Question

• Choose a global company and a single market in which it operates.
• Discuss the factors that constitute the economic environment of this type of business.
• Explain why it is important to understand when markets are at different stages of economic development.
• Explain how the World Bank’s four-category classification system, which measures gross national income (GNI), adds value to an organization.

Answer 1

The single market can be understood as providing a free trade and removing all the barriers which are there in the path of the trade. The European Union is one of the largest single markets in the whole world. There is no fee for rendering the services and moving capital. The economic development of such companies is dependent upon various factors. The first among them is the interest rates and taxes which are very low and sometimes they are negligible. This helps the companies to utilize their capital in some other work. The exchange rate fluctuation is also one of the important factors which constitute the economic environment. The exchange rate has direct influence as the prices affect the economy. For eg. the price of the crude oil if increases then it has a direct impact on the agricultural sectors of some developing countries. So, these are some of the factors.

It is very important to understand when markets are at different stages of economic development. as it plays a crucial role when it came to a comparison of two or more economies. Without the stages of development, comparison cannot be done. The growth in the economy is also measured through this. The Gross Domestic Product and the Gross Value Added are the factors that determine the economic development of a country. These stages of development help in analyzing the actual position of any country and that are why it is important.

World bank has classified the economies of the world in four categories which are high, low, upper-middle, and lower middle. World Bank uses Atlas method for classifying the countries into various categories. It helps the organization to utilize the lending process after being classified. This also helps in understanding the non-monetary factors like education, age etc. which helps the organization to plan their business strategy according to needs of the people. The organization who operate in low income category can make their product according to the income level of the people which will help them to sell the product easily. This it adds value to an organization.