Essay
Unit 39 P2
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Essay of 4 pages for the course Unit 39 - International Business at PEARSON (Unit 39 P2)
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IntroductionIn this task I am going to discuss the mechanisms that regulate international trade within my
selected company. The company that I will be referring to is Tesco.
International trade refers to the process of exchanging capital, goods and services across
international borders. The purpose of international trade is to allow a country or certain
nations to specialise. This would allow companies to produce products at lower prices and
they are usually of a good quality. For example, China produces a great number of goods that
the United States consumes. They are able to mass-produce these products better than the
United States will.
International trade is something to be encouraged because it allows people to experience new
goods and allows different services to be brought over to the current area. By this I mean that
it enables us to expand our markets with goods and services. Through international trade
there is a lot of competition because businesses like car manufactures try to compete with
each other. This is because through international trading we consumers get the opportunity to
choose what car we would like whether it may be German, Japanese, or maybe even
American. Lots of companies will be trying their hardest to gain the most customers which
will result in consumers getting the product cheaper. International trade is good because
within the countries can do specialized trading and them exchange goods for fair proportions.
If two countries were producing the same two products and one had a better output rate of
one than the other they could do something could specialized trading which allows both
countries to focus on the product that they can produce better out of the two and then they can
trade.
Free trade
Free trade is an international trade left to its natural course without tariffs, quotas, or other
restrictions. This means there are no guidelines or rules to disrupt trade process. Free trade
enables foreign companies to trade just as efficiently, easily, and effectively as domestic
producers.
Free trade adds to encouraging international trade because it allows people to trade with no
restraints because normally there are some blockages however with this in place people can
trade fair and efficiently. This may be used by Tesco in China because it will allow them to
save money. Due to the fact that the country is allowed to free trade it would only make sense
that they use the benefit. This would enable them to import and export products knowing
barriers aren’t in place.
Barriers of trade
In international trading there are barriers of trade. Oil and these sort of things are put into
place which have restraints on trading. The most common one would be the tax that have to
be paid when importing goods from overseas. This could hinder some companies’ progress
because tax may be too high and they wouldn’t be willing to pay that much which would
result in them brining less products from overseas. This could potentially mean they lose out
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