1. Merchandise exports and imports: Merchandise means which are tangible. That can be seen and touched. It is also known as trading goods. It excludes trading services.
2. Exports and Imports of Services: Service exports and imports involve trade in intangibles. It is because of the intangible aspect of services that trade in services is termed as intangible trade.
3. Licensing and Franchising: Permitting another party in a foreign country to produce and sell goods under a firm’s trademarks, patents or copyright for which a payment is made which is called royalty is another way of entering into international business. For example, McDonalds’.
4. Foreign Investments: Foreign investment is another way to operate internationally. It involves investment of funds abroad in exchange for financial return. It may take two forms:
5. Direct Investment: It takes place when a company directly invests in property like plant and machinery in foreign countries with a view to undertaking production and marketing of goods and services in these companies.
6. Portfolio Investment: It is an investment that a company makes into another company by way of acquiring shares or providing loans to the latter.