Quick Summary
Diagram
Important Table
| Point | Meaning | Example / Use |
|---|---|---|
| Trade Surplus | Exports greater than imports | Positive BOT |
| Trade Deficit | Imports greater than exports | Negative BOT |
| Exports | Goods sold abroad | Foreign exchange inflow |
| Imports | Goods bought from abroad | Foreign exchange outflow |
Best 10 Marks Answer
Balance of Trade is an important topic in International Business Environment. It helps managers understand how global economic, political, legal, cultural and technological forces affect business decisions.
Balance of Trade is the difference between the value of a country’s exports and imports of goods during a given period.
In international business, this concept is useful because firms operate across countries where markets, laws, currencies, cultures and competition are different. A business must analyse these factors before entering a foreign market or expanding globally.
For example, a company planning to sell products in another country must study customer culture, exchange rate, trade barriers, legal rules, political stability and local competition.
Conclusion: Therefore, Balance of Trade helps businesses reduce risk, identify opportunities and make better global business decisions.
Tips and Tricks to Remember
- ✅ BOT covers goods only.
- ✅ BOP is wider than BOT.
- ✅ Use formula in answer.
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