IBT Chapter 1 PDF

CLASSROOM AND DEPARTMENTAL RULES  BA-6 INTERNATIONAL BUSINESS AND TRADE COURSE DESCRIPTION International business and trade cover a broad spectrum of business activities carried out on a worldwide scale. It involves dealings that go beyond national boundaries, interacting with diverse...

CLASSROOM AND DEPARTMENTAL RULES  BA-6 INTERNATIONAL BUSINESS AND TRADE COURSE DESCRIPTION International business and trade cover a broad spectrum of business activities carried out on a worldwide scale. It involves dealings that go beyond national boundaries, interacting with diverse markets, culture, and regulatory frameworks. The dynamism and adaptability of international business are crucial for the overall global welfare. COURSE LEARNING OUTCOME 01 DEVELOP AN UNDERSTANDING OF CULTURAL AWARENESS AND ADAPTABILITY ENHANCE CROSS-CULTURAL COMMUNICATION SKILLS ACROSS 02 LANGUAGE BARRIERS AND CULUTAL DIFFERENCES 03 ANALYZE AND UNDERSTAND GLOBAL MARKET TRENDS 04 NAVIGATE TRADE REGULATIONS AND POLITICAL CHALLENGES 05 GAIN HOLISTIC VIEW OF GLOBAL COMPETITION EVOLUTION OF INTERNATIONAL TRADE The evolution of the international trade theories reflects the ways nations were addressing basic economic problems due to unequal distribution of natural resources of difference in geographical locations. Overt time, economist have developed theories to address these economic problems and explain the mechanisms of international business and trade. TOPIC FOR LESSON 1 HISTORY OF THE 1.4 PHILIPPINE EVOLUTION OF INTERNATIONAL 1.1 CURRENCY THEORY: A GLIMPSE MOBILE PAYMENTS 1.5 AND INTERNET 1.2 ADD TITLE PAYMENTS BARTER 1.6 VIRTUAL ORIGIN OF 1.3 CURRENCY MONEY 1.1 : Evolution of International Trade Theory – A Glimpse Ancient Trade: The Mesopotamians, Egyptians, and Phoenicians established trade networks as early as 3000 BCE, fostering exchange of commodities such as spices, textiles, metals, and agricultural products. The Code of Hammurabi, dating back to 1754 BCE, provides early documentation of trade regulations and practices. 1.1 : Evolution of International Trade Theory – A Glimpse Silk Road Ancient: Global Trade Network The Silk Road, emerged during the Han Dynasty in China (206 BCE - 220 CE). Extending over 6,000 miles, this network facilitated trade between Asia, Europe, and Africa. Figures like Zhang Qian, a Chinese diplomat and explorer, played a pivotal role in expanding and solidifying this trade route. ZHANG QIAN 1.1 : Evolution of International Trade Theory – A Glimpse Age of Exploration: New Horizons, New Trade Routes The Age of Exploration (15th to 17th centuries) witnessed significant expansions of international trade routes. European explorers such as Christopher Columbus, Vasco da Gama, and Ferdinand Magellan embarked on voyages, seeking new trade routes to Asia and discovering new lands. 1.1 : Evolution of International Trade Theory – A Glimpse Mercantilism and Colonialism: Trade as National Policy 16th to 18th centuries, mercantilism became a dominant economic doctrine. Colonialism played a crucial role in this pursuit, as European nations established colonies worldwide to secure raw materials, establish markets for finished goods, and maintain a monopoly on trade. 1600 - The British East India Company was formed and became a significant player in international trade, particularly in Asia. 1.1 : Evolution of International Trade Theory – A Glimpse Industrial Revolution: Technological Advancements Transform Trade 18th to 19th centuries brought about revolutionary changes in international trade. 1.1 : Evolution of International Trade Theory – A Glimpse Post-World War II: Multilateral Trade Agreements The General Agreement on Tariffs and Trade (GATT), established in 1947, aimed to reduce trade barriers and promote economic growth. In 1995, the GATT evolved into the World Trade Organization (WTO), which oversees trade agreements and dispute resolutions among member nations. 1.1 : Evolution of International Trade Theory – A Glimpse Digital Era: E-commerce and Global Supply Chains Late 20th and early 21st Century The rise of the internet and e-commerce platforms has revolutionized the way businesses conduct cross-border transactions. Global supply chains have become intricately interconnected, allowing for efficient production, distribution, and consumption of goods. 1.2 : Barter Barter is a system of exchange where goods or services are directly traded for other goods or services without using money Late 20th and early 21st Century The rise of the internet and e-commerce platforms has revolutionized the way businesses conduct cross-border transactions. Global supply chains have become intricately interconnected, allowing for efficient production, distribution, and consumption of goods. 1.2 : Barter Benefits of Bartering Bartering allows individuals to trade items that they own but are not using for items that they need, while keeping their cash on hand for expenses that cannot be paid through bartering, such as a mortgage, medical bills, and utilities. Bartering can have a psychological benefit because it can create a deeper personal relationship between trading partners than a typical monetized transaction. Bartering can also help people build professional networks and market their businesses. 1.2 : Barter How Individuals Barter When two people each have items the other wants, both parties can determine the values of the items and provide the amount that results in an optimal allocation of resources 1.2 : Barter How a companies Barter Companies may want to barter their products for other products because they do not have the credit or cash to buy those goods. It is an efficient way to trade because the risks of foreign exchange are eliminated. The most common contemporary example of business-to-business (B2B) 1.2 : Barter How Countries Barter Countries also engage in bartering when they are deeply in debt and are unable to obtain financing. Goods are exported in exchange for goods that the country needs. In this way, countries manage trade deficits and reduce the amount of debt they incur. 1.2 : Barter Bartering During Downturns Online barter exchanges became especially popular with small businesses after the 2008 financial crisis, which culminated in the Great Recession. As prospects and sales dwindled, small businesses increasingly turned to barter exchanges to generate revenue. These exchanges enabled members to find new customers for their products and get access to goods and services using unused inventory. in 2020, a year associated with COVID-19 enforced lockdowns, the BBC reported that bartering in the United Kingdom had become much more widespread. Moreover, in 2022, it was reported that frustrated Argentines, against a backdrop of high inflation and low wages, introduced barter fairs in and around Buenos Aires. 1.2 : Barter How to Barter So how can an individual successfully barter? Here are some tips: 1. Identify your resources: What 4. Search for bartering items do you have that you could partners: After you know what you easily part with? have to offer and exactly what you 2. Put a price tag on it: Successful need/want in a barter situation, find a bartering must result in the barter partner. satisfaction of both parties. 5. Make the deal: After you've found a 3. Identify your needs: Be specific barter partner, get the agreement in about what you are looking for in a writing. barter exchange. 1.2 : Barter Limits of Bartering Bartering does have its limitations. Much bigger (i.e., chain) businesses will not entertain the idea and even smaller organizations may limit the dollar amount of goods or services for which they will barter—they may not agree to a 100% barter arrangement and instead require that you make at least partial payment. What Is an Example of a Barter? A barter transaction could occur, say, between a plumber and a copywriter. In this example, the plumber goes to the writer’s house to fix some leaking pipes and then rather than asking for payment asks the writer to help pen some promotional materials for the plumber’s business instead. What we are witnessing here is one service (plumbing work) being exchanged for another (writing) without any money changing hands. 1.2 : Barter Is Bartering Illegal? Bartering is legal in many countries in the world, provided it is carried out correctly. Issues can arise when exchanges aren’t declared to local tax authorities, in which case the bartering transaction becomes illegal. Is Bartering Still Used Today? Absolutely. The use of a cashless exchange system is still flourishing today. Examples of modern forms of bartering include time banking, child care cooperatives, and house sitting. 1.3 : Origin of Money The terms "money" and "currency" are often used interchangeably. However, several theories suggest they are not identical. According to some theories, money is inherently an intangible concept. Currency, on the other hand, is the physical or tangible manifestation of the intangible concept of money. According to this theory, money cannot be touched or smelled. Currency is the coin, note, object, or physical representation that is presented in the form of money. 1.4 : History of the Philippine Currency What is Money? Money doesn't always have value, whether it's represented by a seashell, a metal coin, a piece of paper, or a string of code mined electronically by a computer. With global wealth estimated to be about $432 trillion at the end of 2023, the value of money depends on the importance that people place on it as a medium of exchange, a unit of measurement, and a storehouse for wealth 1.3 : Origin of Money 1.4 : History of the Philippine Currency History of Philippine Money Pre-Hispanic Era Long before the Spaniards came to the Philippines, trade among the early Filipinos and with traders from the neighboring lands like China, Java, Borneo, and Thailand was conducted through barter. The inconvenience of the barter system led to the adoption of a specific medium of exchange – the cowry shells. Cowries produced in gold, jade, quartz and wood became the most common and acceptable form of money through many centuries. 1.4 : History of the Philippine Currency History of Philippine Money Spanish Era (1521-1897) The cobs or macuquinas of colonial mints were the earliest coins brought in by the galleons from Mexico and other Spanish colonies. These silver coins usually bore a cross on one side and the Spanish royal coat-of-arms on the other. The Spanish dos mundos were circulated extensively not only in the Philippines but the world over from 1732-1772. Treasured for its beauty of design, the coin features twin crowned globes representing Spanish rule over the Old and the New World, hence the name “two worlds.” It is also known as the Mexican Pillar Dollar or the Columnarias due to the two columns flanking the globes. 1.4 : History of the Philippine Currency History of Philippine Money Revolutionary Period (1898 -1899) The cobs or macuquinas of colonial mints were the earliest coins brought in by the galleons from Mexico and other Spanish colonies. These silver coins usually bore a cross on one side and the Spanish royal coat-of-arms on the other. The Spanish dos mundos were circulated extensively not only in the Philippines but the world over from 1732-1772. Treasured for its beauty of design, the coin features twin crowned globes representing Spanish rule over the Old and the New World, hence the name “two worlds.” It is also known as the Mexican Pillar Dollar or the Columnarias due to the two columns flanking the globes. 1.4 : History of the Philippine Currency History of Philippine Money America Period (1900 -1941) With the coming of the Americans 1898, modern banking, currency and credit systems were instituted making the Philippines one of the most prosperous countries in East Asia. The Americans instituted a monetary system for the Philippine based on gold and pegged the Philippine peso to the American dollar at the ratio of 2:1. The US Congress approved the Coinage Act for the Philippines in 1903. 1.4 : History of the Philippine Currency History of Philippine Money The Japanese Occupation (1942 -1945) The outbreak of World War II caused serious disturbances in the Philippine monetary system. Two kinds of notes circulated in the country during this period. The Japanese Occupation Forces issued war notes in high denominations. These war notes had no back up reserves, thus, Filipinos dubbed it “Mickey Mouse” money. During the worst inflation in Philippine history, Filipinos would go to the market laden with bayongs of Mickey Mouse bills, since one duck egg cost 75 pesos, and a box of matches more than 100 pesos. 1.4 : History of the Philippine Currency History of Philippine Money The Philippine Republic With the establishment of the Central Bank of the Philippines in 1949, English series note – the 1st currencies Printed by Thomas de la Rue & Co., England The coins minted at the US Bureau of Mint. 1.4 : History of the Philippine Currency History of Philippine Money The Philippine Republic The “Filipinization” of the Republic coins and notes began in the late 60’s and is carried through to the present. In the 70’s, the Ang Bagong Lipunan (ABL) series notes were circulated, which were printed at the Security Printing Plant starting 1978. A new wave of change swept through the Philippine coinage system with the Flora and Fauna Coin Series initially issued in 1983. The New Design Series of banknotes issued in 1985 replaced the ABL series. Ten years later, a new set of coins and notes were issued carrying the logo of the Bangko Sentral Ng Pilipinas 1.4 : History of the Philippine Currency History of Philippine Money The Philippine Republic The “Filipinization” of the Republic coins and notes began in the late 60’s and is carried through to the present. In the 70’s, the Ang Bagong Lipunan (ABL) series notes were circulated, which were printed at the Security Printing Plant starting 1978. A new wave of change swept through the Philippine coinage system with the Flora and Fauna Coin Series initially issued in 1983. The New Design Series of banknotes issued in 1985 replaced the ABL series. Ten years later, a new set of coins and notes were issued carrying the logo of the Bangko Sentral Ng Pilipinas 1.5 : Mobile Payments and Internet Payments Mobile payments Mobile payments and mobile payment systems have become ubiquitous. According to Fortune Business Insights, the global mobile payment market was valued at $1.18 trillion in 2019 and is projected to grow to $8.94 trillion by 2027. 2019 2027 1.5 : Mobile Payments and Internet Payments What is Mobile Payment? Mobile payment definition varies depending on whom you ask but there is consensus that mobile payment is any use of a portable electronic device to send and receive money. Mobile payments are also referred to as Mobile Money Transfer, mobile money, or simply m payments. 1.5 : Mobile Payments and Internet Payments How Does Mobile Payment Work? How mobile payments work depends on the underlying technology of the mobile payment system. There are many types of mobile payments, and each operates differently from the other. Similar services may also have subtle differences in actual operation. 1.5 : Mobile Payments and Internet Payments Types of Mobile Payments Let’s now consider the different types of mobile payments and examine how each works in detail, with examples of mobile payments. There are broad categories of mobile payments as follows: 1. In-store and remote payments 2. Remote payments 3. Point-of-sale solutions 1.5 : Mobile Payments and Internet Payments In-Store and Remote Payments In-store payments refer to contactless payments made by buyers while they are physically present in a shop. Remote payments refer to situations where someone uses a mobile device to send funds to a merchant or other person in a different geographic area. Let’s consider some examples. 1.5 : Mobile Payments and Internet Payments In-Store and Remote Payments Mobile Wallets Also known as digital wallets, mobile wallets store payment information on a mobile device. This information is usually stored in a mobile application and in some cases, a SIM application toolkit (STK). Different technologies are used during the payment process, for example, both the sender and recipient receive an SMS. Near Field Communication (NFC) technology is also prevalent, as are QR codes. 1.5 : Mobile Payments and Internet Payments In-Store and Remote Payments Mobile Wallets Also known as digital wallets, mobile wallets store payment information on a mobile device. This information is usually stored in a mobile application and in some cases, a SIM application toolkit (STK). Different technologies are used during the payment process, for example, both the sender and recipient receive an SMS. Near Field Communication (NFC) technology is also prevalent, as are QR codes. 1.5 : Mobile Payments and Internet Payments In-Store and Remote Payments Quick response (QR) Code Payments A QR code is a two-dimensional matrix bar code containing machine-readable optical information. A QR code mobile app scanner can scan and read the data in a QR code. 1.5 : Mobile Payments and Internet Payments Remote Payments Internet Payments Most people simply make payments using a web browser such as Chrome, Firefox, or Safari. They also make apps via mobile apps, for example, gaming apps such as Candy Crush or within social media apps such as Facebook, Twitter, and Instagram. This is usually done by manually entering the credit card details on a payment page or charging a preapproved card connected to a mobile app. We can now use or link GCASH / PAYMAYA to online paying apps for payment 1.5 : Mobile Payments and Internet Payments Remote Payments Internet Payments Most people simply make payments using a web browser such as Chrome, Firefox, or Safari. They also make apps via mobile apps, for example, gaming apps such as Candy Crush or within social media apps such as Facebook, Twitter, and Instagram. This is usually done by manually entering the credit card details on a payment page or charging a preapproved card connected to a mobile app. We can now use or link GCASH / PAYMAYA to online paying apps for payment 1.5 : Mobile Payments and Internet Payments Remote Payments Payment Links This is closely related to Internet payments. A link is sent to someone via email or text message. Upon clicking the link, the user is directed to a checkout page where they enter their credit card details. The transaction amount can be configured in advance by the merchant or left blank for the customer to enter. 1.5 : Mobile Payments and Internet Payments Remote Payments SMS Also known as premium SMS, SMS payments are a popular way to pay for ring tones and other digital goods. Once a user subscribes to a premium SMS service by sending a text message or dialing a short-code, the fee is added to their phone bill or taken out of their prepaid credit. 1.5 : Mobile Payments and Internet Payments Remote Payments Direct Operator Billing In direct operator billing, the user enters their phone number on a checkout page. The cost is added to their mobile phone bill or deducted from their prepaid credit. Google Play Store and Apple’s App store offer this option. It is a popular option to pay for digital content subscriptions, charity donations, and television voting. 1.5 : Mobile Payments and Internet Payments Remote Payments Mobile Banking In many countries today, mobile banking is the defacto method for bank transfers and bill payments. Banks provide customers with a mobile app which they use to log into their account, perform transactions, and communicate with the bank. However, mobile apps have proved to be a key attack vector by cybercriminals. Using fake apps and app hijacking, criminals can obtain customer login data and steal funds. To mitigate this risk, many banks use two-step login verification and one-time passwords (OTP) to secure customer accounts.. 1.5 : Mobile Payments and Internet Payments Point-of-sale Solutions Near-field Communication (NFC) payments NFC is a set of communications protocols that dictate how two devices about ten centimeters apart communicate by making use of close- proximity radio frequency identification technology 1.5 : Mobile Payments and Internet Payments Point-of-sale Solutions Sound Waves-Based Payments This is a new cutting-edge mobile payment solution. It eliminates the need for an Internet connection. A payment terminal sends payment data to the mobile device via sound waves. The mobile phone then converts into the analog format and completes the transaction. 1.5 : Mobile Payments and Internet Payments Point-of-sale Solutions Magnetic Secure Transmission (MST) payments An MST mobile payment is effected when a mobile device emits a signal that imitates the magnetic stripe on a credit card. The card terminal senses the signal and processes the payment as though a physical card hard been run through the terminal.. 1.6 : Virtual Currency What Is a Virtual Currency? A virtual currency is a digital representation of value. It is stored and transacted through designated mobile or computer applications. Transactions involving virtual currencies occur through secure, dedicated networks or the internet. They are generally issued by private parties or groups of developers and are mostly unregulated. 1.6 : Virtual Currency Understanding Virtual Currencies Virtual currencies are a form of digital currency. They are issued by private parties, such as a group of developers or organizations, and do not have a physical form like paper money. They include cryptocurrencies and other tokens that hold value. They differ from officially issued digital currencies called central bank digital currency (CBDC). What Is a Central Bank Digital Currency (CBDC)? A central bank digital currency (CBDC) is a form of digital currency issued by a country's central bank. It is similar to cryptocurrencies, except that its value is fixed by the central bank and is equivalent to the country's fiat currency. 1.6 : Virtual Currency Regulatory Environment As of June 2024, regulations covering virtual currencies, tokens, and assets are still emerging around the world. For example, in 2023, The European Union published a broad definition in its Markets In Crypto Assets (MiCA) regulation. In the Philippines, cryptocurrency is recognized as a legitimate digital currency. This recognition resulted from Circular No. 944 issued by the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, in 2017. 16 Licensed crypto exchanges are currently operating in the Philippines, according to BSP 1.6 : Virtual Currency Regulatory Environment The Internal Revenue Service (IRS) in the United States describes virtual currencies as "digital representations of value, other than a representation of the U.S. dollar or a foreign currency ("real currency"), that function as a unit of account, a store of value, and a medium of exchange 1.6 : Virtual Currency How Virtual Currencies Are Used Virtual currencies have many forms, so there are endless ways that they can be used. Cryptocurrency is most commonly purchased and sold by investors and traders on cryptocurrency exchanges to profit from price fluctuations and increases. However, they are also used in some countries by people who don't have access to other payment methods or financial services. Many video games offer virtual currencies you can buy with real money and use to purchase items in-game. Most of these in-game currencies and tokens are not usable outside the game and cannot be transferred. 1.6 : Virtual Currency Types of Virtual Currencies Depending on their operating network, virtual currencies are classified as either. Closed Virtual Currency Open Virtual Currency 1.6 : Virtual Currency Types of Virtual Currencies Closed Virtual Currency As the name suggests, a closed virtual currency operates in a controlled and private ecosystem. It cannot be converted into another virtual currency or a real-world fiat currency. Examples of closed virtual currencies are currencies in gaming systems. Though such currencies can be used in their respective environments (in this case, games), they cannot generally be converted into real-world cash. 1.6 : Virtual Currency Types of Virtual Currencies Open Virtual Currency Open virtual currencies operate in open ecosystems and can be converted into another currency within or outside the platform. Examples of open virtual currencies are stablecoins and cryptocurrencies. Bitcoin and Ethereum, the two biggest cryptocurrencies by market capitalization, can be converted into other cryptocurrencies or certain fiat currencies. 1.6 : Virtual Currency Advantage of virtual currency The technology behind virtual currencies can eliminate geographical boundaries. Decentralized virtual currencies can eliminate intermediaries during monetary transactions and establish a direct connection between two transacting parties. Some virtual currencies can be programmed to complete automated transactions. For example, smart contracts on Ethereum's block chain can hold and release money in escrow accounts without human intervention. Virtual currencies are digital repositories of value and can assign value to disparate sets of objects, from gaming tokens to artwork. 1.6 : Virtual Currency Disadvantage of virtual currency Virtual currencies are attractive targets for hackers. There have been several cases of cryptocurrency theft by hackers. Virtual currencies can be used in scams. Several initial coin offerings (ICOs), which became popular after a runup in cryptocurrency prices, were scams in which private developers sold worthless tokens for hypothetical networks. Unregulated virtual currencies do not offer legal recourses to investors or users because they are issued by private entities and, for the most part, are not regulated by financial authorities. Virtual currencies with market value can be subject to highly volatile price swings. 1.6 : Virtual Currency Differences Between Digital Currencies, Virtual Currencies, and Cryptocurrencies Digital currency is the group of currencies all virtual currencies, stablecoins, and CBDCs belong to. Virtual currencies generally encompass cryptocurrency, gaming tokens, or other types of tokens. Cryptocurrencies are virtual currencies that use cryptographic techniques. 1.6 : Virtual Currency Is Virtual Money Real Money? If something is generally accepted as a means of exchange, a store of value, or a unit of account, it is considered by most to be money. Virtual money can meet this definition, but not always. For example, virtual money earned in a video game used to purchase in-game items is likely not real money. But if it transitions somehow to being exchanged for money that meets this definition, it could become real money. 1.6 : Virtual Currency Is Virtual Currency the Same As Cryptocurrency? Definitions are constantly changing, but by the most currently used ones, cryptocurrency is a form of virtual currency. 1.6 : Virtual Currency What Is the Most Valuable Virtual Currency? Bitcoin is by far the most valuable and popular virtual currency. It took the market by storm in the mid-2010s and has held the top spot for price and market cap ever since. THANKS! SOURCE: The Evolution of International Trade: A Historical Overview - International Trade Council Zhang Qian – Wikipedia Barter (or Bartering) Definition, Uses, and Example (investopedia.com) The History of Money: Bartering to Banknotes to Bitcoin (investopedia.com) Coins and Notes - History of Philippine Money (bsp.gov.ph) What is Mobile Payments - Types, Benefits and Examples – ITChronicles Virtual Currency: Definition, Types, Advantages & Disadvantages (investopedia.com) VC.pdf (bsp.gov.ph) Please do not remove this portion