TABLE OF CONTENT
1. QUESTION 1 2
1.1. Various types of globalisation 2
1.2. World Bank: Worldwide Governance Indicators 2
1.3. Justice theories as
... [Show More] theory of business ethics 3
2. QUESTION 2 5
2.1. Examples of technology and innovation influencing the business world 5
2.2. Aside from innovation, describe 5 other drivers of competitiveness 6
2.3. Need for a global information system 6
3. QUESTION 3 8
3.1. Explain what transfer pricing entails 8
3.2. The types of foreign exchange exposure MNC can encounter in foreign exchange market 8
3.3. Contrast forward exchange contract with foreign currency options with examples 9
3.4. Role of capital market in the economy 10
4. BIBLIOGRAPHY 11
1. QUESTION 1
1.1. Various types of globalizations
Two major types of globalization are described by Aregbeshola (2017, 7), namely market and production globalisation.
In essence, marketplace globalizations involves merging of previously discrete and independent markets into a global structure. Market globalization thus enables international trade via removal of trade barriers. Differing consumer tastes from various parts of the world set new global standards, which enable them to receive the same products from different companies. Globalization of markets also leads to stiffer competition as businesses compete for customers from different parts of the world. (2)
Manufacture globalization enable companies to source goods from various parts of the globe in order to take advantage of differences in quality, cost and the performance of things like raw materials, land, capital and labor. Companies become more competitive as they develop their respective international production networks.
1.2. World Bank: Worldwide Governance Indicators
The worldwide governance indicators (WGI) encompass measures of efficiency and effectiveness of political leadership. The indices are reported for 215 various economies and cover six (6) criteria. The different criteria described by Aregbeshola (2017, 25-26) include:
• Voice and accountability: the criteria measures the degree citizens enjoy freedom of expression to matters of public concern, without fear of persecution from ruling authorities. Voice and accountability captures perceptions of the extent to which a country's citizens are able to participate in selecting their
government, as well as freedom of expression, freedom of association, and a free media.(4)
• Political stability and the absence of violence: Political stability and absence of violence / terrorism measures perceptions of the likelihood of political instability or politically motivated violence. This criterion serves as yardstick for a country’s political maturity in relation to peaceful transfer of power from one government to another and the prevalence of terrorist inflicted violence.(5)
• Government effectiveness: the criteria captures perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies.(6)
• Regulatory quality: captures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.(7)
• Rule of law: the criteria captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence.(8)
• Control of corruption: captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.(9)
1.3. Justice theories as theory of business ethics
Justice theories are referred to by Aregbeshola (2017, 77) as disruptive justice, theories which focus on what is considered fair and equitable. The essence of justice theories lie in the conviction that standards of justice are regarded in higher esteem that the functional basis.
The theory of disruptive justice is widely regarded as being the brainchild of the philosopher John Rawls. According to his theory, the distribution of benefits and burdens in a society is just if the following two principles apply:
• Principle of equal liberty: each person has an equal right to the most extensive basic liberties compatible with equal liberties for all,
• Social and economic inequalities are arranged so that they adhere to both the:
o Difference principle: to the greatest benefit of the least advantaged, and
o Principle of equal opportunity: offices and positions open fairly and equally to all.
Essentially, it says that each citizen's liberties must be protected from invasion by others and must be equal to those of others. These basic liberties include the right to vote, freedom of speech and conscience and the other civil liberties, freedom to hold personal property, and freedom from arbitrary arrest. It also assumes that a productive society will incorporate inequalities, and asserts steps must be taken to improve the position of the most deprived members of society, such as the sick and the disabled. Finally it concludes that everyone should be given an equal opportunity to qualify for the more privileged positions in society's institutions.
Two final types of justice are retributive and compensatory justice, both of which deal with how best to deal with wrongdoers:
• Retributive justice concerns blaming or punishing those who do wrong,
• Compensatory justice concerns restoring to a harmed person what he lost when someone else wronged him.(11)
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