6.3. Business and the international economy
A subsection of Business Studies, 0450, through 6. External influences on business activity
Listing 10 of 20 questions
CXN manufactures glass bottles using flow production. The business has a number of stakeholder groups including its 130 employees. CXN has benefitted from globalisation. Its products are exported to 39 countries. The Managing Director knows that depreciation of an exchange rate can affect business activity. She thinks all manufacturing businesses should contribute to sustainable development. Identify two reasons for globalisation. Reason 1: Reason 2: Define ‘depreciation of an exchange rate‘. Outline one possible objective for each of the following stakeholder groups of CXN. Government: Employees: 1 19 Explain one advantage and one disadvantage to CXN of using flow production. Advantage: Explanation: Disadvantage: Explanation: Do you think using renewable energy is the best way for a manufacturing business to contribute to sustainable development? Justify your answer. [ 1 19
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THEORY
2022
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General Auto is a large global business. The management of General Auto are looking for a country where they might open a factory. What is meant by a ‘global business’? Identify two factors that might influence General Auto’s choice of country in which to locate the factory. Factor 1: Factor 2: Multinational companies are not always welcome in a country because they might misuse their power. Explain how pressure groups might try and influence the behaviour of such companies. Movements in exchange rates can cause problems for any business that trades globally. General Auto’ s home country is the United States. Identify and explain three consequences for General Auto of a rise in the exchange rate of the United States dollar. Consequence 1: Explanation: Consequence 2: Explanation: Consequence 3: Explanation: By examining the advantages and disadvantages that multinational companies create, do you think that a Government should seek to attract these companies to their country? Justify your recommendation.
0450_s10_qp_11
THEORY
2010
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AVC is a private limited company that makes fashion clothing. At the moment it sells all its products to customers in its own country. However, the management of AVC is thinking of exporting goods, although it knows there are problems of entering new markets. All the workers at AVC are members of a trade union. What is meant by a ‘private limited company’? Identify two advantages to AVC of exporting its clothing. Advantage 1: Advantage 2: Identify and explain two methods that the trade union could use to encourage the management of AVC to increase the wages of its workers. Method 1: Explanation: Method 2: Explanation: Identify and explain three problems that AVC might face if it exported its clothing to other countries. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: AVC has recently received a takeover bid from a multinational clothing manufacturer. Do you think that the stakeholders in AVC would benefit if the takeover went ahead? Justify your answer.
0450_s10_qp_12
THEORY
2010
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AVC is a private limited company that makes fashion clothing. At the moment it sells all its products to customers in its own country. However, the management of AVC is thinking of exporting goods, although it knows there are problems of entering new markets. All the workers at AVC are members of a trade union. What is meant by a ‘private limited company’? Identify two advantages to AVC of exporting its clothing. Advantage 1: Advantage 2: Identify and explain two methods that the trade union could use to encourage the management of AVC to increase the wages of its workers. Method 1: Explanation: Method 2: Explanation: Identify and explain three problems that AVC might face if it exported its clothing to other countries. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: AVC has recently received a takeover bid from a multinational clothing manufacturer. Do you think that the stakeholders in AVC would benefit if the takeover went ahead? Justify your answer.
0450_s10_qp_13
THEORY
2010
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Country G has a market economy. There are no employment laws and trade unions are not allowed. GreenStar is located in country G. It sells designer clothing to retailers in Asia and Europe. GreenStar’s Managing Director wants the business to grow. He is concerned that country G’s appreciating exchange rate will affect the competitiveness of the business. What is meant by a ‘market economy’? What is meant by a ‘trade union’? Explain the possible effect of an appreciation in country G’s exchange rate on the competitiveness of GreenStar. Identify and explain three reasons why the Managing Director of GreenStar might want the business to grow. Reason 1: Explanation: Reason 2: Explanation: Reason 3: Explanation: Do you think it would benefit businesses in country G if there were employment laws? Justify your answer.
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THEORY
2013
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BRZ sells outdoor clothing, such as waterproof trousers and coats, in country X. It imports most of its inventory from low wage countries. ‘Globalisation has changed how we do business. It offers many opportunities but I have to consider import quotas and exchange rates’ said the Operations Director. BRZ tries to act in an ethical way with all its stakeholders. The Operations Director is not sure if it is possible for BRZ to be both ethical and profitable. What is meant by an ‘import quota’? What is meant by ‘inventory ’? Explain how a depreciation in the value of country X’s currency might affect the profits of BRZ. Identify and explain two opportunities that globalisation might offer BRZ. Opportunity 1: Explanation: Opportunity 2: Explanation: Do you think it is possible for companies such as BRZ to be both ethical and profitable? Justify your answer.
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THEORY
2015
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CQT is a public limited company. It manufactures paint using flow production. This method of production allows CQT to benefit from economies of scale. CQT employs 50 workers. All CQT’s raw materials are currently bought from local suppliers. However, the Operations Director knows there are many reasons for globalisation. He has been asked to explain factors a business should consider when deciding whether to relocate its factory to another country. Define ‘public limited company’. Identify two reasons for globalisation. Reason 1: Reason 2: Outline two economies of scale CQT might benefit from. Economy of scale 1: Economy of scale 2: [ 1 12 Explain two limitations for CQT of using flow production. Limitation 1: Explanation: Limitation 2: Explanation: Explain two factors a business should consider when deciding whether to relocate its factory to another country. Which factor is likely to be the most important? Justify your answer. 1 12
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THEORY
2024
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Zalpha is a multinational company. It manufactures agricultural machinery and employs a large number of people. Figure 1 shows a simplified organisation chart for the business. The business decision making is centralised and some employees complain of poor communications within the company. Figure 1 Board of Directors Managing Director Europe Division Managing Director Africa Division Managing Director Asia Division Factory A manager Warehouse manager Stock control manager Quality manager Factory B manager What is meant by a ‘multinational company’? Using only the information in Figure 1: Identify the span of control of the Managing Director of the Asia division. How many levels are there in the chain of command? Identify and explain two possible reasons why Zalpha has poor internal communications. Reason 1: Explanation: Reason 2: Explanation: Identify and explain two advantages to Zalpha of using centralised decision making. Advantage 1: Explanation: Advantage 2: Explanation: Do you think that multinational companies such as Zalpha benefit the countries in which they operate? Justify your answer.
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THEORY
2014
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AHP is a multinational company. It makes mobile phones in Europe in country X. 80% of its sales are in Europe. Some people are concerned about AHP’s impact on the environment. The Operations Director said: ‘AHP always tries to ensure it meets all legal controls. Globalisation has created many opportunities for AHP and its stakeholders. The Operations Director is planning to relocate its factories to a low-cost country in Asia. Raw materials would need to be transported an extra 4000kms. Interest rates are likely to increase across Europe. What is meant by ‘multinational company’? Identify two advantages to AHP of being a multinational company. Advantage 1: Advantage 2: Identify and explain two ways in which AHP might have an impact on the environment. Way 1: Explanation: Way 2: Explanation: 1 12 Identify and explain two ways in which an increase in interest rates might affect AHP. Way 1: Explanation: Way 2: Explanation: Do you think AHP should relocate its factories to a low-cost country in Asia? Justify your answer. 1 12
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THEORY
2018
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Raul owns a small farm that grows oranges. His farm is based in country Z. Like all primary sector activities, farming creates external costs and external benefits. Raul sells all 600 tonnes of his oranges direct to a drinks manufacturer in country E. The Government of country E plan to introduce either import tariffs or quotas. Raul said: ‘This might help country E’s Government achieve one of its economic objectives but how will it affect companies that export to country E?’ Define ‘primary sector’. Identify two government economic objectives. Objective 1: Objective 2: Outline one external benefit and one external cost that Raul’s business activity might create. External benefit: External cost: [ 1 12 Explain two advantages to Raul’s business of selling direct to a manufacturer. Advantage 1: Explanation: Advantage 2: Explanation: Do you think the introduction of import tariffs is likely to have a greater effect than the introduction of import quotas on an exporting business? Justify your answer. 1 12
0450_s21_qp_12
THEORY
2021
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Questions Discovered
20