This document is a summary of Chapter 3: Going Global of the textbook FOUNDATIONS OF BUSINESS MANAGEMENT IN SOUTH AFRICA. The summary consists of detailed disadvantages and advantages, definitions and examples of every term affiliated with international trade.
TEXTBOOK/SOURCE: Foundations of Business Management
in South Africa 1st Edition, US Authors: William M. Pride, Robert
J. Hughes, Jack R. Kapoor.
Adapters: Brownhilder N. Neneh
NOTES BY: Thabiso P. Kheo (Student at the University of
Johannesburg)
NOTE: The notes are a summarised version of the owner’s
understanding, and they may not be in the order of the
textbook.
, This chapter explores the following concepts.
An international business refers to all business activities that
involves exchanges across national boundaries.
We also come across two types of advantages namely the
absolute advantage and comparative advantage.
ABSOLUTE ADVANTAGE COMPARATIVE ADVANTAGE
The ability to produce a specific product The ability to produce a specific
more than any other nation. product more than any other
If both Country A and B produces product.
sugar, and coffee, and A produces If country A produces coffee
more sugar than B, A therefore has more than sugar it has a
an absolute advantage over B in comparative advantage of
producing sugar. If B produces producing coffee more than
more coffee than A, B therefore sugar.
has an absolute advantage over A
in producing coffee.
EXPORTING AND IMPORTING
Exporting: Selling and shipping raw materials to another
country/ countries. China exports its technological equipment
such as computers to other countries.
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