ASSESSMENT NO. 1: ANALYSING AND REPORT WRITING OBJECTIVES: To assess student's ability to understand the basic TERMINOLOGY in international economics. Topic:- International Trade

International Trade 1.0 Introduction International trade is the sale and purchase of goods and services by companies from different countries. If someone is able to buy an Apple iPhone in Germany or a Toyota car in Spain then it is the impact of international trade. Internal trade allows companies to expand in different countries and increase competition. Without international trade, a customer would have to only use products that are made by the companies from that particular country only. It would have lessened the competition and given a scope for the companies to be complacent. A competitive market creates more competitive pricing for the products which allows more consumers to buy them, thus, creating a greater economy (Sunhilde & Tripa, 2018). International trade provides a variety of advantages for businesses. 2.0 Main Body In the beginning, understanding why countries trade is important. There must be some reasons. The biggest reason of international trade is comparative advantage. According to the theory of comparative advantage, two trading countries can mutually benefit from trading with each other. Here, companies need to understand what they are better at producing domestically and what costs them less. Based on that, they will produce a product that costs less to produce. The other product that the other foreign company is good at will be traded in. By doing this, the company can focus on only producing the product or service where they have a comparative advantage (Maqbool et al., 2021). As a result, both the companies will have access to both the products at a lower cost. For example, if Apple Inc. thinks that they can get good and cheaper smartphone displays from Korea based company Samsung, they will trade them and use them in their smartphones instead of producing their own displays at a higher cost. This gives Apple a comparative advantage of keeping their smartphone prices down while trading smartphone displays from another country. Apart from comparative advantage, there are many advantages of international trade. When a company decides to trade with foreign countries they tend to focus more on the use of natural resources from their own country so that they can produce products at a cheaper cost which will give them foreign currency. With the use of natural resources of their own country the overall economic situation of the country can be improved (Algieri et al., 2022). International trade will allow different countries to have access to different types of products and services from other countries. This way the customers will be benefited the most. These customers can get access to foreign products at a cheaper cost and probably with a better quality. Another huge advantage of international trade is that it helps to improve international relations between the companies and the countries they are trading in. Doing business in each other's country will improve the communication between the two countries which helps them to maintain a strong relationship with each other (Martinuzzi, 2018). International trade opens up a huge opportunity for any company to do business in a huge foreign market. Not only customers, but the new market will also provide new clients to the company. If a company can grasp a foreign market then its revenue will increase drastically. These increased revenues will enable more cash flow and will eventually lay them a scope to produce products at a cheaper cost. This cycle is continuous and it will help the country to improve its economy (Rashid et al. 2022). Studies have also proven that doing business in foreign countries can result in substantial growth for any company. International trade also provides the opportunity to benefit from currency exchange. By doing business in a weaker economy, companies can have a better return on their value. Currency fluctuation is a very complex matter but the companies that can gain from it become very profitable. An obvious benefit of international trade is that it allows a company to have international exposure. If they can maintain their quality, their products can be considered reputed. This enhanced reputation helps the company to scatter in more countries and make more profit (Algieri et al., 2022). A strong base in one country will also allow them to grow in adjacent countries without doing much. More international exposure means a larger potential customer base. By expanding in more countries will increase the chances of any businesses to have more opportunities to have or build a loyal customer base. The importance of a loyal customer base in today's businesses is second to none. Another huge advantage of international trade is that it can open up new markets where there is enough demand for the product but not a lot of competition (Bellino & Fratini, 2019). For example, America is a crowded market for electric cars with so many competitors fighting for it. If Tesla or Audi decides to enter the Indian market where there is a sheer lack of competition may result in success if they find enough demand. This decreased competition will give the company some respite from its highly competitive market in the United States of America. 3.0 Conclusion Thus, from the above discussion, it is evident that international trade can have a number of benefits for any organizations that are involved in it. In the process of doing international business, the countries involved in the trade also experience a boost in the economy. Therefore, the advantages are wide-ranging and cover multiple parties. Even though there are certain risks such as intellectual property risk, foreign exchange risk, ethical risks, and shipping risks exist, the advantages outweigh the risks with ease. In today's businesses, international trade plays a significant role. It is almost impossible to find any successful company that is not into international trade. The introduction of international trade has opened up a variety of opportunities for all types of and all sizes of companies. The World Trade Organization or WTO needs to ensure that the policy of free and fair trade remains intact even in the forthcoming future. References Algieri, B., Aquino, A., & Succurro, M. (2022). Trade Specialisation and Changing Patterns of Comparative Advantages in Manufactured Goods. Italian Economic Journal, 1-61. Bellino, E., & Fratini, S. M. (2019). Absolute Advantages and Capital Mobility in International Trade Theory. Centro Sraffa Working Papers, 39. Maqbool, M. S., Bashir, F., ur Rehman, H., & Ahmad, R. (2021). Revealed Comparative Advantages and Exports Competitiveness of ASEAN-5 Countries in the Global Market. Review of Economics and Development Studies, 7(2), 267-276. Martinuzzi, B. (2018, March 21). What Are the Advantages of International Trade? Business Class: Trends and Insights | American Express. Rashid, R. N., Maqbool, S., Shafiq, A., & Afzal, M. (2022). Revealed Comparative Advantages in the Services Trade of Pakistan: What do they tell us?. Pakistan Journal of Humanities and Social Sciences, 10(2), 695-701. Sunhilde, C. U. C., & Tripa, S. (2018). The Evaluation of Balkan Countries Clothing Trade With EU-28 Based on The Analysis of Comparative Advantages Indices. Textile and Apparel, 28(3), 178-181.