Business and the international economy

Key definitions

Globalisation — the increase in communication and interactions between countries and their people.
Import tariffs — taxes imposed on imports.
Import quotas — a limit imposed on the number of imports allowed into a country.
Multinational company (MNC) — a company that operates in multiple countries, e.g. Gong cha.
Exchange rate — the value of a country's currency in comparison to another country's currency.

To protect domestic industries — for example, China's cheap EVs mean that US-produced EVs are demanded less. These domestic US industries weaken, causing unemployment. The US may deploy tariffs on Chinese EVs to disincentivise consumers from buying these imports.
To reduce a balance of trade deficit — increased taxes on imports reduce demand, as imports become more expensive domestically. Consumers switch to buying domestic goods, so imports fall.
To prevent MNCs from dominating a local market — stopping foreign firms from taking over the largest market share, so local businesses can continue to run. Increased tax and quotas on foreign firms raise the cost of importing, meaning less profit is available.

For the business	For stakeholders
Access to new markets	Increased profit!!!
Operating closer to the market
Cheaper operation costs in other countries
Avoid trade barriers (import tariffs and quotas)
Easier access to high quality goods
Ideas are shared around the world

Multinational companies may monopolise markets, driving local businesses out.
It may be hard to adapt to a new market.
Repatriation of profit — MNCs send profit back to their home country and thus don't pay taxes in the host country.

Depreciation (e.g. $1 = MYR8)	Appreciation (e.g. $1 = MYR2)
Imports from other countries become more expensive, so fewer people from a country are able to afford them	Imports become cheaper, so more people from a country are able to afford them
Exports become cheaper, so people from other countries can purchase the goods	Exports become more expensive, so people from other countries cannot afford them