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BUSI 617 Ch 2 - Chapter 2-The Global Economic Environment...

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Chapter 2-The Global Economic Environment Market – People or organizations with needs and wants and both the willingness and ability to buy or sell Companies engage in global markets to increase sales, profits, and market share BRIC – Brazil, Russia, India, China. Four fast growing markets that represent important opportunities Russia – 1998, economy collapsed 2006, experienced immense growth. Recovery attributed to oil/gas prices, politics (Vladimir Putin enforced several reforms), and price increase in imports. Economic integration increased from 10 to 50% since 2000, mostly in EU and N.A. Free Trade Area Changes over the past 2 decades Capital movements have replaced trade as the driving force of the world economy Productivity not related to employment as much The world economy dominates the scene; individual country economies play a subordinate role The struggle between capitalism and socialism (began 1917) is largely over Growth of e-commerce diminishes the importance of national barriers and forces companies to reevaluate their business models GDP (Gross Domestic Product) – Total market value of final goods/services produced within a nation’s borders. Measure of economic output and growth; reflects increases in productivity. GNI (Gross National Income) – GDP + income generated from nonresident sources ECONOMIC SYSTEMS Factors Type of economy, type of government, trade and capital flows, commanding heights (transportation/communication and energy sectors), services provided by the state (health care, education), institutions (corruption), markets Market Capitalism Economic system in which individuals and firms allocate resources and production resources are privately owned. Consumers decide what goods they desire and firms determine what and how much to produce State’s role is to promote competition and ensure consumer protection N.A. and Western Europe Centrally Planned Socialism
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The state has broad powers to serve the public interest as it sees fit.
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