Business and Financial Environment I
Assignment
Part 1
Word count: 1987
Contents
1 Executive Summary 3
2 The global factors 4
3 Changes in the world economy 6
4 Organisation strategy 7
5 Types of costs 8
6 Demand elasticity 10
7 Appendices 12
8 References 13
9 Bibliography 14
1 Executive Summary
The global economy has increased the interdependence of national economies. Multinational companies dominate the international economy. The integration of the financial markets and the internet technology give access to investments in foreign countries.
As investors increasingly buy assets in a high yield foreign currency the exchange rates in this specific currency rises. This leads to a reduction in exported and an increase in imported goods. The balance is easily disturbed and governments find it increasingly difficult to control rising inflation. The economic relations between countries are very complex as each country has its monetary policy. Japan for example exerts a strong control on the exchange rates due to a high export percentage, whereas the U.S. does not use the currency operations as a tool of monetary policy.
Companies are confronted with different cultures and markets and have to differentiate their products in order to maximize their profit in clearly separated market segments. Investments in foreign countries have become easier, and multinational companies benefit from economy of scales and low cost production using the cheapest resources available.
2 The global factors
In a global economy, multinational companies independent of national government, dominate the international economy. This increases the interdependence of nations as each multi ...