International trade and production are a way of life for business managers today. All over the world large numbers of business people find that foreign trade is an important part of their total activities. Countries rely on foreign countries for much of their raw materials or sell a significant portion of their output abroad.
International business encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national borders.
International business occurs in many different forms, the movement of goods from one country to another (exporting, importing, trade), contractual agreements that allow foreign firms to use products, services, and processes from other nations (licensing, franchising), the formation and operations of sales, manufacturing, research and development, and distribution facilities in foreign markets.
International trade is the exchange of capital, goods, and services across international borders or territories. It is the exchange of goods and services among nations of the world.
All countries need goods and services to satisfy their people. Production of goods and services require resources. Every country has limited resources; therefore, a country solely cannot produce all the goods and services that it requires.
Required goods which cannot be produced or the amount is insufficient as required, need to be provided from other countries. Similarly, countries sell their products to others also when the production of goods comes in surplus quantities than demanded in the country.
Countries trade because they are different from each other and can benefit from their differences by reaching arrangements in what each does or is naturally endowed with.