Global Business & Economic Concepts Explained

Setting Up a Multinational Branch

When establishing a branch of a multinational company, several critical factors are considered:

1. Cheap Labor: Access to affordable labor can significantly reduce operational costs.
2. Low Transportation Costs: Proximity to markets or raw materials can minimize logistics expenses.
3. Cheaper Industrial Land: Lower land acquisition or rental costs for industrial facilities.
4. Fiscal Benefits: Favorable tax policies, subsidies, or incentives offered by the host country.
5. Lower Production Costs: Overall reduction in expenses related to manufacturing or service delivery.
6. Favorable Political Circumstances: A stable political environment and supportive government policies.
7. Lower Tax on the Activity: Reduced tax burden on the specific business operations.
8. Cheaper Raw Materials: Availability of raw materials at competitive prices.

Understanding the Welfare Society

A welfare society is a system in which the state protects the health and well-being of its citizens, especially those in financial and social need. This protection is typically provided through various means such as grants, pensions, and other social benefits.

Defining Infrastructure and Its Role

Infrastructure refers to the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. Examples include buildings, roads, bridges, power grids, communication networks, and water supply systems.

Transportation's Importance for Industry

Transportation is crucial for industry because businesses must receive raw materials for production and then transport finished products to the markets where they will be sold. Efficient transportation networks ensure timely delivery and cost-effectiveness.

Why Port Infrastructure Matters

It is important to have suitable infrastructure near a port to efficiently store and transport goods that are unloaded from ships. This includes warehouses, roads, rail links, and customs facilities, all of which facilitate the smooth flow of international trade.

Growth of the Tertiary Sector Explained

The tertiary sector (or service sector) is experiencing growth primarily because the standard of living has risen in many countries. As incomes increase, people demand more services, leading to expansion in areas like tourism, healthcare, education, and finance.

Purpose of Carrier and Tanker Ships

The purpose of ships like carriers and tankers is to transport specific types of freight and even substances like oil or gas. Tankers are specifically designed to transport liquids, while carriers typically transport dry bulk cargo or containers.

Understanding a Trade Balance Deficit

When a country has a trade balance deficit, it means that the country's value of imports is greater than the value of its exports.

Defining the Balance of Trade

The balance of trade is the difference between the total value of a country's imports and the total value of its exports over a specific period.

Understanding the Balance of Payments

The balance of payments is a comprehensive record of all economic transactions between a country and the rest of the world over a specific period. It includes the balance of trade, as well as income from tourism, money sent home from emigrant workers, and other financial flows.

Trade Patterns: Developed vs. Developing Nations

Generally, developed countries primarily buy raw materials and unprocessed goods from other nations. Conversely, underdeveloped countries (or developing countries) typically buy manufactured goods and finished products from developed nations.

Disadvantages of Large Shopping Centers

Three common disadvantages of large shopping centers include:

1. They can negatively impact and potentially ruin smaller, local businesses.
2. They may offer poorer quality in fresh products compared to specialized local vendors.
3. Customers often need to use transportation to reach them, which can be inconvenient and costly.

Main Exports of Developed Countries

Developed countries mainly export manufactured goods, including high-tech products, machinery, vehicles, and consumer electronics.

Factors Detrimental to Tourism

Three common factors that can negatively affect tourism are:

1. Unsafety: A lack of security or high crime rates in a destination.
2. Bad Weather: Unfavorable climatic conditions that deter visitors.
3. Lack of Infrastructure: Insufficient or poor quality infrastructure, such as transportation, accommodation, or services.
4. Lack of Natural Attractions: Absence of significant natural beauty or unique geographical features.