End-of-Chapter Problems

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END-OF-CHAPTER PROBLEMS

1.1) Describe the shifts in the world economy over the last 30 years. What are the implications of these shifts for international businesses based in Britain,North America, and Hong Kong?
Over the last 30 years, there has been a shift away from a world in which national economies are relatively self-contained entities, isolated by barriers to trade and investment, and differences in government regulation, culture, and business systems and toward a world where barriers to trade and investment are declining, cultures are converging, and national economies are merging into an integrated, interdependent global economic system. As companies from Japan and emerging markets like Chinaplay a more vital role in the world economy, the dominance of companies from the United States and Western Europe has diminished. Significant implications for British firms involve their need to look beyond Europe and America for investment and opportunities. Consumer spending power is growing the most quickly in developing countries. British firms also face the opportunity (and the threat) of attracting Asian firms interested in Britain as a launch pad for the European market. For North American firms, the same holds true, although the importance of the increasing prosperity in Latin America suggests a potentially huge market in “their backyard.” Hong Kong, while losing its “independence”, is perceived as the gateway to the immense market of mainland China. While the free market freedoms Hong Kong firms have enjoyed are now less taken for granted, access to China is improving along with the move towards a market economy within China. International businesses based in all three locations are facing new opportunities and threats.

1.6) If current trends continue, China may emerge as the world’s largest economy by 2010. Discuss the possible implications…...

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