The Global Business Environment

Question 1

What is the purpose of organizations?

Answer 1

To create value for stakeholders by achieving goals such as profit, service delivery, or social welfare.

Question 2

What are the key types of organizations?

Answer 2

Public, private, non-profit, government, and hybrid organizations

Question 3

What are external influences on organizations?

Answer 3

PESTEL
Political, economic, social, technological, environmental and legal factors.

Question 4

Define the term “globalization”

Answer 4

The integration of markets, businesses, and cultures through international trade and communication technologies

Question 5

What are the benefits of globalization

Answer 5

Access to new markets, lower production costs, increased innovation, and improved economies of scale

Question 6

What are the risks of globalization?

Answer 6

Increased competition, regulatory challenges, cultural misunderstandings, and exposure to global economic downturns

Question 7

What are trade blocs?

Answer 7

Groups of countries that agree to reduce or eliminate trade barriers between them (e.g., the European Union, NAFTA)

Question 8

Define the concept of Corporate Social Responsibility (CSR)

Answer 8

CSR is a business’s commitment to ethical practices, sustainability, and contributing to social and environmental welfare

Question 9

What is the PESTEL framework?

Answer 9

A tool used to analyse the Political, Economic, Social, Technological, Environmental, and Legal factors affecting an organization

Question 10

What is the role of multinational enterprises (MNEs)?

Answer 10

MNEs operate in multiple countries, expanding their markets and spreading risk while contributing to economic globalization

Question 11

What is the difference between outsourcing and offshoring?

Answer 11

Outsourcing: Contracting out tasks to third-party providers.
Offshoring: Relocating business processes to another country to reduce costs

Question 12

What are the advantages of outsourcing?

Answer 12

Cost reduction, access to specialized skills, flexibility, and improved focus on core business activities.

Question 13

What are the challenges of offshoring?

Answer 13

Cultural differences, quality control issues, time zone differences, and potential job losses in home countries.

Question 14

What are the key global economic indicators?

Answer 14

GDP, inflation rates, unemployment rates, exchange rates, and interest rates

Question 15

Define sustainable development

Answer 15

Meeting the needs of the present without compromising the ability of future generations to meet their own needs

Question 16

What is the World Trade Organization (WTO)?

Answer 16

An international organization that regulates trade rules and ensures free and fair trade between nations

Question 17

What is the impact of technological advancements on businesses?

Answer 17

Increased efficiency, innovation, disruption of industries, and enhanced customer experiences

Question 18

What is meant by the term “business ethics”?

Answer 18

Business ethics refers to the moral principles that guide behavior and decision-making in organizations

Question 19

What are environmental regulations?

Answer 19

Laws and guidelines set by governments to reduce pollution, conserve natural resources, and protect the environment.

Question 20

What are the components of the ‘Triple Bottom Line (TBL)’?

Answer 20

1. People (social responsibility);
2. Planet (environmental responsibility);
3. Profit (economic performance).

Question 21

What is an emerging market?

Answer 21

A nation with a rapidly growing economy and developing industrial base, offering potential for investment.
BRIC countries:
Brazil, Russia, India, and China are considered the top four emerging markets
CIVETS countries:
Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa are predicted to be among the next emerging markets to rise in economic prominence.
The Next Eleven – or “N-11” – coined by Jim O’Neill and his Goldman Sachs colleagues in 2005 and consists of eleven emerging markets with huge economic potential: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam
Other emerging markets:
Argentina, Mexico, Poland, South Korea, Taiwan, Thailand, Egypt, Iran, Nigeria, Pakistan, Saudi Arabia

Question 22

What are the primary risks in emerging markets?

Answer 22

Political instability, regulatory uncertainty, currency fluctuations, and infrastructure challenges

Question 23

What is the role of innovation in global business?

Answer 23

Innovation drives competitive advantage, leads to new products and services, and fosters business growth

Question 24

Define foreign direct investment (FDI)

Answer 24

FDI occurs when a company invests in a business or asset in another country to establish a lasting interest

Question 25

What are trade tariffs?

Answer 25

Taxes imposed by a government on imported goods to protect domestic industries or raise revenue

Question 26

What is a protectionist policy?

Answer 26

Policies designed to protect domestic industries by restricting imports through tariffs, quotas, and other trade barriers

Question 27

What is a free trade agreement?

Answer 27

An agreement between two or more countries to reduce or eliminate trade barriers, fostering economic cooperation

Question 28

Define exchange rate

Answer 28

The value of one currency compared to another, influencing the cost of imports and exports

Question 29

What is the role of the International Monetary Fund (IMF)?

Answer 29

The IMF promotes global economic stability, offers financial assistance, and provides policy advice to member countries

Question 30

What is corporate governance?

Answer 30

Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled

Question 31

What are the pillars of corporate governance?

Answer 31

Accountability, fairness, transparency, and responsibility

Question 32

Define business sustainability

Answer 32

A business strategy focused on meeting the needs of the present without compromising future resources or the environment

Question 33

What is the impact of economic downturns on businesses?

Answer 33

Reduced consumer spending, layoffs, cost-cutting, lower profits, and decreased investment

Question 34

What is the role of NGOs in the global business environment?

Answer 34

NGOs (Non-Governmental Organizations) advocate for social, environmental, and ethical issues, influencing corporate behaviour and policies

Question 35

What is competitive advantage?

Answer 35

A company’s ability to perform better than its competitors, achieved through cost leadership, differentiation, or niche focus

Question 36

What is the role of ethics in decision-making?

Answer 36

Ethical decision-making ensures that business actions align with moral standards and social expectations, avoiding harm to people, communities, or the environment

Question 37

Define political risk

Answer 37

The likelihood that political decisions, events, or conditions will affect a business’s operations or profitability in a particular country

Question 38

What is inflation?

Answer 38

A general increase in prices and a fall in the purchasing value of money over time

Question 39

What are the components of GDP?

Answer 39

Consumption, investment, government spending, and net exports (exports minus imports)

Question 40

What is supply chain management?

Answer 40

The process of managing the flow of goods, services, and information from raw material suppliers to final customers