Mid-Term Examination Business Globalization

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SECTION A
Short Answer Questions
1. The global economy is all the economies of individual nations that are linked together
rather than individual economies.
(a) Define market economies (3marks)
All the resources in a market economy are privately owned by people and firms.
Every business will aim to make as much profit as possible i.e. profit is the main
motive.
There is consumer sovereignty.
Firms will only produce those goods which consumers want and are willing to pay
for.
Price is determined through the price mechanism

(b) Give three (3) advantages and three (3) disadvantages of market economies (6
marks)
Advantages
Market economies responds quickly to peoples wants
Factors of production which are profitable will only be employed.
There is wide variety of goods and services in the market.
New and better methods of production are encouraged thus leading to lower cost
of goods and services.
Disadvantages
Public goods may not be provided for in Market economy, thus the government
will have to interfere to provide these types of goods.
Market economies encourage consumption of harmful goods
Prices are determined by the demand and supply of goods.
Social cost may not be considered while producing goods and services. It may
lead to unemployment because machines will be more productive than men.




Mid-Term Examination Business Globalization

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2. Discuss the most important characteristics of developing countries. (6 marks)
Explain any three of this
(i) Lower per-capita income
(ii) Low levels of human capital
(iii) High levels of poverty and under-nutrition
(iv) Higher population growth rates
(v) Predominance of agriculture and low levels of industrialization
(vi) Low level of urbanization but rapid rural-to-urban migration
(vii) Dominance of informal sector
(viii) Underdeveloped labor, financial, and other markets.

3. (a) What is culture? (3 marks)
The body of learned beliefs, tradition, principles and guides for behaviour that are
commonly shared among members of a particular group. Culture serves as a road map
for both perceiving and interacting with the world.
(c) What are the primary components of culture? (6 marks)
Aesthetics
Aesthetics refer to the ideas in a culture concerning beauty and good taste as expressed in
the arts -music, art, drama and dancing and the particular appreciation of colour and
form. Aesthetic differences affect design, colours, packaging, brand names and media
messages.
Values and Attitudes
Values are defined as the standards by which people assess desirability, goodness, and
beauty; they are broad principles which underlie beliefs, specific statements that people
hold to be true. Beliefs are learned through socialization and help shape how we perceive
our surroundings and how our personality develops. Indeed they provide the cultural
capital by which we evaluate our future possibilities. Values represent a persons
judgments about what is good or bad, acceptable or unacceptable, important or
unimportant, and normal or abnormal. People develop attitudes and preferences based on
their values.
Attitudes are similar to opinions except that attitudes are often unconsciously held and
may not have a rational basis. Prejudices are rigidly held attitudes, usually unfavourable
and usually aimed at particular groups of people. Typical values in North America,
northern Europe, and Japan include hard work, punctuality, and the acquisition of wealth.
People from such countries may misjudge those from developing economies who may
not embrace such values. They may inaccurately judge the Bolivian housekeeper for not
working hard enough or the Jamaican businessman for not being on time.
Mid-Term Examination Business Globalization

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4. What are the four (4) dimensions that make up Hofstedes model of culture? (6 marks)
Power distance This refers to the degree of social distance between senior management
and workforce. If there are many levels of management within the organisation, and little
contact between those at the top and the bottom of the organisation, power distance can
be said to be high.
Uncertainty avoidance This refers to the appetite for risk which is prevalent in any
organisation. A high uncertainty avoidance culture is characterised by low risk-taking,
and vice versa.
I ndividualism/collectivism This refers to the propensity of the culture to reward
individual effort, as distinct from a collectivist approach. This has a clear bearing upon,
for instance, reward systems in an organisation.
Masculinity/femininity This is probably the most controversial of Hofstedes indices: a
masculine culture is seen as macho, whereas a feminine culture is seen as nurturing.

SECTION B
Essay Question
South Korea, Taiwan, Singapore, and Hong Kong are referred to as Four Tigers. Another
name for tigers is NIE, which is an acronym for Newly Industrializing Economies. Discuss
about the NIE global economic system. (15 marks)
Newly industrialized nations (NICs) have a rapidly growing base of productive capital and rising
incomes. Most of these nations have sound governments and banking and financial systems,
although they may occasionally be subject to financial or political dislocation. For instance,
Brazil is weighed down with international debt and must work hard to control inflation. Pakistan
may face political instability and a shaky relationship with neighbouring India.
Newly industrialized nations include Hong Kong, Singapore, Taiwan, and South Koreawhich
are known as Asia's Four TigersPakistan, Malaysia, Indonesia, Thailand, Mexico, Brazil,
Chile, Venezuela, Israel, South Africa, and Hungary. Another characterization of NICs is that
of nations undergoing rapid economic growth (usually export-oriented). Incipient or on-going
industrialization is an important indicator of an NIC. In many NICs, social upheaval can
occur as primarily rural, or agricultural, populations migrate to the cities, where the growth of
manufacturing concerns and factories can draw many thousands of labourers.
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NICs usually benefit from comparatively low labor costs, which translate into lower input
prices for suppliers. As a result, it is often easier for producers in NICs to outperform and
outproduce factories in developed countries, where the cost of living is higher, and labor
unions and other organizations have more political sway. This comparative advantage is often
criticized by advocates of the fair trade movement.