Please enable JavaScript.
Coggle requires JavaScript to display documents.
BUSINESS AND THE INTERNATIONAL ECONOMY (multinational businesses (benefits…
BUSINESS AND THE INTERNATIONAL ECONOMY
globalisation
the increases in worldwide trade and movement of people and capital between countries
benefits
opening up foreign markets
become a multinational business
import products from othre countries to sell to customers in home country with no trade restrictions
import materials and components from other countries - reduce costs
threats
if foreign competitors offer cheaper products sales of local business might fall
increasing investment from multinationals to set up operations in home country will create further competition
employees may leave businesses that cannot pay rhe same or more than international competitors
Free Trade Agreements (FTA's)
a free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them
a free trade area is where there are no import tariffs or quotas on products from one country entering another
free trade area examples
NAFTA: United States, Mexico and Canada
EFTA: European Free Trade Association consists of Norway, Iceland, Switzerland and Liechtenstein
SAFTA: South Asian Free Trade Area comprising Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka
tariffs and quotas
a tariff is a tax on imports
quota is a quantity limit of imports coming into a country
examples of tariffs
On March 1, 2018, President Trump announced he would impose a 25% tariff on steel imports and a 10% tariff on aluminum
EU charges 12.8% + 1713 € per 1 ton of mutton
Norway charges 7.36 NOK per 1kg or 125% of the value of peas
examples of quotas
US imposed an import quota of no more than 1.25 tons of sugar from 1993 to 1994
since 1993, Europe had a quota on the imports of bananas that allowed for a greater number of bananas to enter from its former colonies in Africa than from Latin America
why some governments introduce tariffs and quotas
regulate the volume of trade between them and other countries
protect nascent industries
fortify national defense programs
support domestic employment opportunities
combat aggressive trade policies
protect the environment
reduce imports and increase domestic production
multinational businesses
are those with factories, production or service operations in more than one country (sometimes known as transnational businesses)
multinational businesses operating in Vietnam
coca cola
adidas
nike
apple
samsung
benefits to the business
produce goods with low costs, wages
extract raw materials
nearer to the market to reduce transport costs
avoid trading barriers
increase market share, expand into different market areas
remain competitve with rival businesses
gain government grants
benefits to the country
jobs created, reduce unemployment
increased investment
increased exports
taxes paid by multinationals
increased customer choice
drawbacks to the country
unemployment among skilled workers
reduced sales for local businesses
repatriation of profits
resources used up by firms
government and economy influenced by firms
other businesses
hermes
pepsi
gucci
chanel
mc donalds