General Analysis on Globalization of the Economy
Business and Financial Environment I
Assignment
Part 1
Word count: 1987
Contents
1 Executive Summary 3
2 The global factors 4
3 Changes in the world economy 6
4 Organisation strategy 7
5 Types of costs 8
6 Demand elasticity 10
7 Appendices 12
8 References 13
9 Bibliography 14
1 Executive Summary
The global economy has increased the interdependence of national economies. Multinational companies dominate the international economy. The integration of the financial markets and the internet technology give access to investments in foreign countries.
As investors increasingly buy assets in a high yield foreign currency the exchange rates in this specific currency rises. This leads to a reduction in exported and an increase in imported goods. The balance is easily disturbed and governments find it increasingly difficult to control rising inflation. The economic relations between countries are very complex as each country has its monetary policy. Japan for example exerts a strong control on the exchange rates due to a high export percentage, whereas the U.S. does not use the currency operations as a tool of monetary policy.
Companies are confronted with different cultures and markets and have to differentiate their products in order to maximize their profit in clearly separated market segments. Investments in foreign countries have become easier, and multinational companies benefit from economy of scales and low cost production using the cheapest resources available. 2 The global factors In a global economy, multinational companies independent of national government, dominate the international economy. This increases the interdependence of nations as each multinational company invests their assets in several countries. Those companies respond effectively to differing regional demand. Furthermore, they benefit from economy of scales and low cost production using the cheapest resources available. The global economy has opened the market
Assignment
Part 1
Word count: 1987
Contents
1 Executive Summary 3
2 The global factors 4
3 Changes in the world economy 6
4 Organisation strategy 7
5 Types of costs 8
6 Demand elasticity 10
7 Appendices 12
8 References 13
9 Bibliography 14
1 Executive Summary
The global economy has increased the interdependence of national economies. Multinational companies dominate the international economy. The integration of the financial markets and the internet technology give access to investments in foreign countries.
As investors increasingly buy assets in a high yield foreign currency the exchange rates in this specific currency rises. This leads to a reduction in exported and an increase in imported goods. The balance is easily disturbed and governments find it increasingly difficult to control rising inflation. The economic relations between countries are very complex as each country has its monetary policy. Japan for example exerts a strong control on the exchange rates due to a high export percentage, whereas the U.S. does not use the currency operations as a tool of monetary policy.
Companies are confronted with different cultures and markets and have to differentiate their products in order to maximize their profit in clearly separated market segments. Investments in foreign countries have become easier, and multinational companies benefit from economy of scales and low cost production using the cheapest resources available. 2 The global factors In a global economy, multinational companies independent of national government, dominate the international economy. This increases the interdependence of nations as each multinational company invests their assets in several countries. Those companies respond effectively to differing regional demand. Furthermore, they benefit from economy of scales and low cost production using the cheapest resources available. The global economy has opened the market
References: Bank of England (2008) Inflation Report, London, Park Communications Limited European Central Bank (2006) The Implementation Of Monetary Policy In The Euro Area, Frankfurt am Main, European Central Bank Fairview New Homes Ltd. (2008) Fairview – About us [WWW]. Available from: http://www.fairview.co.uk/general.asp?article=aboutus.xml [Accessed 21 Feb 2008] Federal Reserve Bank (2004) U.S Kingston University (2007) Business and Financial Environment I, Kingston, Kingston University Persimmon Plc Shadow Open Market Committee (2001) Japanese Monetary Policy, Tokyo, Bank of Japan The Economist (22 Nov 2007) Time to break free [WWW] Bank of England (2008) Inflation Report, London, Park Communications Limited Engel, Charles (2006) Exchange Rate Models “Not as Bad as You Think” [WWW] European Central Bank (2006) The Implementation Of Monetary Policy In The Euro Area, Frankfurt am Main, European Central Bank Federal Reserve Bank (2004) U.S Matthew, Robin (2008) Business and Financial Environment. Kingston, Kingston University Shadow Open Market Committee (2001) Japanese Monetary Policy, Tokyo, Bank of Japan