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Drexel University Author: Jibran Nabeel
Jibran Nabeel
International Business (INTB-200-005)
Professor Bernard Rayca
(Research Assignment 10)
9/3/2016
Before the details of international business and different terminologies and connections
pertaining to international business are discussed, it is important to give the core definition of
international business. International business is defined as a commercial transaction (private,
governmental, logistics and transportation) that takes place between two or more regions or
countries beyond their political boundaries. In elementary terms, international business can be
defined as trade between two or more specific regions (including countries). This term is used
to refer to all business activities that involve cross-border trade of goods, services and
resources.
Trade itself holds a very broad meaning. It involves the transfer of the ownership of goods and
services from one entity to another entity in exchange for other goods or some specific preset
monetary value. Trade is important in international business because it is the means through
which international business can exist, keeping in mind that the entities in this case are not
domestic but are explicitly international.
Since trade is essentially the core and the backbone of international business it presents its own
set of “problems”. These are more commonly referred to as trade barriers. The three types of
trade barriers are tariff barriers, monetary barriers and market barriers. Tariff barriers include
licenses, import quotas, local content requirements and ad valorem taxes. Licenses are granted
by governments to ensure the import of certain goods by certain businesses. Import quotas are
restrictions on an amount of a particular good and ad valorem tax is any tax that is imposed on
the basis of the monetary value of the good. Monetary barriers include blocked currency,
differential exchange rate and government approval for securing foreign exchange. Blocked
currency is the refusal to allow importers to exchange their national currency with the seller’s
currency. Similarly differential exchange rate places an emphasis on less and more desirable
goods accounting for the importer to pay varying amounts of domestic currency for various
