Question

Answer Two Questions Only     Clearly Indicate the Question Number Use minimum 400 words

1.    Describe and explain the factors which have made globalisation possible.

2.    What were, and are, the advantages and drawbacks of Fordist production systems?.

3.    What factors encourage, and what factors restrict, national economic growth?.   

4.    What is ‘Competition Policy’ and why is it so important in Europe?.

5.    What are the main tools of government economic policy?.  How do they work?

6.    Why are multinational corporations so strong and successful?.

7.    Why do firms ‘go public’?  What happens when they do this?

8.    Why do different countries have different chronic trade imbalances?

9.    Describe and explain the problems of both capitalist and command economies.

10.  Why are Lobby Groups a problem?

11.  Why is language so important to international business?

Answer 1

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1. Describe and explain the factors which have made globalisation possible.

A number of influences is adding to the globalization process. Several of the more significant forces of globalisation are listed below.

Containerisation — Thanks to containerisation, bulk transport and other efficiencies, ocean transportation prices have been reduced. The reduced unit cost of exporting goods across the world economy helps push costs in the producing nation equal to those in the export markets and allows trade more internationally contestable

Technical transition – Rapid and continuous technological progress has lowered the expense of processing and exchanging information – often referred to as the 'death of space' – a primary force behind the exchange of consumer goods utilizing network technology Scale economies – Many analysts agree that the minimum productive size (MES) correlated with some industries has risen. When the MES is growing, so a domestic demand can be deemed too limited to satisfy such industries' sales needs. Many developed nations with their own transnational companies

Differences in tax systems — Companies' ability to benefit from lower unit labor costs and other favorable development factors abroad has prompted countries to change their tax structures to draw foreign direct investment (FDI). In a attempt to attract lucrative international investment contracts, several countries have been interested in tax war between themselves.

Less protectionism — The systematic elimination of old mechanisms of non-tariff protection such as import licenses and foreign exchange caps. Borders have been opening up and average tariff rates for imports have dropped. Having said that, it is worth noting that there has been an rise in non-tariff barriers in recent years.

Transnational and Multinational Companies' Expansion Strategies — International companies and brands have steadily invested substantially in growing globally through their search of sales and income growth. This is especially relevant for companies owning brands that have shown the ability to be popular internationally, notably in faster-growing economies fuelled by rising numbers of middle-class customers.

Transportation costs — Increases in containerization have reduced freight charges significantly. For starters, maritime unit costs have plummeted by more than 70 percent in the last 25 years, while air freight costs have declined by 3-4 percent year-on-year. When freight prices are also less likely to balance out the profits from the competitive advantage, the effect has been a increase in trade flows. The increase of sea and air travel, though, has often created considerable anxiety over foreign trade's detrimental externalities. Indeed, latest projections of an rise in CO2 pollution of > 70 per cent of 2020 have contributed to demands for green taxes on shipping.

Internet development — Internet innovation has expanded e-commerce, enabling businesses of all sizes to participate more effectively in global markets. Essentially, the internet serves as a 24-hour store front empowering customers around the globe to procure goods digitally and around the clock from anybody who has the greatest price to give. Consequently, it provides the organization with a worldwide presence through inexpensive ads, such that only tiny local companies can afford to service clients internationally. Accordingly, the internet offers better exposure to international markets for both businesses-both local and MNCs alike. We now consider that the greater company is no longer the exclusive domain of foreign exchange.

4. What is ‘Competition Policy’ and why is it so important in Europe?.

European competition law is the rule in effect inside the European Union. It facilitates the protection of competitiveness within the European Single Market by controlling anti-competitive actions by firms to insure that they do not establish cartels and monopolies that would affect society's interests. Nevertheless, European antitrust legislation is drawn largely from Articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU), as well as from a set of rules and directives. Four main regulatory fields are: cartels, or conspiracy regulation and other anti-competitive activities, under Section 101 TFEU. Pursuant to Article 102 TFEU, market domination or misuse of dominant business roles by corporations is prohibited. Fusions, regulation of planned mergers, acquisitions and joint projects between firms with a fixed sum of turnover in the EU, in compliance with the legislation of the European Union on merger.

The sole jurisdiction for the implementation of competition law in the European Union lies with the European Commission and its Directorate-General for Competition, while certain Directorates-General manage state assistance in other industries, such as agriculture. The Directorates will demand reimbursement of unsuccessfully received State assistance, as was the case with Malev Hungarian Airlines in 2012. Since the philosophy of trade is ideally tailored to private industry, the essence of EU antitrust law concerns companies making income. That said, legislation obviously stretches further and both Articles 101 and 102 in the TFEU use the vague definition of 'undertaking' to delimit the spectrum of competition law.

EU competition policy aims at safeguarding the correct workings of the single market. Essentially, it means that firms have the right to operate in the markets of all Member States in fair terms. Competition policy includes a broad variety of areas: competition and collusion, mergers analysis, State assistance, industry liberalization and foreign collaboration. The European Commission (EC) enforces laws regulating trade by its investigative and penalty powers. Competition proceedings of complaints considered by the Court of Justice can be put to the General Trial. Within the Treaties, generally by the review process, the European Parliament is interested in trade affairs, with significant examples are the monopoly risk regulations and the authority of the national competition authorities. For all two instances the Senate, along with the Council, served as co-legislator in the regular statutory process. EU antitrust legislation forbids deals between two or more separate market players where rivalry is limited. This also forbids the exploitation by one or more firms of a powerful business place.

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