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M2 Country Comparison

M2 Country Comparison. Unit 1 – The economic environment. Inflation. Inflation occurs when there is a general rise in the price of goods in the whole economy.

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M2 Country Comparison

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  1. M2 Country Comparison Unit 1 – The economic environment

  2. Inflation • Inflation occurs when there is a general rise in the price of goods in the whole economy. • A rise in the rate of inflation might reflect a rise in costs they have to pay; employees will want more wages, costs of materials may go up and the cost of fuel and energy may rise. This may decrease the amount of profit a business makes.

  3. Unemployment • Unemployment is when you have people who are of working age and actively seeking a job but unable to find one. • If unemployment is high, this could benefit a business if it wants to expand. • If unemployment is high less goods and services will be demanded.

  4. Interest Rate • The interest rate is the cost of borrowing money. • The higher the interest rate the less likely a business will borrow money to invest. • The lower the interest rate the more likely customers will borrow money to buy goods and services.

  5. Legal Policies • Policies such as: • Holiday Entitlement • Statutory sick pay • Flexible working regulations • Disciplinary and dismissal procedures

  6. Fiscal Policy

  7. Monetary Policy

  8. China Employment Policies

  9. Global Interaction • Globalisation involves the creation of global markets, global businesses and global products. • Key aspects of globalisation include: • The creation of global brands • The creation of global products and global advertising • Huge economies like China and India • Instant global communications

  10. Types of Interdependence • Business reply on each other on different levels • Local Level • National Level • International Level

  11. Supply Chains

  12. Multinational Companies • A multinational company owns at least 50 per cent of the shares in at least one overseas business. • The overseas business that is part owned or fully owned is then called a subsidiary. • Some business may enter into a joint venture, this is when two businesses will create and share ownership of a new company.

  13. Movement of capital • Investors are always on the lookout for investment opportunities. • Investors may move their business operations to a country where costs are lower.

  14. Difficulties in relegating • Can move to new locations • Loss of Jobs

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