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Chapter 1Chapter 1OVERVIEW OF GLOBAL THEORYOVERVIEW OF GLOBAL THEORYAND PRACTICEAND PRACTICE

Chapter OutlineChapter Outline

•Meaning and nature international businessMeaning and nature international businessenvironmentenvironment•Distinctions between internal and internationalDistinctions between internal and internationalbusinessbusiness•Advantages and disadvantages of internationalAdvantages and disadvantages of internationaltrade/businesstrade/business•Theories in international tradeTheories in international trade

–MercantilismMercantilism –Theory of absolute cost advantageTheory of absolute cost advantage –Comparative cost advantageComparative cost advantage –Heckscher – Ohlin theoryHeckscher – Ohlin theory

•International investmentInternational investment•Global forces effecting international tradeGlobal forces effecting international trade

What is business and businessWhat is business and businessenvironment?environment?

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Business is a wide term andBusiness is a wide term and

signifies all signifies all economic activities carried on with theeconomic activities carried on with theobjective of earning money/profit/gainobjective of earning money/profit/gain

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Economic activities involveEconomic activities involve

production, production,exchange, distribution and consumption of exchange, distribution and consumption of goods and services.goods and services.

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In short, the definition of aIn short, the definition of a

business as abusiness as acommercial activity to make a profit of ancommercial activity to make a profit of anorganisation (private or public).organisation (private or public).