[PDF] Global Business Environment Assignment Sample

Global Business
Environment

TABLE OF CONTENT
2. How Donald Trump's economic policy impacts upon foreign economies ............................3
3.Discussing and interpreting how emerging economies are creating opportunity for global
expansion for the business houses...............................................................................................6
4. How government uses fiscal and monetary policies for stimulating the economic activity
and growth by using trickle down economics ............................................................................7
REFERENCES................................................................................................................................9

2. How Donald Trump's economic policy impacts upon foreign economies
Introduction
Economic policy is the set of rules and regulation that made by the government for
taxation, budgets of government, supply of credit and money in the country, rates of interest
along with labour market, national ownership etc. Usually this economic policy is segregated
into segments; Fiscal policy which is concerned with the spending and taxation while other is
monetary policy which is concerned with supply of money, interest and other central banking
activities (Mishel, Bernstein and Allegretto, 2016). The president of USA Donald Trump has
made significant changes in the economic policy of the country which has affected the other
major economies of the world.
Main Body
Donald Trump's favours economic nationalism. The economic plan of the President
outlines the different matters such as reduction in immigration, reforms in individual and
corporate tax, protection of trade in the country for safeguarding the interests of domestic traders,
disassembling of consumer protection act and Dodd Frank Wall Street reform. The economic
policy also repealed the Patient Protection and Affordable Care Act. The administration office
of Trump announced significant cut in the tax rates for higher income taxpayers and companies
in which it was said that this revised tax rates will improve the size of economy in terms of GDP
by around 0.7% (President Donald Trump's Economic Plan, 2019).
The trade with the China has suffered due to the economic policy of Donald Trump. The
President has increased the strictness on the trade negotiations with the China and has vowed to
double the tariff rates on the goods and services produced by China. This action was taken US
because it felt that China uses unfair trade practises and not only this, it also accused country for
stealing the intellectual property in terms of know-how, patents, copyrights etc. This has resulted
into the trade deficit with the China which could seen from below example.

Illustration 1: US trade with China
(Source : Trade war: US-China trade battle in charts,2019)
It can been seen that trade deficit with the China has increased as China is not importing goods at
the same rate at which it is exporting its goods to US. This has increased trade deficit of $419 in
2018 for US.
As per a tweet from the US President, the WTO has discovered that EU gives subsidies to
Airbus, which has negatively impacted the US economy which is the reason why the government
of US has increased the tariff rates on imports. This has started trade war between the major
trading partners of US namely China, Canada and EU (A US-EU trade war would be a political
and economic mistake, says French finance minister, 2019).
Conclusion

It can be concluded that strict restriction on the trade with other countries and increased
tariff rates are hurting the trade of US with its major trading partners as it can be seem from
China's example. Also, the economic policy of the Trump favours economic nationalism which
protects the domestic traders is in some-way unfavourably affecting the relations with its trading
partners. Bring a global power, the economic policy of America significantly affects the
economies other countries.
3.Discussing and interpreting how emerging economies are creating opportunity for global
expansion for the business houses
Introduction
The emerging economies of the world accounts for almost two third of the total GDP
growth at the global level and also accounts for more than half of the new consumption in the
last fifteen years. As per the Morgan Stanley Emerging Market Index, twenty four countries have
been listed as the most emerging markets in the world that are offering ample opportunities to the
businesses. Some of the countries are China, India, Hungary, Egypt, Qatar, Peru, South Africa
etc (Taking Advantage of Emerging Market Opportunities, 2019).
Main Body
Emerging markets are characterised by less than average per capita income, high rate of
volatility in markets, rapid growth rate recently, the capital markets are less matured and more
than average returns for the investors. If an economy posses such characteristics , then it can be
considered as an emerging economy which has the capability of offering enormous opportunities
for growth to the organisations for the expanding their operations in the country.
For example, Gillette found out very early that India could be a enormous opportunity
where it can expand its business when it observed that more than 450 million of the men uses T
razors which has costs in pennies but such razors were highly inclined to causing skin cuts. The
company identified the opportunity here and planned for manufacturing such razors which does
not easily give skin cuts and also which are cost effective. The company launched Guard razors
after thorough research and experiments according to the shaving habits of Indian. The product
of the company soon became extremely popular in the country and is the market leader in the
nation. Expansion of the businesses in the emerging is an opportunity which should be grabbed
by the corporation but it has to done in accordance with the culture, habits of customers,
priorities, needs and expectations of the target audience (Taking Advantage of Emerging Market

Opportunities, 2019). Gillette succeeded in expanding its business in India only after
understanding the culture and habits of the target customers. It failed when it first launched its
product called Vector in 2002 which they invented keeping in minds the habits of western men.
However, it bounced back after thorough research of the market and became successful and took
the advantage of the opportunities provided by the emerging economy.
Conclusion
It can be concluded that emerging markets of the world provides ample opportunities to
the organisations for expansion and growth but along with this some threats also comes. If such
threats and challenges are not met properly, it could lead to the failure of company's expansion in
the intended emerging market as it can be seen from the Gillette's example. The subsidiary of
P&G recognised the opportunity in the Asian market of India but failed to understand the cultur
and habit men which led to the failure of product in 2002, after which it introduced a guard razor
as per the need and expectation of customers which became ultra successful product in the
country.
4. How government uses fiscal and monetary policies for stimulating the economic activity and
growth by using trickle down economics
Introduction
Fiscal policy is a tool or set of rules by which the government makes adjustments in its
spending level, and makes appropriation in the tax rates for the country for monitoring and
influencing the economy of the nation. Monetary policy is that tool by which the central bank of
the country manages the supply credit or money supply/flow of credit in the country. Both these
policies are closely related to one another (Bianchi and Ilut, 2017). Trickle down economics is
that aspect of economics which is concerned with concept of lowering the tax rate on businesses
and wealthy people for the purpose of stimulating the investment in the country for short term so
that society in large can be benefited in the long run.
Main Body
Government of the country uses the tools such as monetary and fiscal policies for
stimulating the investments in the country by the business houses and wealthy and rich people in
the society. For example, lowering the tax rates for the corporates by the way fiscal policy will

be considered as the good and welcoming move by the government as more number of
corporates would like to set up their businesses in a country where the taxes are low as heavy tax
rates lowers the net income of the owners. More businesses means more employment and job
creation in the country which have a direct link to the economic prosperity of the nation. The
living standard index also rises because of such move in the fiscal policy. Lowering of the taxes
would also means that people will less likely to evade the high taxes (Expansionary Fiscal
Policy and How It Affects You, 2019). This altogether will result into increase in the treasury of
the government. lowering the interest rates by the way of monetary policy would encourage the
organisation to undertake the business activities at large scale as the credit is available to them at
lower interest rate. This is a way by which government tries to trigger the economic pace of the
country which is called as trickle down economics.
Conclusion
It can be concluded that for the benefit of the society at large for longer term, it is
necessary for the government to use the concept of trickle down approach of economics so that
wealthy people and corporations could be used for triggering the pace of the economic growth of
the nation. Lower corporate taxes, interest rates, personal income taxes helps in stimulating the
extra savings of this section of the society into the economy through which jobs could be created,
more money could be rotated in the economy, through which the GDP of the country could be
improved.

REFERENCES
Books and Journals
Bianchi, F. and Ilut, C., 2017. Monetary/fiscal policy mix and agents' beliefs. Review of
economic Dynamics. 26. pp.113-139.
Mishel, L., Bernstein, J. and Allegretto, S., 2016. Economic Policy Institute. The State of
Working America 2006. 7. pp.181-189.
Online
Facebook faces Senate, potential government regulation — and big changes.2019. [Online].
Available through <https://www.digitaltrends.com/social-media/facebook-zuckerberg-
testifies-before-congress-cambridge-analytica/>
Regulatory Challenges in the Emerging Internet Media Environment. 2018.[Online]. Available
through<https://web.archive.org/web/20160103041748/http://www.isoc.org/inet2000/
cdproceedings/8b/8b_1.htm>
Trade war: US-China trade battle in charts.2019. [Online]. Available through
<https://www.bbc.com/news/business-48196495>
A US-EU trade war would be a political and economic mistake, says French finance
minister.2019. [Online]. Available through<https://www.cnbc.com/2019/04/12/us-eu-trade-
war-a-political-economic-mistake-france-bruno-le-maire.html>
Taking Advantage of Emerging Market Opportunities.2019. [Online]. Available
through<https://velocityglobal.com/blog/taking-advantage-of-emerging-market-
opportunities/>
Expansionary Fiscal Policy and How It Affects You. 2019. [Online]. Available
through<https://www.thebalance.com/expansionary-fiscal-policy-purpose-examples-how-
it-works-3305792>