It also reads the global political condition’s effect on the country and business. When conducting this step, ask questions like “What kind of government leadership is impacting decisions of the firm?” Some political factors are: Government policies Taxes laws and tariff Stability of government Entry mode regulations ECONOMIC FACTORS Economic factors involve all the determinants of the economy and its state. These are factors that can conclude the direction in which the economy might move. So, businesses analyze this factor based on the environment. It helps to set up strategies in line with changes.
Promotion of small business entrepreneurship policies created by the government can attracts these investors, which enables a stable economic growth. Politics affects the macro environment of every business and in order to have a positive effect on it, it is mandatory for it to be unwavering. This enables investors to be confident about decision making relating to whether to invest in the country or not. Political factors analyze economic processes and also include how a state government affects its economic performances. According to Gerring, et al (2005), democracy has a negative effect on our economic growth.
Also, it will explore the various advantages that a capitalist economy has on individuals and the economy at large. Also, it shall attempt to discuss the various cons and conclude as to whether such economies are of benefit to a country. As stated earlier, a capitalist environment is one which the businesses are run and controlled privately. Usually, such economies are governed by democratic environments as dictatorial governments restrict such freedoms. Most economies, such as America among others are not entirely capitalists as the government is still in control of some businesses.
People choose their governments and they should operate the economy and practice its power to maintain a stable growth of business and balance the income between poor and rich. In conclusion, Friedman fights for the concepts of the soulless capitalism and shows that the benefit of the people is increasing the profits. In contrast, Colin disagrees with Friedman and argues that the arguments of Friedman do not reflect the reality how corporations act and their independence of the society is a huge logical mistake Friedman presents. Business ethics is a window dressing by corporations to advertise their brands and attract people to buy their products; a corporation can act ethically just to hide its real intentions of maximizing
I only found some things, like meeting short-term goals and buying-back shares of shareholders, that can have influence on economic growth. In the share buy-back article (The Economist, 2014) is only stated that “They worry…will damage…the economy.” and they don’t come up with hard evidence. In the studies about monitoring and controlling managers of firms, they found evidence that not monitoring will lead to an incentive for managers to shrink (Jensen and Meckling, 1976). Also the compensation of managers will be higher when they are not controlled by institutional investors (Hartzell and Starks, 2003). This means that without monitoring and controlling by institutional investors, there is an agency problem which can lead to maximizing personal wealth of managers instead of maximizing value of the firm.
For example, the automotive industry, electrical equipment industry, and canning industry in the United States are controlled by several companies. The appearance of the oligopolistic market is mainly attributed to three reasons. First, due to the economies of scale, that is, manufacturers continue to expand production scale, and the market is relatively small. The second reason is due to the barriers to entry. The government grants monopoly power to certain enterprises in the industry through laws and regulations, and at the same time, it imposes certain controls on it
1, Market failure is a condition in which a market does not efficiently allocate resources to achieve the greatest possible consumer satisfaction. It means the market can’t allocate goods and labor services effectively, and that can influence achieve consumer satisfaction. For example, the income and wealth allocate unfair, and the problem of unemployment. The government enhances growth and stability of the economy. It provides the infrastructure and systems that facilitate economic activity while formulating regulations and controls to ensure order and fairness in businesses operations.
In this chapter, we will explore how differences in culture across and within countries can affect international business. Culture is defined by Edward Tylor as ‘that complex whole which includes knowledge, belief, art, morals, law, custom and other capabilities acquired by man as a member of society’. Culture is passed from one generation to succeeding generations through immaterial culture, such as values, norms, language, rituals, and symbols, and material culture, such as objects, art, and institutions. Different cultures are more or less supportive of the capitalist mode of production and may increase or lower the cost of doing business. Values provide the context within which a society’s norms are established and justified.
One of the effects of the organization is that of having high taxes being imposed to products of the business and this affects the profits that are realized by the organization. In this, the operations of the company is usually affected by taxes that are imposed by different countries based on what they feel is right for them without the interest of any international business. Additionally, international business law also dictates the way that an organization treats its employees and they are supposed to be equally treated. International business laws stipulates the way that organizations are supposed to run their organizations and this makes it hard for the organization to operate effectively in their operations. In this, all the employees of the organization are supposed to be compensated at a particular rate without considering the operations of the business.
Being a market oriented means to be able to adopt on people’s behavior, new trends, and changing place in order to address those needs. Being a social entrepreneur means that you need to know how to adapt in the market in order to create a strategy. Being a market oriented has played a significant role on the phenomenon of social economy. The term social economy is different from social market economy because this both term can get the people easily confused with these two terms. Social economy is defined as part of the economy that works alongside the market and the state.