International Trade - is the exchange of capital, goods and services across the borders of different countries.

Benefits:

• Variety - allows them to obtain products they cant make themselves
• Economic efficiency - Can enable a business to gain economies of scale when they expand into new markets.
• Growth - Access to lots more potential customers
• International Cooperation - Leads to less conflict between countries as they are dependent on each other
• Specialisation - A country can just stick to doing what they are best at.

Some countries though don't want to trade internationally, these countries put up trade barriers to limit trade to them.

Reasons:

• Foreign competition can lead to unemployment if domestic market is undercut
• To protect homegrown businesses that rent ready to compete on global market yet
• When a country runs a large balance of payments deficit

Free trade - trade without tariffs or quotas imposed on products.

Tariffs - a tax on imports or exports between countries.

Quotas - a restriction on the amount of goods a country can export or import

Trading bloc - a group of countries within a particular geographic region that protect themselves from imports from non-members (EU).

Types of Trading Blocs:

• A free trade area - this is one which two or more countries agree to reduce barriers to trade on all goods being traded between each other
• A customs Union - A common external tariff against goods imported from outside the bloc
• Common Market - All members tradeall resources freely, not just goods. Meaning barriers to trade goods, services , capital and labour are reduced.

Benefits:

• Access to a potential market of hundreds of millions of people
• Selling in another country can increase a businesses stability
• Access to raw materials and components at lower costs
• Access to capital from foriegn investors
• The potential for economies of scale

Disadvantages:

• Membership can hinder trade with countries outside of the bloc
• Domestic companies can be taken over by foriegn investors easier
• The scale of competition increase
• Block members have to abide by any laws the bloc establishes.

Factors that businesses have to consider when expanding abraoad:

• Language
• Culture
• Customs
• Logistics
• Currency
• Buying habits

Exchange rate - The value of the pound in terms of another currency

Foreign Exchange market - The market for currency, which is not in a single location but exists globally whenever buyers and sellers deal.