Exam Guide 1 (2021/22)

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Table of Contents

QUESTION 1: Extensively analyse the relevance of subsidy as an instrument of
trade restriction, especially in agriculture sector......................................................... 2

Introduction. ............................................................................................................ 3

Trade restriction. .................................................................................................. 3

Conclusion. ............................................................................................................. 5

QUESTION 2: Discuss the various economic systems and how these systems affect
globalization. .............................................................................................................. 6

Introduction. ............................................................................................................ 6

Free market economy. ......................................................................................... 6

Command economy. ............................................................................................... 7

Mixed economy. ...................................................................................................... 8

Conclusion. ............................................................................................................. 8

QUESTION 3: Discuss in detail the vital role played by culture both during and after
international business acquisitions. ............................................................................ 9

Introduction. ............................................................................................................ 9

Culture. ................................................................................................................ 9

Conclusion. ........................................................................................................... 11

Question 4: Taking into account the dynamics of foreign operations, critically discuss
expatriate training and development. ....................................................................... 12

Introduction. .......................................................................................................... 12

Training and development. ................................................................................ 12

Ethnocentric staffing approach. ......................................................................... 13

Polycentric staffing approach............................................................................. 14

Geocentric Staffing approach. ........................................................................... 15

Conclusion. ........................................................................................................ 15

Reference List. ......................................................................................................... 16

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QUESTION 1: Extensively analyse the relevance of subsidy as an
instrument of trade restriction, especially in agriculture sector.

Introduction.

Globalisation has been at its peak in the early 2000s. This has pushed different
economies through international businesses to expand in foreign economies as they
look for different factors that include cheap labour, ready market among others.
However, host-countries have felt the heat especially developing economies and this
has pushed them to develop restrictions in certain sectors. Developed economies on
the other hand also managed to have restrictions as a matter of national security. In
this essay, restrictive measures in particular, subsidies, shall be explained with
respect to agriculture as an example on how nations are protecting strategic sectors
as well as infant businesses.

Trade restriction.

A subsidy is a direct or indirect payment to individuals or firms, usually in the form of
a cash payment from the government or a targeted tax cut (Hill & Hult, 2017). In
economic theory, subsidies can be used to offset market failures and externalities in
order to achieve greater economic efficiency. Subsidies offered to domestic
producers have the intention of helping an industry. Subsidies give the receiver of
the subsidy a cost advantage over competitors and they form part of industry
protection. Producers who receive a subsidy to cover costs can charge lower prices
for their products giving them an unfair advantage on the international market.
Subsidies granted to home producers also have essentially the same economic
impact as taxes on imported goods.

Anderson (2018) further argues that, a subsidy can be in a form of payment by the
government to producers or distributers in an industry to prevent the decline of that
industry or an increase in the prices of its products or simply to encourage it to hire
more labour. Governments often serve to reinforce the unequal distribution of
resources and gains from trade resulting from differences in size and economic
power. Developed nations` governments influence world economic affairs by their
domestic and international policies (USA, EU). They can resist countervailing
economic pressures from weaker nations and can act in collusion and often in


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