Exam questions Market leader 3 year Trade 1) What is free trade? How do countries benefit from free trade?

Free trade - it is a situation in which goods come into and out of a country without any controls or taxes.

Free trade is an economic practice whereby countries can import and export goods without fear of government intervention. Government intervention includes tariffs and import/export bans or limitations. Developing countries can benefit from free trade by increasing their amount of access to economic resources. Nations usually have limited economic resources. Small developing nations often have the lowest amounts of natural resources in the economic marketplace. Free trade agreements ensure small nations can obtain the economic resources needed to produce consumer goods or services.

Benefits – countries which open their markets usually have a policy of deregulation, they free their companies to compete in markets without government control or subsidies because of this consumers in free trade areas are offered a wider range of high quality products at low prices. People in those areas can move to the most productive parts of the economy and get better jobs with higher wages or salaries.

2) What is the major concern in international trade and how to deal with it?

3) What are the main barriers to trade?

Two main barriers are:

• Tarrifs are taxes on imported goods so they can not compete so well against domestic products.

• Subsidies – are money paid to domestic producers, so that they can sell their goods more cheaply than foreign competitors.

Other less important barriers – are quotes, expensive licences for importers and regulations relating to documents which a company must have to export its goods to certain countries.

4) Why do many countries protect their industries?

1. Some people say why should we practice free trade if other nations compete unfairly. For example dumping is fairly common international trade. Companies can only do that when they are heavily subsidized by the government.

2. Many people believe that strategic industries must be protected. These are steel, power, communications and so on. In the US many Americans think that the steel industry should be protected against cheap imports from the other countries. If US depends too much on foreign-made steel, this could be bad in a time of war

3. Finally, some people say that in developing countries industries need to be protected until they are strong enough to compete in world markets.

5) Do you think globalization has an impact on international trade? If so,how? 6) What is the essence of good (bad) times in market activity? What two common types of stock market investors are known? 7) Why are companies interested in export trade? What are the most important reasons for exporting?

Quality 8) How to define quality in business? How important is it? 9) What different business philosophies are practised to control quality? 10) Does high quality mean high cost? Give your reasons. 11) Which features express the idea of quality in the best way? Why? Ethics 12) What are the main objectives of any business?

Every business has its sets of objectives. The objectives include such categories:

1. Economic objectives: every business is started for earning profit because profit is the acid test for every business. Every business has the objective to build a market share.

2. Human objectives: the business should render welfare to its employees. The consumer should be supplied with qualitative products so that they will be satisfied. The business should provide enough satisfaction to shareholders. Also should have the objective of being helpful to the government.

3. Social objectives: to ensure continuous supply of goods to meet requirement of the society. Should create more employment opportunities, should ensure effective utilization of natural resources.

4. National objectives: The business should help in development of small scale industries. Also improve economic position of society.

13) How do companies deal with different ethical issues?

Different types of business face different ethical issues:

• Financial institutions try to prevent inside trading by erecting national barriers called chinese walls between different departments.

• Companies selling personal finance promise to ensure that clients are sold appropriate products for their needs and thus avoid misselling

• Manufactures claim that their products are green or environmentally friendly in all stages of their production, use and disposal.

• Cosmetic companies say their products are nor tested on animals

• Clothing companies claim to trade fairly and that their products are not made in sweatshops paying subsistence wages and using child labour.

14) Which act of wrongdoing do you think is the most (least) serious? 15) What practical steps can companies take to prevent their trade secrets from being stolen? 1) Limit employee access to trade secrets. Obviously, the fewer people who know a trade secret, the less likely it will leak out. If company grows, it’s good idea to restrict access to trade secrets to only those employees who really need to know them.

2) Create a log for each project and have every employee sign in and out every time they use confidential materials.

3) Employ security guards, surveillance cameras and perimeter fencing.

4) Restrict photocopying. Require key cards and passwords to use company photocopies.

5) Control visitors. Visitors to your company should not be allowed to wander unsupervised in areas where confidential materials are kept.

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