IB chapter 3 and 4
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Identify key environmental variables that affect
+Inflation (GDP, employment, CPI, PPI), +Interest Rate, Bond (-price and +yield), Stock (-price), -Real estate activity, +Currency value strength, -Crude Oil Price
current account balance
One of the accounts of a balance of payment, it is made up of all exports and imports of a country, any income earned or remitted because of assets, and employee compensation received or paid. The current account is the one most watched by policy makers and international companies
How are the countries of the world classified in
terms of their economic development?
high-income countries; upper middle-income countries; lower middle-income countries; and low income countries.
purchasing power parity
the number of units of a currency required to buy the same amount of goods and services in the domestic market that could be bought with the U.S. dollar in the United States.
three types of economic systems
- market-based economy; centrally planned
- economy; and mixed economy.
What is country risk analysis and how is it
financial risk: political stability, economic conditions, banking and finance, laws and regulations, cultural factors, infrastructure, level of technology, quality of life, and country’s external debt.
Identify the critical variables considered by Euromoney in its country ranking.
quantitative and qualitative: economic performance, political risk, debt indicators, debt in default, credit rating, access to bank financing, access to short-term financing, access to capital markets, and forfeiting.
dictates most of the actions of a company. A company’s strategic initiatives are to some extent driven by the actions of its competitors.
1. How similar are the product or service offerings of a company to other firms in the same country (substitutability)? 2. How similar are the benefits derived by the customers from the products or services that the other firms offer? 3. How do other firms define the scope of their market?
What are some of the factors used in raking
quality of life indexes?
standard of living, education, availability of public transportation, crime rate, freedoms of speech, religion and politics, job opportunities, weather conditions
purpose of political systems
integrate society into a viable, functioning unit and the legal environment helps the society maintain its peace and order. Stable political systems generally have stable governments who enact laws that benefit their population and at the same time encourage a receptive environment for businesses.
define political systems
institutions that set standards, rules, and policies to govern a society. political parties, political organizations, interest groups, and the members of the leading industry groups.
components of political environment
The aggregated viewpoints of politicians, business people, interest groups and the general masses form the core principles of a country’s political system.
key influencers of a country’s political environment?
ideology, nationalism, unstable governments, traditional hostilities, public sector enterprises, terrorism, corruption, and international companies.
set of ideas, theories, and goals that constitute a sociopolitical program; thought process that guides individuals in the formation of institutions or social movements.
how many different political ideologies exist?
capitalism, socialism, conservative vs. liberal, communism, and authoritarian.
basic differences between capitalism and socialism?
While in capitalism the means of production and distribution of goods and services are, for the most part, privately owned, in socialism it is the government that owns and controls the production and distribution of goods and services. Furthermore, the primary concern of a socialistic system is to make available all the basic commodities for all the citizens at a reasonable price.
four forms of totalitarianism
communism, right-wing, tribal, theocratic
three major legal systems
Civil law is how the law is applied to the given facts and is based on the application of pre-set codes; the common law is based on the courts’ interpretation of events, and the theocratic law is based on what is acceptable within the religious precepts.
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