How to study international business: acronyms, theories and real deals

If you're looking up how to study international business, here's the short answer: the major mixes three things that need to be studied differently. There's economic theory (why countries trade at all), there are rules and acronyms (Incoterms, tariffs, customs regimes, payment methods), and there are actual transactions where all of that gets applied at once. Study it all the same way, reading and highlighting, and it blurs together. Split it into parts and give each one its own method, and it gets a lot more manageable.

The problem specific to this major is the sheer amount of vocabulary. A single lecture can throw FOB, CIF, WTO, duty drawback, certificate of origin and letter of credit at you, each with a precise definition the exam will want word for word. On top of that, the slides tend to be lists of terms with very little explanation, and exams mix definition questions with case questions: "a company ships this product under these terms; who bears the loss if the cargo is damaged at the port?"

It's not my major: I study computer engineering. What follows comes from looking closely at how international business is studied and tested, and from what we know about how people learn. It also works for the global business and trade courses that show up in business administration, economics or marketing degrees.

Build your own glossary from week one

In the first week it feels like the problem is understanding. It's actually remembering. Most of the terms aren't hard on their own; what's hard is having a hundred of them floating around without mixing them up.

So start a glossary on day one, not during finals week. A simple table with four columns:

• The term or acronym, with what it stands for if it's an acronym (FOB is Free On Board).
• The definition in your own words, in one or two sentences.
• A concrete example with a real product: a company exporting coffee, one importing machinery.
• What it gets confused with, which is the column that pays off most. Ad valorem versus specific tariffs, quotas versus tariffs, dumping versus subsidies.

You don't reread the glossary; you quiz yourself with it. Cover the definition and say it out loud, or cover the term and guess it from the example. An acronym you can explain with an example sticks. If flashcards work for you, move the glossary into Anki or Quizlet and review it for a few minutes a day. That's spaced repetition applied to a vocabulary that keeps piling up lecture after lecture.

Trade theories, in one comparison chart

The international economics part of the major comes with a list of theories taught in historical order, and exams almost always ask you to compare them. The ones on nearly every syllabus:

1. Absolute advantage (Adam Smith). A country should produce what it makes with fewer resources than everyone else.
2. Comparative advantage (David Ricardo). Even if a country is better at everything, it still gains by specializing in what it does relatively best and buying the rest.
3. Factor endowments (Heckscher and Ohlin). Each country exports goods that use a lot of the factor it has in abundance: labor, land or capital.
4. New trade theory (Paul Krugman, among others). Explains why similar countries sell each other similar products, through economies of scale and product differentiation.

Put them in a chart with the same rows for each: what question it answers, what it assumes, what it predicts and what it fails to explain. That last row is what separates a memorized answer from one that shows understanding. Ricardo, for example, doesn't explain why Germany and France sell cars to each other, and that's exactly the gap new trade theory fills.

One exercise that works really well with Ricardo: work through the two-country, two-good numerical example from lecture by hand, then change one number and solve it again. If you can do it with different numbers, you get the idea; if you can only do it with your professor's numbers, you memorized it. It's the same kind of work with models I described in how to study economics.

Incoterms: a chart of who pays for what

Incoterms are the rules published by the International Chamber of Commerce that spell out, in a sale between countries, who pays for each leg of transport, who buys insurance and at what point the risk moves from seller to buyer. The current version, Incoterms 2020, has eleven rules, and it's one of the most tested topics.

The trap is studying them as eleven separate definitions. They work much better as a chart:

• Rows: the eleven rules, in order, from EXW, where the seller does almost nothing, to DDP, where the seller does almost everything.
• Columns: the exam questions. Who pays the main freight, who pays insurance, where risk transfers, who clears export customs and who clears import customs.
• A separate group for the four sea rules (FAS, FOB, CFR and CIF), which are only used for sea and inland waterway transport.

Once the chart is done, patterns jump out: in the rules starting with C, the seller pays the main freight, but the risk passes earlier, at origin. Cost and risk don't travel together, and that gap is what case questions love to test. If you understand why the seller buys insurance under CIF even though the risk already belongs to the buyer, you understand the logic behind all of them.

Walk through a full deal, start to finish

The applied side of the major is transactions: actually exporting or importing something, step by step. On exams that shows up as a case study, and the best way to prepare is to build a full deal yourself, even a made-up one.

Pick a product and two countries, and go through it in order:

1. The quote. Which Incoterm you use and which costs go into the price you give the buyer.
2. The payment method. Cash in advance, documentary collection or a letter of credit, and who carries the risk of not getting paid in each case.
3. The documents. Commercial invoice, packing list, transport document, and a certificate of origin if a trade agreement applies.
4. Customs. What duties and taxes the import pays and which regime applies (permanent, temporary, with some kind of relief).
5. What can go wrong. The cargo is damaged, the buyer doesn't pay, a document has an error. Who's responsible in each case.

One made-up deal teaches more than ten definitions you read, because it forces you to connect courses that live separately on the syllabus: the Incoterm with insurance, the payment method with the documents, customs with the trade agreement. If your professor shares case studies from past exams, solve them with the same structure and check against the answer key, the way I described in how to use past papers.

The numbers matter too

Depending on your program, you'll have courses with calculations: exchange rates, the balance of payments, landed cost of an import, the effect of a tariff. The math isn't hard, but people lose points to mistakes in the order of steps.

Two tips:

• Use the same layout every time. For landed cost, for example: value of the goods, plus freight and insurance to destination, then the duty on that, then the other taxes. Write it in the same order every time and you won't skip a step.
• Ask what the result means. If a country runs a current account deficit, what has to happen in the financial account? A number with no interpretation is worth half the points on a written exam.

Lectures and readings, without getting lost

International business slides tend to be heavy on acronyms and light on explanation: an Incoterms table, a balance of payments diagram, a list of shipping documents. Your professor talked through them in class; the PDF only keeps the labels.

For that part you can use Filmina, a web app that explains your lecture slides out loud, one at a time, pointing at the part it's talking about. It also looks at each slide as an image, so it explains the table or the diagram along with the text. If something doesn't click, you ask Mina, the chat that answers from your own material ("why does risk pass at origin under CFR if the seller pays the freight?"), and then you can practice with questions built from that lecture. It has limits: it needs an internet connection, the free plan has a monthly cap on minutes, and a scanned deck gets read with text recognition, which can slip on small print. The glossary, the Incoterms chart and the start-to-finish deal are still yours to build.

Frequently asked questions

What do you study in international business?

The economics of trade between countries, trade policy (tariffs, quotas, trade agreements), logistics and shipping, Incoterms, international payment methods, customs and global marketing. Depending on the program, also international finance and international trade law.

How do you memorize Incoterms?

Build a chart with the eleven rules as rows and, as columns, who pays freight, who pays insurance and where risk transfers. Seeing the patterns (for example, that under the C rules the seller pays freight but risk passes at origin) helps more than memorizing eleven separate definitions.

Is international business a hard major?

It demands a lot of vocabulary and connecting economics, logistics and law. The math usually isn't heavy; the hard part is applying theory and rules to concrete cases, and you learn that by practicing with real or made-up deals.

What are the main theories of international trade?

The ones on almost every syllabus are Adam Smith's absolute advantage, David Ricardo's comparative advantage, the Heckscher-Ohlin factor endowment model, and new trade theory, associated with Paul Krugman, which explains trade between similar countries.