Chapter 1: Global Business Environment

Question 1

Factors that transform International trade and global commerce are?

Answer 1

• Emerging global progress (BRICS)
• Technological progress
• Shifts in priority related to former “fringe” issues

Question 2

Why can global investment be risky for the evolution of the global business environment?

Answer 2

• Investments can quickly flow into a region and can be withdrawn just as quickly. A.K.A hot money.
• Provides only short-term gains
• Can lead to systematic instability (Failure of one institution can affect their economy, thus affecting the global economy)

Question 3

Common challenges between large corps. and SMEs are?

Answer 3

• Business vision
• People and financial management
• Marketing and sales skills
• Commercial acumen
• Competitive mettle

Question 4

What basic procedures can be difficult for global businesses?

Answer 4

1. Due diligence (an investigation of a person or company prior to signing a contract)
2. Commercial credit check (Credit granted to a business by a bank for commercial purposes)

Question 5

What are the infrastructures that support global business?

Answer 5

• Government agencies
• Regulatory bodies
• Financial institutions
• Technology

Question 6

Define commerce

Answer 6

The activity of buying and selling, especially on a large scale.

Question 7

Accelerated pace in the global business environment is due to some factors

Answer 7

Partnerships:

• China
• India

Technology:

• e-commerce
• Online trading platforms
• Social networking

Question 8

What are new businesses and trade partners now focusing more on?

Answer 8

Professional services rather than primary inputs and manufactured goods.

Question 9

What is an example of a bilateral relationship?

Answer 9

The flow of goods and services between U.S and china

Question 10

Define multilateral

Answer 10

Agreed upon or participated in by three or more parties. I.e multilateral trade agreements.

Question 11

Define south-south trade

Answer 11

Trade between low-and middle income countries. Is currently fast growing.

Question 12

Define global sourcing

Answer 12

Practice of sourcing from the global market for goods and services across geopolitical boundaries. aims to exploit global efficiencies in the delivery of a product or service.

Question 13

What factors blur the lines between trade and investment?

Answer 13

• Promotion of trade and export support foreign investment
• Trade promotion organizations are actively on the investments side
• Privatization of organizations

Question 14

Give an example of specialized investment vehicles

Answer 14

Hedge funds

Question 15

Define global integration

Answer 15

The process by which a company combines different activities around the world so that they operate using the same methods. refers to the many aspects of trade that businesses utilize to achieve the lowest possible cost and maximize the return for their products.

Question 16

What makes global integration possible?

Answer 16

Globalization (the process by which businesses or other organizations develop international influence or start operating on an international scale).

Question 17

What makes globalization possible?

Answer 17

Free trade agreements

Question 18

List new emerging international powers?

Answer 18

• China
• Indian
• Russia(?)
• Brazil
• Europe (EU)

Question 19

List some multilateral institutions

Answer 19

1. World Trade Organization (WTO) - Assists in resolving trade disputes and welcoming other nations to do business according to agreements and rules. Negotiates trade agreements.
2. United Nations Organization (UN)
3. World bank
4. International Labour Organization (ILO)
5. United Nations Development Programme (UNDP)

Question 20

Define protectionism

Answer 20

The theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports. (Raising taxes to reduce imports to protect domestic industries).

Question 21

Define out-sourcing

Answer 21

Obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.

Question 22

Define off-shoring

Answer 22

The practice of basing some of a company’s processes or services overseas, so as to take advantage of lower costs.

Question 23

what is an issue regarding human capital

Answer 23

The recognition of educational and professional equivalencies between countries and jurisdictions. the vast majority of skill sets, educational credentials and technical and professional accreditation’s are poorly understood and thus inadequately matched across jurisdictions.

Question 24

Define value chain

Answer 24

The process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.

Question 25

Define value-added

Answer 25

The amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.

Question 26

Global business primary focuses are on what?

Answer 26

• Commodities
• Primary industries
• Traditional business services

Question 27

What are some of the complex focuses of global business?

Answer 27

• High-value activities - engineering, professional services and even health care.

Question 28

What are 2 major organizations used to support trade?

Answer 28

1. Export Development Canada (EDC) - insures and finances exporters
2. Trade commissioners - Sales representative of ther country. Help exporters find buyers.

Question 29

Define absolute advantage

Answer 29

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than another entity that produces the same product or service. Produces a product or service using a smaller number of inputs or a more efficient process than another entity producing the same. Not mutually beneficial.

Question 30

Define comparative advantage

Answer 30

An economy’s ability to produce goods and services at a lower opportunity cost than trade partners. Gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins. Mutually beneficial.

Question 31

Name some challenges in Jurisdiction

Answer 31

• Transfer of pricing across borders

- Transactions in another country

Question 32

Name a few security enhancements in global business

Answer 32

• Biometric technology
• Customs inspection
• Securing shipments in transit

Question 33

Name a security issue

Answer 33

Longer transit times due to increased security screenings, involve an economic cost.

Question 34

Name 2 issues

Answer 34

• Intellectual property (IP) in global business - Organizations pursuing opportunities in the markets that most flagrantly violate IP regulations do so at significant risk.
• Environmental impacts - companies are increasingly being pressured to focus on “green” or “sustainable” supply chain models which use environmentally friendly inputs and result in byproducts or outputs that can be recycled. (Former “fringe” issue).