Key vocab + CUEGIS

Question 1

Sustainability (3p)

Answer 1

1. An increasingly important business idea which has begun to take on greater importance given increasing economic scarcity, population and social change.
2. Sustainability can refer to:
   - environmental factors
   - economic factors
   - cultural factors
   - social factors.
3. Many business writers collect these terms into one—called the “quadruple bottom line”. A business should try to limit the environmental impact of its activity and remain viable to provide income and job opportunities for future generations. In addition, the performance and role of business operations, especially for a business in a global context, should not damage cultural and social norms in countries other than the organizations country of origin.

Question 2

Enterprise (2p)

Answer 2

1. Enterprise refers to the idea of responsible risk-taking by an entrepreneur, to create new business opportunities by bringing the three factors of production (capital, land and labour) together for productive ends.
2. Enterprise has strong links to sustainability. Risk-taking should be carried out to add positive value to communities in terms of economic sustainability and not damage cultural and environmental sustainability.

This is not easy to achieve.

Question 3

External factors (2p)

Answer 3

1. These are factors that are outside the control of a business, but which can act both negatively and positively on business decision-making giving rise to both threats and opportunities.
2. They can be summarized by the acronym STEEPLE:
   - social
   - technological
   - economic
   - ethical
   - political
   - legal
   - environmental.

Question 4

Transparency (2p)

Answer 4

1. Given the rise of social networking, email, instant messaging and Web 2.0 tools, which allow greater collaboration and feedback, business activity and decision-making now face greater scrutiny than ever before. This scrutiny has now forced many businesses to become much more transparent, ethical and open.
2. Clear, consistent reporting and communication to stakeholders is now the norm for all businesses as part of the commitment to transparency. Of course, greater transparency brings Signifiant opportunities and threats to an organization.

Question 5

Stakeholders (3p)

Answer 5

1. Stakeholders are individuals or groups who have a direct or active interest in businesses’ operations.
2. They include external stakeholders such as customers, competitors, suppliers and the government and internal stakeholders such as employees, managers and shareholders.
3. The degree of interest and impact of stakeholders will vary according to ownership stake, financial resources and influence.

Question 6

Cultural intelligence (CQ) (2p)

Answer 6

1. Given globalization, the need for a business to undertake CQ activities becomes paramount: it needs to discover customs, values, and consumers’ backgrounds and preferences about potential new markets it may wish to enter.
2. CQ should not be considered as just more market research on consumer tastes but a more systematic attempt to build a consumer and social problem of existing and new customers across a range of global markets.

Question 7

Uncertainty and complexity (4p)

Answer 7

1. Business decision-making and risk- taking have always uncertain and complex activities. Given the existence of external factors, an entrepreneur can never be conodont that every business decision he or she has taken will be successful.
2. In the new century, with globalization and change, uncertainty and complexity have taken on a whole new meaning. In 2007, Nokia effectively “owned” the mobile phone market with nearly a 50% global market share and a value of over $1 00 billion as a company. By 2013, Nokia had sold its mobile phone business to Microsoft to remain economically sustainable with the value of Nokia now 93% smaller at $7 billion. It is unlikely any stakeholder would have predicted such a fall from grace in 2007.
3. For a future career in business, given the rapid social and technological changes occurring as these words are written, successful entrepreneurs will need to be able to incorporate uncertainty, complexity, greater transparency and CQ into their decision-making.
4. For these reasons, the ability to be creative and forward-looking becomes critical.

Question 8

Globalisation (3p)

Answer 8

1. Globalization can be defned as the growing integration,
   interdependence and general connectedness of the world
   through markets, labour mobility and capital transfer.
2. Globalization has driven both economic and socio-political change that has forced businesses to become more innovative and retain their place in their own market.
3. Greater transparency through the world wide web via communication and social media has promoted much greater
   awareness of ethical issues, leading to all businesses having to
   consider new strategic options. Moreover, greater transparency
   and “connectedness” through the Internet has heightened the
   need to be sensitive to diferent cultures.

Question 9

4 important reasons (or “events”) that have allowed globalisation

Answer 9

1. There was increased opportunity for large organizations to spread tax liabilities around the world, boosting portability to shareholders.
2. The increase of and availability of international schools helped with the relocation of families in response to the movement of labour and capital.
3. There have been dramatic falls in the cost of communication and the simultaneous use of VOIP tools such as Skype and instant messaging with the increased use of video conferencing.
4. A Signifiant fall in air fares with an increase in the number of routes available led to greater competition in the airline industry.

Question 10

Impact of internet on globalisation (5p)

Answer 10

1. The fall of the Berlin Wall on 9 November 1989 marked the world balance of power shifting towards more open economies and markets.
2. The Netscape IPO on 9 August 1995 sparked interest in fibre optic cables which allow much faster transfer of data.
3. Power searching could be carried out on the Internet through Google and other search engines, allowing greater transparency about pricing, product availability and competition.
4. Widespread adoption of wireless technology increased mobile and personal communication opportunities both locally and globally.
5. Web 2.0 software facilitated more online collaborative workspaces across a range of time zones and economic regions (Friedman, 2007).