Mercantilists, the kings could
afford to hire large armies and increase military
spending to fight other countries there by
expand their territories.
• Mercantilists ideas were popular and. The
export-oriented industries favoured such trade
policies.
• Domestic firms threatened by foreign imports
endorsed mercantilists trade policies such as
imposing import tariff or quotas.

17. • Business owners, workers, suppliers and local
politicians all supported and were benefited by
such promotion of export policies.
• For example, under the Navigation Act of
1660 all European goods imported by the
American colonies had to be shipped from
Great Britain.
• The British government prohibited colonial
firms from exporting certain goods that might
compete with those from British factories such
as iron goods, finished woolen goods.

18. • British government also ensured the supplies
of raw materials at low prices for their
producers.
• The British admin forced colonial industries to
sell their output only to British firms. These
outputs were rice, tobacco, forests products.
• Mercantilist policies ultimately backfired – it
contributed to the grievances that led to the
overthrow British colonial rule in North
American colonies.