Quick Summary
Diagram
Important Table
| Point | Meaning | Example / Use |
|---|---|---|
| Mercantilism | Export more than import | Wealth accumulation |
| Absolute Advantage | Produce at lower absolute cost | Adam Smith |
| Comparative Advantage | Lower opportunity cost | David Ricardo |
| Heckscher-Ohlin Theory | Trade based on factor endowment | Labour/capital abundance |
| Porter Diamond | National competitive advantage | Innovation and clusters |
Best 10 Marks Answer
International Trade Theories is an important topic in International Business Environment. It helps managers understand how global economic, political, legal, cultural and technological forces affect business decisions.
International trade theories explain why countries trade with each other and how they benefit from specialisation and exchange.
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, International Trade Theories helps businesses reduce risk, identify opportunities and make better global business decisions.
Tips and Tricks to Remember
- ✅ Mention theorist names where possible.
- ✅ Comparative advantage is most important.
- ✅ Use table format in long answers.
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