Business and the international economy (Globalisation (Potential: (Start…
Business and the international economy
describe increases in worldwide trade and movement of people and capital between countries
for example, people from Vietnam are moving to another countries by getting visa to work and raise their money.
Start selling exports to another countries- open up foreign markets
Open Factorise/operations in other countries.
Import products from other countries to sell customers in 'home' country
Increasing imports into home market by foreign competitors
Increase investment from multinationals to set up operations in home country
Employees may leave business that cannot pay the same or more than international competitors.
FTA (Free Trade Agreements)
when there are agreements to trade imports/exports freely from two countries.
North American Free Trade Agreement (NAFTA)
Central American-Dominican Republic Free Trade Agreement (CAFTA-DR)
Asia-Pacific Economic Cooperation (APEC)
Why governments might introduce import quota and tariff ?
To protect domestic industries from competitions that might otherwise close them down. (protectionism)
Examples of quota:
Sugar and products with more than 65% sugar content.
Tabaco can only import to Vietnam when there are less than 500 boxes (just an example, not real)
Examples of Tariff
Cars, government increases the price of cars when import to Vietnam.
When the business has a factory or a production/service operation in more than 1 country.
Because they have more than 1 factory and lots of production businesses/service operations
McDonald - USA, Russia
Samsung - Russia, Canada
Toyota - France, Canada
Honda - Russia, Canada, France
Apple - USA, Japan, Russia
ADV and DIS
They can produce goods nearer the market to reduce transport cost
remain competitive with rival markets
gain government grants given to the business to set up operations in particular countries
Reduce sales for local business
the jobs created are often unskilled assembly-line tracks
As multinational business is large, the business could have a lot of influence on both the government and the economy of the host country.