Business in the global economy and ethics

The economic environment

Inflation, interest rates, exchange rates, unemployment and economic growth affect costs, demand and planning. Zimbabwean firms deal with currency changes (US dollar and ZiG) and must manage exchange-rate risk.

Government and business

Taxation (ZIMRA), regulation, competition law (Competition and Tariff Commission), consumer protection, labour law, environmental law (EMA) and support for exporters (ZimTrade).

International business

• Reasons to trade internationally: larger markets, cheaper inputs, spreading risk.
• Methods: exporting, licensing, franchising, joint ventures and foreign direct investment.
• Multinational corporations bring investment, jobs and technology, but may repatriate profits and exploit resources.
• Trade blocs: SADC, COMESA and the African Continental Free Trade Area reduce tariffs.

Globalisation

Increasing integration of economies through trade, technology and communication. Opportunities and threats for local firms.

Ethics

Ethical issues: fair wages, honest marketing, bribery and corruption, environmental damage, child labour in supply chains. Ethical behaviour may raise costs in the short term but builds trust and long-term success.

Check yourself

1. Give two reasons why a business might export.
2. State one advantage and one disadvantage of multinationals to a host country.
3. Which organisation enforces environmental regulations in Zimbabwe?