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Business and the international economy (Advantages of those multinationals…
Business and the international economy
What is globalization ?
Benefits
Becoming a multinational
Import products form other countries to sell to customers in 'home' country
Export products to other countries- opening up foreign markets
Import materials and components from other countries - but still produce final goods in 'home' country
Threats
Unemployment
Inequality
Trade Imbalances
Created further competition
Globalization is the term now widely used to describe increases in worldwide trade and movement of people and capital between countries
Why some government introduce some tariffs and quotas ?
In order to protect domestic businesses from foreign competition using tariffs and quotas.
Tariffs example: The U.S. tariff rate on light trucks, such as pickup trucks and SUVs, has been 25% since 1965
Quotas example: Country A can only import X amount of products from country B.
What is FTA's
Exist when countries agree to trade imports/exports with no barriers such as tariffs and quotas.
Regional free trade areas
Customs union (CAN, EAC, EUCU, SACU)
Common market (EEA–Switzerland, ASEAN)
Economic and monetary union (CSME/EC$, EU/€, Switzerland–Liechtenstein/CHF)
What is meant by multinational businesses
Are those with factories, production or service in more than one country. These are sometimes known as transnational businesses.
Example
Toyota (Japan)
Nike (Thailand)
Chanel (Paris)
Chevrolet ( Indonesia )
Adidas (Germany)
Why do firms become multinational
lower cost
Extract new materials needed for production
Increase market share and spread risks
Remain competitive
Gain government grants
Reduce transport costs
Advantages of those multinationals operating in Vietnam
increase investment
jobs are created
Increase consumer choices
increase export
taxes are paid by multinational
Disadvantages of those multinationals operating in Vietnam
may ask the government for large grants
reduce sales for local business
often unskilled jobs