Essential Concepts in Global Business and Finance

Consumer Society and Environmental Impact

It is often said that we live in a Consumer Society; we consider it important to buy products and services. Companies need to be aware of the impact of this on the Environment, the natural world around us.

Corporate Responsibility and Sustainability

Many companies use Packaging (boxes, bottles) which has been Recycled, that is, made using old materials. Pollution, such as smoke in the air, can be reduced if companies use trains instead of road transport.

Raising Capital: Stocks and Bonds

A company can raise money on the Stock Market or Stock Exchange (a marketplace for buying and selling shares) in two different ways:

1. Issuing Shares (US Stocks), or units of its capital, to Institutional Investors.
2. Issuing Shares to the general public.

Understanding Equities and Ownership

Different types of shares or Equities are available, but the most common are known as Ordinary or Common Shares (US Common Stock).

When an investor buys a share, using the services of a specialist company or Broker, he or she becomes a Shareholder (US Stockholder) and owns a part of (or has a Stake in) a company.

How Shareholders Profit

Shareholders can make money in two primary ways:

• Receiving Dividends, paid as a proportion of a company's annual profits.
• When the value of their shares increases.

Debt Financing: Bonds and Securities

A company can also borrow money from investors by issuing Bonds, which are loans for fixed periods with fixed interest rates. Securities refers to both shares and bonds. Each year, billions of shares and bonds are sold or Traded on the world's major stock exchanges.

Fundamentals of International Trade

International Trade is the exchange of goods and services between different countries. Depending on what a country produces and needs, it can Export (send goods to another country) and Import (bring in goods from another country).

Trade Controls and Protectionism

Governments can control international trade. The most common measures are Tariffs (or Duties) and Quotas.

• Tariff: A tax on imported goods.
• Quota: The maximum quantity of a product allowed into a country during a certain period of time.

These measures are Protectionist as they raise the price of imported goods to protect domestically produced goods.

International Trade Regulation

International organizations such as the WTO (World Trade Organization) and EFTA (European Free Trade Association) regulate tariffs and reduce trade restrictions between member countries.