The Global Business Environment Flashcards
What is the purpose of organizations?
To create value for stakeholders by achieving goals such as profit, service delivery, or social welfare.
What are the key types of organizations?
Public, private, non-profit, government, and hybrid organizations
What are external influences on organizations?
PESTEL
Political, economic, social, technological, environmental and legal factors.
Define the term “globalization”
The integration of markets, businesses, and cultures through international trade and communication technologies
What are the benefits of globalization
Access to new markets, lower production costs, increased innovation, and improved economies of scale
What are the risks of globalization?
Increased competition, regulatory challenges, cultural misunderstandings, and exposure to global economic downturns
What are trade blocs?
Groups of countries that agree to reduce or eliminate trade barriers between them (e.g., the European Union, NAFTA)
Define the concept of Corporate Social Responsibility (CSR)
CSR is a business’s commitment to ethical practices, sustainability, and contributing to social and environmental welfare
What is the PESTEL framework?
A tool used to analyse the Political, Economic, Social, Technological, Environmental, and Legal factors affecting an organization
What is the role of multinational enterprises (MNEs)?
MNEs operate in multiple countries, expanding their markets and spreading risk while contributing to economic globalization
What is the difference between outsourcing and offshoring?
Outsourcing: Contracting out tasks to third-party providers.
Offshoring: Relocating business processes to another country to reduce costs
What are the advantages of outsourcing?
Cost reduction, access to specialized skills, flexibility, and improved focus on core business activities.
What are the challenges of offshoring?
Cultural differences, quality control issues, time zone differences, and potential job losses in home countries.
What are the key global economic indicators?
GDP, inflation rates, unemployment rates, exchange rates, and interest rates
Define sustainable development
Meeting the needs of the present without compromising the ability of future generations to meet their own needs
What is the World Trade Organization (WTO)?
An international organization that regulates trade rules and ensures free and fair trade between nations
What is the impact of technological advancements on businesses?
Increased efficiency, innovation, disruption of industries, and enhanced customer experiences
What is meant by the term “business ethics”?
Business ethics refers to the moral principles that guide behavior and decision-making in organizations
What are environmental regulations?
Laws and guidelines set by governments to reduce pollution, conserve natural resources, and protect the environment.
What are the components of the ‘Triple Bottom Line (TBL)’?
- People (social responsibility);
- Planet (environmental responsibility);
- Profit (economic performance).
What is an emerging market?
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
What are the primary risks in emerging markets?
Political instability, regulatory uncertainty, currency fluctuations, and infrastructure challenges
What is the role of innovation in global business?
Innovation drives competitive advantage, leads to new products and services, and fosters business growth
Define foreign direct investment (FDI)
FDI occurs when a company invests in a business or asset in another country to establish a lasting interest
What are trade tariffs?
Taxes imposed by a government on imported goods to protect domestic industries or raise revenue
What is a protectionist policy?
Policies designed to protect domestic industries by restricting imports through tariffs, quotas, and other trade barriers
What is a free trade agreement?
An agreement between two or more countries to reduce or eliminate trade barriers, fostering economic cooperation
Define exchange rate
The value of one currency compared to another, influencing the cost of imports and exports
What is the role of the International Monetary Fund (IMF)?
The IMF promotes global economic stability, offers financial assistance, and provides policy advice to member countries
What is corporate governance?
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled
What are the pillars of corporate governance?
Accountability, fairness, transparency, and responsibility
Define business sustainability
A business strategy focused on meeting the needs of the present without compromising future resources or the environment
What is the impact of economic downturns on businesses?
Reduced consumer spending, layoffs, cost-cutting, lower profits, and decreased investment
What is the role of NGOs in the global business environment?
NGOs (Non-Governmental Organizations) advocate for social, environmental, and ethical issues, influencing corporate behaviour and policies
What is competitive advantage?
A company’s ability to perform better than its competitors, achieved through cost leadership, differentiation, or niche focus
What is the role of ethics in decision-making?
Ethical decision-making ensures that business actions align with moral standards and social expectations, avoiding harm to people, communities, or the environment
Define political risk
The likelihood that political decisions, events, or conditions will affect a business’s operations or profitability in a particular country
What is inflation?
A general increase in prices and a fall in the purchasing value of money over time
What are the components of GDP?
Consumption, investment, government spending, and net exports (exports minus imports)
What is supply chain management?
The process of managing the flow of goods, services, and information from raw material suppliers to final customers
