Factors Driving Global Business Development

Question 1

What are the factors that drive Global Business Development?

Answer 1

1.Financial growth opportunities or loss minimization
2.Consumer purchasing and spending patterns
3. World Trade Organisation (WTO) regulations and sanctions
4.Deregulation of the financial market

Question 2

Define Globalisation

Answer 2

The increasing integration of the world’s economies in terms of economics, culture and politics. For businesses, it is an attempt by firms to efficiently produce and sell the same products or services simultaneously in different countries.

Question 3

Globalisation involves 4 ranges of areas such as?

Answer 3

1.Trade: selling goods and services in other nations.

2.Investment: the purchasing of physical assets, intangible assets or financial assets.

3.Technology: tools supporting transport, trade, development of products, production…. *

4.The flow of capital ($): the *movement of funds and assets invested by the owners of the business in order to receive a return.

Question 4

what are the advantages of Globalisation?

Answer 4

1. International trade creates jobs and investment,
2. builds global standards for fair trade and** environmental protection and human rights.**
3. promotes competition, which leads to better choices and prices for consumers and business
4. improves education and training.

Question 5

Disadvantages of Globalisation

Answer 5

1. Free trade harms local workers.
2. International companies take advantage of poor environmental protections in some countries.
3. Globalization widens the income gap between wealthy countries and corporations and low-paid workers.

Question 6

Financial Growth Opportunities

Answer 6

Financial growth opportunities are the opportunities for a business to expand into foreign markets, resulting in access to larger markets and a larger pool investors. Businesses can then look to gain a percentage of that market which will ultimately result in larger profits. 

Question 7

why do business go Global

Answer 7

1.Higher profits

2.Access to global markets.

Lower technological barriers to movement of goods, services and factors of production. **

3.Lower labour and production costs in developing nations.

4.Extended product life cycles through marketing inventory in other nations.

Question 8

what are financial growth opportunities

Answer 8

The Opportunities for a business to expand into foreign markets,whilst gaining access to larger markets and larger pool of investments thus having an opportunity to gain more profits

Question 9

when should a company expand?When they……

Answer 9

1.Succeed in the domestic market of Aus

2.Have reached market maturity stage of the product life cycle which removes the potential for further growth opportunities.  

3.Established brand. 

4. have a strong financial position and is ready to expand. 
   **
   5.have bigger markets to enter.** 

6.Opportunities in other countries for** joint ventures.  **

** Identifies new investors overseas**

Question 10

what is loss minimisation

Answer 10

It is where a business aims to reduce its loss of profit due to circumstances that cannot be covered by sales within their home country

Question 11

why should business attempt to loss minimise

Answer 11

1.By selling overseas ,this minimises the risk of losing money
2.expansion into foreign markets can minimise hedge against financial losses for a business
to remove seasonal purchasing by customers resulting in steady cash flow for a business
3.seasons in the south hemisphere are opposite to the northenr hemsisphere

Question 12

key points for why going Global is important

Answer 12

Domestic business can look overseas for **investors and sources of funding. 
**
Australian companies can access services and production at a lower cost than in the domestic market, to reduce costs and help make growth more affordable. 

**Domestic markets may be mature or highly competitive.
International markets may provide opportunities for sales growth.  **
*
Seasonal differences between northern and southern hemispheres mean that companies can hedge against seasonal fluctuations in demand. *

Question 13

Definition for consumption

Answer 13

the description of a household’s spending on goods and services determined by Income level, type of product and social norms.

Question 14

consumption patterns

Answer 14

the spending on goods and services by households, it is influenced by social norms, disposable income levels and access to technology.

Question 15

What factors contribute to consumers using online global businesses?

Answer 15

1.Access to greater choice of products

2.Widespread use of **mobile devices

3.Widespread use of internet

4.Strength of **the AUD **

5.Improved online shopping convenience

6.Use of **social media **by consumers and retailers to contribute to brand awareness

7.Secure and reliable** online payments**

Question 16

Key Points for consumer purchasing and spending patterns

Answer 16

1.Confidence in the reliability and security of online shopping provides companies with access to larger, international markets.

2.Social media is used by consumers to review products and **build brand awareness. **by companies.

3.Distribution of digital products reduces costs and makes it easier for companies to grow internationally e.g. music, software, and elearning.

4.Consumers use the internet to research products, prices and reviews and compare online options to build their own shops.

Question 17

define WTO

Answer 17

World Trade Organisation

Question 18

what is the purpose of the WTO

Answer 18

to sets the standards for international trade and for countries participating in Free Trade Agreements

Question 19

how does WTO accomplish its purpose

Answer 19

it has growing authority over national governments by imposing restrictions and controls on nations requiring assistance .

Question 20

Under WTO rules free trade agreements must:

Answer 20

1.Eliminate tariffs and other restrictions on all trade in goods between member countries.

2) Eliminate discrimination against service suppliers from member countries (helping to increase trade)

Question 21

what standards are set by the WTO

Answer 21

1) Transparency: clear information about policies rules and regulations (increasing the clarity of procedures when trading)

2) Commitment to **lower trade barriers **and to increase access to global markets.

3) Centralised databases of trade information.

4)** Trade facilitation**: the simplification of procedures,removal of red tape and measures to simplify trade between nations.

Question 22

The role of WTO

Answer 22

a key role is **resolving conflicts ** between members.if a panel finds a member in breach of WTO rules then sanctions may be imposed

Question 23

sanctions that could be imposed By WTO

Answer 23

1. Increase in customs duties (higher fees)
2. Embargoes (official ban on trade or commercial activities)
3. Boycotts – refusal to buy or handle goods as punishment

Question 24

overall what does the WTO aim to do

Answer 24

facilitate safe global trade. Encouraging countries to trade through clear rules, standards and platforms to resolve disputes. This aims to provide businesses with more confidence and opportunity when considering entering international markets.

Question 25

What is DEREGULATION

Answer 25

the reduction or elimination of laws/ government control over a particular industry, usually enacted to create more competition within the industry

Question 26

What does Deregulation look like?

Answer 26

Removal of price controls - businesses can now set their own price, no minimum or maximum price.

**Removal of trade barriers **

**No tariff: added tax on imports. **

**No quota: unlimited imported products.
**
Removal barriers to investment - investors can now look to other nations for opportunities.

Removal of licensing requirements - being able to drive a taxi without a driver’s license.

Question 27

BENEFITS OF Deregulation

Answer 27

Promoting competition: anyone can now enter a market or country.

Reduces the cost of running a business: no costs of licensing.

Better prices for consumers: no inflated prices.

No irrelevant regulations: saving time for businesses.

Question 28

Key points of Deregulations to know

Answer 28

Reducing barriers to the flow of capital between countries is part of globalisation.

It can reduce limits on bank lending, making it easier for companies to secure loans for expansion.

Deregulation **reduces barriers to entry and can increase competition in the financial industry. **

Companies benefit from competition as financial institutions compete on interest rates, services and fees and charges.

Question 29

overall Deregulation will allow businesses to focus on………

Answer 29

inovation and expansion, rather than dealing with complex and unnecessary regulation.

Question 30

WHAT does GLOBALISATION IMPACT?

Answer 30

1.Employment levels in developing countries and developed countries

2.Global spread of skills and technology

3.International cooperation

4.Domestic market

5.Tax minimisation – tax havens and transfer pricing

Question 31

What do we mean by employment levels or rates ?

Answer 31

Refer to the proportion of a population that is willing and able to work and can find employment.

Question 32

How do employment levels increase in developing nations through globalisation?

Answer 32

1) Developing nations have a lack of capital and government support in growing their domestic business and employment.

2) International companies invest in roads, buildings and technology to allow for employment in developing nations.

3) Developed nations have now lost jobs due to the movement of business to developing nations.

Question 33

How are employment levels affected by Globalisation in developed nations?

Answer 33

1.Growth in High skilled jobs

2.Foreign investment creates jobs in industries.

3.Globalisation spurs innovation, which creates jobs in technology sectors.

4.Access to global markets boosts exports, more job creation.

5.Outsourcing causes job displacement in developed Australian jobs impacted.

6.Globalisation contributes to income inequality in developed nations. e.g white collar workers are paid highy for specialised work and low income workers are replaced through automation

Question 34

key points on employment levels in developing countries and developed countries….

Answer 34

1.the higher the unemployment rate – the greater the opportunity for businesses in the global marketplace to find workers as people wiling to accept job offers
2. In developed nations globalisation offers opportunities that will increase employment levels, however low unemployment rates businesses will have to pay higher wages for sought after skilled labour.

Question 35

How does Globalisation Positively impact employement Levels in Developing Countries?

Answer 35

1.There is an increase in Job Opportunities
2.economic growth and improved living standards

Question 36

How does Globalisation impact employement levels negatively in Developing countries ?

Answer 36

1.it affects employment stability
2.Exploitative labour practises by multinational corporations seeking competitiveness
3.vulnerability of these economies to global economic downturns

Question 37

what is outsourcing

Answer 37

hiring external third-party service parties s to handle specific business functions, aiming for cost savings and specialization. It allows companies to focus on core activities while benefiting from external expertise and resources.

Question 38

Falls under Global spread of skills and technology

how outsourcing impacts local nations

Answer 38

1.it may result in ** loss of local labour** in a home country
2.The low cost production process allows for money to be redirected towards new investment.
3. There is increased economic activity which may lead to further development, as more businesses outsource to developing nations.

Question 39

Falls under Global spread of skills and technology

Other factors drive international migration and the global movement of labour, including

Answer 39

1) Climate change

2) Lack of food security

3) Disruption of local industries (political instability & financial instability)

Question 40

Falls under Global spread of skills and technology

Offshoring

Answer 40

the practice of relocating certain business functions or processes to another country, often for cost savings, access to skilled labor, or enhanced efficiency.

Question 41

Falls under Global spread of skills and technology

Benefits of International Investment

Answer 41

1.development of infrastructure
2.Rapid economic development
cath up to developed nations
3.removal of digital divide

Question 42

Falls under Global spread of skills and technology

Spread of Skills & Tech Key Points

Answer 42

1.Globalisation allows for ** spread of technology, innovation and new business models**.

2.Joint ventures and licensing arrangements transfer technology internationally.

3.**Companies take their innovation and technology to low cost countries to source their labour and expertise at low costs. **

4.Governments **encourage skilled migration so people can move to where there is a demand in their labour and expertise. **

5.The internet allows companies to sell their products and services internationally, access secure international payment systems and efficiently operate across countries.

Question 43

Overall message of Global spread of skills and tech

Answer 43

1.globalisation allows offshoring of production in developing nations, encouraging the spread of employment and skills to developing nations. sharing up-to-date technology with developing nations
2.facilitating international business investment will allow for rapid economic development which will allow for developing nations to catch up to developed nations.
3.developed nations can attract high skilled workers who want to take advantage of policies that incentivise skilled workers to migrate and bring their knowledge and expertise to assist domestic businesses.

Question 44

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International cooperation

Answer 44

Globalisation helps facilitate Cooperation between different cultures and counrties of people around the word

**Trade **is a key fator ,driving international cooperation between people ,businesses,governments and households experience benefits of international trade.

Question 45

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How Globalisation Impacts International cooperation?

Answer 45

1.Multicultural societies which result from Gloablisation can lead to increased diversity ,understanding of others culture,increased travel and migration which increases International cooperation
2.Globalistaion will involve international gvt cooperation through agreements such as Bilateral Free Trade agreements and WTO dealings which reduce regulations further enhancing cooperation
3. Technology means cooperation can occur in real-time, and information, capital and expertise can be shared quickly and cheaply

**Trade **is a key fator ,driving international cooperation between people ,businesses,governments and households experience benefits of international trade.

Question 46

What is Free Trade Agreement(FTA)

Answer 46

(FTA) are mechanisms for deregulation allowing for the creation of agreed rules and standards for trade that apply across nations and regions

Question 47

what do we mean by the Domestic market ?

Answer 47

The internal market or home market, where goods and services are bought and sold Domestically within the borders of a country.

Question 48

how does Globalisation Impact The Domestic Market?

Answer 48

Globalisation make Domestic markets compete with imported goods through the development of online shopping and secure online payment systems. This can lead to domestic producers reducing their prices in order to compete, resulting in some inefficient small businesses going out of business.

Question 49

What impacts Australia’s competitiveness overseas?(exports)

Answer 49

1) Exchange rate

2) Prices

3) International demand

Question 50

Key points on the Domestic market.

Answer 50

Australian companies that export are affected by changes in exchange rates, prices and demand overseas.

Domestic companies** compete with international businesses** because of globalisation and the internet.

Strong domestic sales and profits can help companies finance global expansion.

A mature or declining domestic market encourages a company to look internationally for revenue.

Question 51

what is tax minimisation?

Answer 51

Tax minimisation is when you legally arrange to reduce the amount of tax paid.

Question 52

Tax Haven

Answer 52

Countries with secretive tax and systems that allow for low taxes for non-resident and foreign owned companies. This leads to less taxes paid to the government where the business is operating

Question 53

There are two requirements for a country to be classified as a ‘tax haven’:

Answer 53

Lack of transparency
- Weak or no laws about business records and reporting, resulting in difficulty in tracking business transactions, earnings and money.

Lack of information exchange
- Governments and financial institutions do not share information with other governments. They also resist sharing information with international investigations.

Question 54

Tax minimisation – tax havens and transfer pricing due to Globalisation

overall tax haven is…..

Answer 54

a legal way for a company to avoid paying taxes in their home country. The lack of transparency and information exchange in tax havens allows for their domestic governments to attract foreign capital.

Question 55

what is transfer Pricing ?

Answer 55

it when one part of a multinational company sells products or services to another part of the same company in a different country.

The prices charged can manipulate profits and the amount of tax they have to pay.

Question 56

what is the aim of transfer pricing ?

Answer 56

to allocate profits and costs among the subsidiaries or divisions of the company in different tax jurisdictions.

Question 57

what may companies use transfer pricing for?

Answer 57

to optimize tax liabilities, reduce overall tax expenses, and comply with tax regulations in various countries

Question 58

key Points in Tax minimisation

Answer 58

1. companies operate in countries where they can minimise their tax
2. by minimising tax ,companies can access more funds for global growth
3. tax havens are countries that have low taxes on companies and dont permit other government to access their financial and banking information.
4. Transfer Pricing is when a corporation sets out companies in tax havens to manipulate where revenue is earned ,and cost are incurred ,to avoid paying tax

Question 59

Key information when answering a question on tax minimisation and transfer pricing:

Answer 59

A tax haven is a jurisdiction that has a low rate of tax or does not levy a tax. It offers some degree of secrecy. Tax havens do not share or provide information to other financial institutions or governments.

Transfer pricing is the setting of the price for goods and services sold between controlled legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price.

MNCs may attempt to minimise tax by relocating profits within a parent company located in a high-taxing economy, to a subsidiary company in a low-taxing economy (i.e a tax haven).

This can be done by setting artificially high transfer prices for their commercial/financial dealings with their subsidiary company.

This allows for the manipulation of profits and the consequent amount of tax paid by the enterprise

Question 60

overall Transfer pricing …….?

Answer 60

is utilised by multinational companies that operate using tax haven countries. The use of artificially low prices allows for the company to avoid paying the usual amount of tax. Paying less tax means more financial resources left over for the business to grow.

Question 61

examples of how globalisation can be affected by loss minimisation.

Answer 61

Currency speculation (profit from buying or selling foreign currency) now occurs between countries, businesses and individuals.  

2) Profit margins also encourage globalisation.  

Example: An Australian wholesaler or retailer may go to a low-cost country to manufacture goods. The opportunity to increase their profit margin and make a business opportunity viable drives global business.  

3) The cost of manufacturing in Australia is very high due to higher labour costs, rent etc.  

Question 62

overall message on consumption patterns

Answer 62

a morden reliance on digital tech has changed the way that consumers spend their money.This has allowed for increased access to global markets,fostering global business opportunities and transnational expansion

Question 63

key points on International corporation.

Answer 63

1.IC is fostered through trade in the globalised marketplace
2.companies can source skilled labour easier
3.Free Trade Agreements reduce regulations and barriers to trade and reduces the costs of importing and exporting goods.
4.government coorperate internationally through FTAs
5.Governments have incentives to encourage international companies to work together to create new products and services.

Question 64

overall message for Consumer patterns in relation to GLOBALISTAION.

Answer 64

digital technologies have changed the way that consumers spend their money.This has allowed for increased access to global markets,fosterin global business opportunities and transitional expansion,