a. What are the modern, firm-based international trade theories? b. Describe how a business may use trade theories to develop its business strategies. Use Porter’s four determinants for the explanation.

a. The modern, firm-based international trade theories include the internalization theory, transaction cost theory, and the global value chain theory. These theories focus on the role of firms in international trade and emphasize the importance of firm-specific advantages in gaining a competitive advantage in the global market. b. A business can use trade theories to develop its business strategies by analyzing the four determinants of competitiveness according to Porter's model. These determinants include factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. For example, using the internalization theory, a business may decide to establish a subsidiary in a foreign market to exploit its firm-specific advantages such as technology, brand image, or superior management practices. By doing so, the firm can reduce transaction costs and increase efficiency in the production process. Additionally, the firm may benefit from sourcing inputs from related and supporting industries in the host country, such as suppliers or distributors. In terms of Porter's determinants, the firm's factor conditions may refer to the availability of skilled labor or access to capital, while demand conditions may include the size and growth of the market, consumer preferences or purchasing power. Related and supporting industries may refer to the presence of local suppliers or the existence of strong backward and forward linkages in the value chain. Finally, firm strategy, structure, and rivalry may include the firm's competitive strategy, organizational structure, and the intensity of local competition in the market. By analyzing these determinants and applying trade theories, a business can develop a comprehensive strategy to gain a competitive advantage in the global market.