Atención a la diversidad

The syllabus outlines four specific influences on global business, each with its own components:

1. Financial influences occur as businesses deal with aspects such as:

a. Currency fluctuations. A business might begin trading with a firm from another country that provides them with a good profit. When the deal is due, currency fluctuations could mean that demand increases (if our currency depreciates), or profits could drop if demand decreases (if our currency appreciates).

b. Interest rates. Some firms take advantage of lower interest rates on offer overseas and so gain a competitive edge against rivals.

c. Overseas borrowings. Firms must consider the joint effects of the above two factors. Overseas loans will become easier to service if our dollar increases in value, effectively reducing interest rates. However, currency fluctuations can make these loans much more expensive if our dollar depreciates.

2. Political aspects will always arise and include:

a. Tensions between protectionism and free trade have existed since trade began. Free traders want a level playing field, whilst protectionists want to preserve local jobs and ensure the future of domestic industries.

b. The World Trade Organisation (WTO) is an international organisation that acts as a policing agent for firms who feel that they have been treated unfairly. Treaties can be enforced or rescinded and intellectual property protected. Major summits such as the G7 will set policies, but countries can only agree to be bound, not forced to conform.

c. Trade agreements are often developed between nations to promote both economic and defence arrangements. Unilateral agreements are between two nations, multilateral ones involve several nations.

d. Regionalism has been an increasing trend as free trade blocs are secured to try to give participating countries advantages. The European Union is a leading example and Australia strives for similar advantages by joining ASEAN.

e. War and civil unrest are at the forefront since September 11. The choice of the World Trade Towers on Wall St was as much driven by economic dogma as politics. Many developing nations experience instability and overseas businesses can lose vast amounts of invested funds if new regimes renege on contracts.

3. Legal influences on global business include

a. Contracts signed between businesses from different nations need to take into account the domestic laws that exist in various countries. What we would expect as normal and proper may not be the case for others. Because jurisdictions tend to stop at national boundaries firms tread carefully when dealing with unknown entities.

b. Dispute resolution processes are developing in response to concerns by businesses dealing globally. The WTO has established mediation and resolution responses for firms having trouble in international legal matters, but because international law can‟t be enforced easily, it means that this remains a grey area.

c. Intellectual property concerns are an ongoing problem as poor nations tend to allow businesses to disregard copyright and patent laws. Many Australian tourists return from Bali with pirated DVDs and CDs, a typical example of this issue.

4. Social/cultural aspects have specific influences for global businesses such as

a. Languages need to be carefully interpreted, especially if contracts are made up in a foreign language. Other areas of concern here include making sure that instructions are clear and can be correctly followed, along with listing of ingredients for food and pharmaceutical products.

b. Tastes obviously vary and so firms that might have a successful recipe or formula domestically may have to make changes for overseas markets. Even McDonalds has altered its menus around the world to cater for variations in tastes.

c. Religion is a major part of the lives of many people around the world. For firms selling to customers with beliefs that differ from their own, great care must be taken. An example would be the need to kill and process meat products in different ways to satisfy the requirements for people of Jewish or Islamic faiths.

d. Business practices and ethics vary significantly between nations. In Australia we are accustomed to heavy regulation and high ethical standards, however in other nations graft, corruption and taking advantage of unsuspecting consumers are all „normal‟ parts of the business environment. Firms need to juggle requirements in one nation with customs in another.

Sheet 3 Specific influences on global business Revision Task

Match the following terms to their corresponding definitions below.

Terms: specific influences, financial, currency fluctuations, interest rates, overseas

borrowings, political, protectionism, free trade, World Trade Organisation, trade agreements, regionalism, war and civil unrest, legal, contracts, dispute resolution, intellectual property, social/cultural, languages, tastes, religion, business practices, ethics, graft, copyright.

1. Appreciations and depreciations in currency. 2. Trade without tariffs or duties.

3. Political instability often causes these problems.

4. These need to be carefully checked in foreign contracts. 5. Protective measure for intellectual property.

6. Money gained from loans offshore.

7. Formal contracts signed for international dealings. 8. Methods such as mediation to solve problems. 9. The ways in which firms are regulated.

10. Global business face four of these in the syllabus. 11. Influences that involve governments.

12. Development of trading blocs. 13. Includes trade marks and patents. 14. Taking a moral stand in business.

15. International organisation that deals with trade. 16. Illegal payment to bribe someone.

17. Influences like tastes, languages and religion. 18. Documents that set out terms of agreements. 19. These reflect the cost of money.

20. Trade policy that imposes tariffs to help local firms. 21. A system of beliefs and philosophies.

22. Influences of a monetary nature.

23. Desires, usually based on cultural upbringing. 24. Influence of the law on global business.

Sheet 3 Specific influences on global business Revision Task - Answers

Match the following terms to their corresponding definitions below.

Terms: specific influences, financial, currency fluctuations, interest rates, overseas borrowings, political, protectionism, free trade, World Trade Organisation, trade agreements, regionalism, war and civil unrest, legal, contracts, dispute resolution, intellectual property, social/cultural, languages, tastes, religion, business practices, ethics, graft, copyright.

1. Appreciations and depreciations in currency. currency fluctuations

2. Trade without tariffs or duties. free trade

3. Political instability often causes these problems. war and civil unrest

4. These need to be carefully checked in foreign contracts. languages

5. Protective measure for intellectual property. copyright

6. Money gained from loans offshore. overseas borrowings

7. Formal contracts signed for international dealings. trade agreements

8. Methods such as mediation to solve problems. dispute resolution

9. The ways in which firms are regulated. business practices

10. Global business face four of these in the syllabus. specific influences

11. Influences that involve governments. political

12. Development of trading blocs. regionalism

13. Includes trade marks and patents. intellectual property

14. Taking a moral stand in business. ethics

15. International organisation that deals with trade. World Trade Organisation

16. Illegal payment to bribe someone. graft

17. Influences like tastes, languages and religion. social/cultural

18. Documents that set out terms of agreements. contracts

19. These reflect the cost of money. interest rates

20. Trade policy that imposes tariffs to help local firms. protectionism

21. A system of beliefs and philosophies. religion

22. Influences of a monetary nature. financial

23. Desires, usually based on cultural upbringing. tastes

HSC TOPIC 5: GLOBAL BUSINESS