Page 70 - Introduction to Business

44 PART 1 The Nature of Contemporary Business

7. What are the major flaws of the command economic “Consumer confidence is at [say] a 5-year low:
system? Explain how this system essentially led to Signs of crumbling faith in the U.S. economy fuel
the downfall of economies like the Soviet Union. prospect for interest rate cut by Fed.” How will a
8. Although many countries claim to be capitalist, cut in interest rates help businesses and con-
none of the countries practice pure capitalism. sumers?
Why? So, what system do the majority of countries 2. Because business is global, you will come across
practice? Where do the transition economies fit in reports from companies indicating that they antic-
the scheme of things? ipate rising sales revenue but at the same time
9. Explain what the major factors of production are. expect profits to decline. What do you think is
Which factor do you think will play a crucial role in going on in the marketplace?
the United States’ business future, and why? 3. On several occasions, Federal Reserve Bank chair
10. Compare shareholder wealth maximization with Allan Greenspan has expressed confidence that
stakeholder wealth maximization. Which approach U.S. productivity growth will continue because of
do you prefer, and why? corporate spending on technology. What does pro-
11. What are the pros and cons of keeping state- ductivity growth mean? How does technology
owned enterprises? Would you suggest that all spending by companies help productivity growth?
state-owned enterprises be privatized? Why?
12. Not-for-profit organizations play extremely impor-
tant roles in countries. Pick a not-for-profit organi- Web Assignments
zation that you are familiar with and determine its
primary objectives, its organization, and its recent 1. Visit McDonald’s website, www.mcdonalds.com,
performance. surf that website, and go to some of the company’s
13. Culture’s role in business is extremely important, country sites and study their menus. What can you
both domestically and internationally. Identify a say about McDonald’s menus in foreign countries?
product that you use or see every day and trace the Pick a particular non-U.S. and non-European
role of culture in its design, development, and pro- country where McDonald’s does business and
motion (advertising). explain that country’s menu.
14. What are the four major components of GDP? 2. Visit Coca-Cola’s home page, www.cocacola.com,
Which component drives U.S. economic growth, select a foreign brand product Coca-Cola has
and why? What is the “bellwether” indicator that acquired, and write a one-page (double-spaced)
businesses closely watch to determine the outlook report on that product. Did you know that Coca-
for their industry? Cola owns and sells many foreign brands that you
15. Pick any Latin American country and develop a have never heard of in the United States?
table like Exhibit 1.8. Graph nominal and real 3. The Economic Report of the President, which is an
GDP over time for that country. How does the annual report on the state of the U.S. economy, is
country’s real GDP compare with its nominal prepared by the President’s Council of Economic
GDP, and why? Advisors and delivered by the president to the U.S.
16. In the current global business environment, if you Congress. It is an extremely important document
are considering exporting a particular item, will with a lot of facts and figures. Thanks to the Inter-
you look at nominal GNI or PPP-based GNI of net, issues of this document are now available on
countries to decide which country to export to? the Web at http://www.gpoaccess.gov/eop/
Why? What would your top five countries of choice index.html. Pick the section that deals with the
to export to be? United States in the international economy. What
17. Explain and analyze the impact of the Internet on are the key factors contributing to increased inte-
business. gration of the U.S. economy into the rest of the
18. We have seen a number of e-businesses come world?
and go. Why do you think that some of these com- 4. Visit Panasonic’s homepage, www.panasonic.com,
panies failed? Do you see any challenges that which shows Panasonic electronic gadgets you see
e-commerce is likely to face? How may they be and use every day. Where is Panasonic’s corporate
overcome? headquarters? Visit their corporate site and write a
one-page report (double spaced) on Panasonic’s
corporate philosophy. What is the type of con-
Interpreting Business News sumer most important to Panasonic?
1. Business newspapers such as the Financial Times
and The Wall Street Journal may at times state that

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