1.

TARIFF BARRIERS
i. Introduction of Tariff Barriers on the Exportation of Maize:

When tariff barriers are introduced on the exportation of maize from Zambia to Congo, it means
that a tax or duty is imposed on the exported maize. This measure is intended to make the
exported maize relatively more expensive compared to locally produced maize in Congo. As a
result, the effects of this scenario can be as follows:

 Reduced demand:

Tariffs increase the price of exported maize, which can lead to a decrease in demand from
Congo. Congolese buyers may find it more cost-effective to purchase maize from domestic
sources or seek alternative markets with lower prices.

 Decreased export volume:

With reduced demand, Zambian exporters like Mr. Banda may face a decline in the quantity of
maize they can export to Congo. The imposition of tariffs makes their products less competitive
in the Congolese market.

 Potential impact on revenue:

If the export volume of maize decreases significantly due to the tariff barriers, Mr. Banda and
other Zambian exporters may experience a decline in their revenue. The additional costs imposed
by tariffs can eat into their profit margins.

ii. Ban on importation of motorbikes into Zambia:

A ban on the importation of motorbikes into Zambia implies that the government prohibits the
entry of motorbikes from Congo into the Zambian market. The effects of this scenario can be as
follows:

a) Limited consumer choice:

The ban would restrict Zambian consumers from accessing motorbikes imported from Congo.
They would have fewer options available in the market, potentially limiting their choices and
forcing them to purchase locally available motorbikes.

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 b) Disruption of supply chain:

The ban would disrupt the supply chain between Mr. Phiri, who imports motorbikes from Congo,
and the Zambian market. Mr. Phiri's business would be adversely affected as he would no longer
be able to sell motorbikes in Zambia.

c) Market opportunities for local producers:

The ban creates an opportunity for local motorbike manufacturers in Zambia. With imported
motorbikes prohibited, local producers can potentially benefit from increased demand for their
products. It could lead to the growth of the domestic motorbike industry and the creation of new
business opportunities.

iii. Introduction of Quotas on the Importation of Motorbikes:

The introduction of quotas on the importation of motorbikes from Congo to Zambia means that a
predetermined limit is set on the quantity of motorbikes that can be imported. The effects of this
scenario can be as follows:

 Limited import volume:

The quotas would restrict the number of motorbikes that Mr. Phiri and other importers can bring
into Zambia. This limitation can reduce the availability of motorbikes in the market, potentially
leading to higher prices and limited choices for consumers.

 Increased competition for quotas:

With a limited number of quotas available, competition among importers would likely intensify.
Importers would need to secure a quota allocation to continue importing motorbikes. This could
create additional administrative burdens and potential costs for businesses.

 Potential impact on local market:

Depending on the size of the quotas, the introduction of quotas could create opportunities for
local motorbike producers in Zambia. With limited imports, local manufacturers may face less
competition, allowing them to capture a larger share of the market.

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 iv. Removal of Tariff Barriers on the Exportation of Maize to Congo:

If the Zambian government removes tariff barriers on the exportation of maize to Congo, it
means that there will be no additional charges or taxes imposed on Zambian maize being
exported. The effects of this scenario can be as follows:

 Increased competitiveness:

Without tariff barriers, Zambian maize becomes more competitive in the Congolese market. The
removal of tariffs can make Zambian maize more affordable and attractive to Congolese buyers
compared to maize from other countries that still have tariff barriers. This can potentially
increase the demand for Zambian maize in the export market. In addition, similarly, the demand
will Increased: The removal of tariff barriers makes Zambian maize more competitively priced in
the Congolese market. This can lead to an increase in demand for Zambian maize as it

 Expansion of Mr. Banda's business:

As an exporter of maize, Mr. Banda's business may benefit from the removal of tariff barriers.
With increased demand for Zambian maize in Congo, Mr. Banda may experience higher sales
and potentially higher profits as he can export more maize without the burden of additional
tariffs.

 Economic benefits:

The removal of tariff barriers can promote trade between Zambia and Congo, leading to
economic benefits for both countries. It can foster stronger bilateral relations, increase revenue
from exports, and potentially stimulate agricultural production in Zambia, as farmers have a
larger market for their maize.

 Potential challenges for domestic consumers:

If a significant amount of maize is exported to Congo, it may result in reduced availability of

maize in the domestic market, potentially leading to higher prices for Zambian consumers. This
can pose challenges, particularly for individuals who heavily rely on maize as a staple food.

2. GLOBALIZATION

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Certainly! Globalization is driven by various factors that have contributed to the increased
integration of economies, cultures, and societies worldwide. Here are ten key drivers of
globalization:

 Technological Advancements:

Technological innovations, particularly in transportation and communication, have

revolutionized global connectivity. Advancements in air travel, shipping, and the internet have
made it easier and faster to transport goods, services, and information across borders.

 Trade Liberalization:

The removal or reduction of trade barriers, such as tariffs, quotas, and import/export restrictions,
has facilitated the flow of goods and services across borders. Trade agreements, such as the
World Trade Organization (WTO) and regional trade blocs, have played a significant role in
promoting global trade.

 Market Liberalization:

Economic reforms and deregulation initiatives in many countries have encouraged free-market
principles and opened up economies to foreign investment. Privatization, deregulation of
industries, and the liberalization of financial markets have attracted cross-border investments and
fostered global economic integration.

 Investment and Capital Flows:

The ease of capital mobility and cross-border investments has increased with globalization.
Multinational corporations (MNCs) seek investment opportunities in foreign markets to access
resources, expand their markets, and benefit from cost efficiencies.

 Economic Integration:

Regional economic integration initiatives, such as the European Union (EU), North American
Free Trade Agreement (NAFTA), and Association of Southeast Asian Nations (ASEAN), have
promoted closer economic ties among member countries. These initiatives aim to eliminate trade

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barriers, harmonize regulations, and promote the free movement of goods, services, capital, and
labor.

 Outsourcing and Offshoring:

Globalization has enabled companies to outsource and offshore various business functions and
production processes to countries with cost advantages. This has allowed for the fragmentation
of production and the creation of global value chains.

 Labor Mobility:

Globalization has facilitated the movement of people across borders, whether for work,
education, or other purposes. Skilled labor migration, international student mobility, and the
exchange of knowledge and skills have contributed to the global integration of labor markets.

 Cultural Exchange and Media:

Globalization has led to the dissemination of cultural products, ideas, and values through media
platforms. Movies, music, literature, and social media have facilitated cultural exchange, leading
to the spread of global popular culture and the blurring of cultural boundaries.

 Global Financial System:

The expansion and integration of global financial markets have facilitated capital flows, foreign
direct investment, and access to financing for businesses and governments worldwide. Global
financial institutions, such as the International Monetary Fund (IMF) and World Bank, play a
crucial role in providing financial assistance and promoting stability.

 Global Challenges:

Global issues, such as climate change, pandemics, terrorism, and transnational crime, have
necessitated global cooperation and collaboration. These challenges have highlighted the
interdependence of nations and the need for collective action, driving countries to work together
on shared problems.

It is important to note that while globalization has brought numerous benefits, it has also
presented challenges, including inequality, cultural homogenization, and environmental

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concerns. The drivers mentioned above have shaped the ongoing process of globalization, which
continues to evolve and impact various aspects of our interconnected world.

3. FORMS OF GLOBALIZATION

Certainly! The various forms of globalization in the world economy are essential to international
business due to several reasons. Here are some key explanations:

 Market Expansion:

Globalization enables international businesses to access larger markets beyond their domestic
boundaries. By entering new markets, businesses can tap into a broader customer base, increase
sales, and expand their revenue streams. This allows for greater business growth and economies
of scale.

 Access to Resources:

Globalization facilitates access to diverse resources, such as raw materials, labor, technology,
and expertise, from different parts of the world. International businesses can leverage these
resources to optimize their production processes, reduce costs, and enhance competitiveness.

 Cost Efficiency:

Globalization provides opportunities for international businesses to achieve cost efficiencies. By

relocating production or sourcing components from countries with lower labor or production
costs, businesses can reduce expenses and improve profitability. This is particularly significant in
industries where cost competitiveness is crucial, such as manufacturing.

 Innovation and Knowledge Transfer:

Globalization fosters the exchange of knowledge, ideas, and innovation across borders.
International businesses can benefit from accessing global networks of talent, research, and
development. Collaborating with diverse partners and operating in different markets can lead to
the transfer of innovative practices, technologies, and management approaches, enhancing
competitiveness.

 Strategic Alliances and Partnerships:

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Globalization enables international businesses to form strategic alliances, joint ventures, and
partnerships with companies from different countries. These collaborations can facilitate market
entry, share risks and costs, access local expertise, and gain competitive advantages in specific
markets or industries.

 Diversification and Risk Management:

Operating internationally allows businesses to diversify their operations and reduce reliance on a
single market. By spreading their activities across different regions, businesses can mitigate risks
associated with market fluctuations, political instability, or economic downturns in specific
countries or regions.

 Talent Acquisition:

Globalization offers international businesses access to a larger pool of talent. By recruiting from
diverse talent markets, businesses can acquire specialized skills, cultural insights, and diverse
perspectives. This enhances their ability to innovate, adapt to local markets, and develop a
competitive advantage.

 Brand Recognition and Reputation:

Expanding globally enables businesses to build brand recognition and reputation on a broader
scale. A strong global presence can enhance a company's credibility, trustworthiness, and
customer loyalty. It also provides opportunities for global marketing and brand positioning.

 Learning from Global Best Practices:

International businesses can learn from and adopt best practices from different markets and
industries around the world. By benchmarking against global leaders, businesses can improve
their operational efficiency, customer experience, and overall performance.

 Adaptation to Changing Market Dynamics:

Globalization forces businesses to adapt to evolving market dynamics, technological

advancements, and consumer preferences. This fosters agility, innovation, and the ability to
respond effectively to changing global trends and opportunities.

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In summary, the different forms of globalization in the world economy are crucial to
international business as they offer market expansion, resource access, cost efficiencies,
innovation, diversification, risk management, talent acquisition, brand recognition, learning
opportunities, and adaptation to changing market dynamics. Embracing these forms of
globalization enables businesses to thrive and succeed in an increasingly interconnected and
competitive global marketplace.

4 CLASSIFICATION BASED ON THE CHARACTERISTICS OF POLITICAL RISKS:

Political risks refer to the uncertainties and potential negative impacts that arise from political
decisions, actions, or instability in a country or region. These risks can significantly affect
international business operations. Political risk classification based on their characteristics helps
identify and assess the potential impact on businesses. Here are five common classifications:

 Macro Political Risks:

These risks are associated with large-scale political events and changes that can have a broad
impact on business operations. Examples include changes in government, political instability,
regime changes, civil unrest, wars, or geopolitical conflicts. Macro political risks can lead to
disruptions in supply chains, currency devaluation, property damage, or business closures.

 Micro Political Risks:

Micro political risks are specific to individual companies or industries and can result from
government policies, regulations, or actions. Examples include changes in taxation policies, trade
restrictions, labor laws, licensing requirements, or industry-specific regulations. These risks can
directly impact the profitability, competitiveness, or operational efficiency of businesses.

 Legal and Regulatory Risks:

Legal and regulatory risks arise from changes or inconsistencies in laws and regulations that
affect business operations. This includes issues related to contract enforcement, intellectual
property protection, corruption, bribery, compliance with local regulations, or changes in legal
frameworks. Businesses need to navigate these risks to ensure legal compliance and protect their
interests.

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  Policy and Political Stability Risks:

Policy and political stability risks relate to the predictability and consistency of government
policies and the overall political climate in a country. Business operations can be affected by
policy flip-flops, abrupt changes in regulations, or inconsistent enforcement of laws. Political
instability and uncertain policy environments can erode investor confidence and disrupt business
planning and operations.

 Social and Environmental Risks

Social and environmental risks involve political factors related to social issues, environmental
regulations, and public sentiment. These risks can include social unrest, labor strikes, protests,
environmental activism, or changing societal expectations. Businesses need to consider these
factors to mitigate reputational risks and ensure compliance with evolving social and
environmental standards.

b) Five Indicators of Globalization:

Indicators of globalization help measure and assess the extent of global integration and
interconnectedness. Here are five commonly used indicators:

 Trade Flows:

International trade is a key indicator of globalization. The volume and value of imports and
exports between countries reflect the degree of economic integration. Trade indicators include
the total value of merchandise trade, trade-to-GDP ratio, and trade balances between nations.

 Foreign Direct Investment (FDI):

FDI represents the investment made by individuals, businesses, or governments from one
country into another. FDI indicators track the flow of capital across borders and indicate the
extent of international investment and economic cooperation.

 Cross-Border Financial Flows:

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Cross-border financial flows measure the movement of funds between countries. Indicators
include foreign portfolio investment, remittances, international banking, and cross-border
lending. These indicators reflect financial integration and capital mobility.

 Information and Communication Technology (ICT) Connectivity:

ICT indicators measure the accessibility and usage of technology, particularly internet
connectivity and mobile phone penetration rates. These indicators reflect the level of global
connectivity, communication, and information sharing.

 Global Cultural Exchange:

Indicators of cultural globalization measure the diffusion of cultural products, ideas, and
practices across borders. These indicators include the global circulation of media content,
international tourism, cross-cultural collaborations, and the spread of global languages.

These indicators provide insights into the interconnectedness and interdependence of economies,
societies, and cultures worldwide, helping evaluate the progress and impact of globalization.

5 MULTINATIONAL CORPORATIONS (MNCS

Certainly! Multinational corporations (MNCs) can be classified into different types based on
their strategies and characteristics. Here are five common types of multinational corporations and
their features:

Global MNCs:

Features: Global MNCs operate with a centralized approach and aim for a high level of
integration and coordination across their global operations.

Strategy: They typically standardize their products, processes, and marketing strategies to
achieve economies of scale and global efficiency.

Examples: Coca-Cola, McDonald's, Procter & Gamble.

Multi-domestic MNCs:

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Features: Multidomestic MNCs focus on adapting their products and strategies to local markets
and consumer preferences.

Strategy: They decentralize decision-making and give autonomy to their local subsidiaries to
customize products, marketing, and operations.

Examples: Unilever, Nestlé, Walmart.

Transnational MNCs:

Features: Transnational MNCs aim for a balance between global integration and local
responsiveness.

Strategy: They adopt a "think global, act local" approach, combining standardization of core
elements with customization of products and strategies for different markets.

Examples: Toyota, General Electric, Samsung.

Platform MNCs:

Features: Platform MNCs build and operate digital platforms that connect various stakeholders,
such as consumers, producers, and service providers.

Strategy: They focus on facilitating interactions and transactions on their platforms, often
generating revenue through fees or commissions.

Examples: Amazon, Alibaba, Uber.

Born Global MNCs:

Features: Born Global MNCs are companies that start operating internationally shortly after their
establishment, without significant prior domestic market presence.

Strategy: They leverage technology, digital platforms, and global networks to quickly expand
their business globally.

Examples: Skype, Spotify, Transfer Wise.

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It's important to note that these classifications are not mutually exclusive, and many MNCs may
exhibit characteristics of multiple types depending on their industry, size, and specific strategies.
Additionally, the nature and strategies of MNCs can evolve over time as they adapt to changing
market conditions and global trends.

TARIFF AND MARKET IMPACT

The 50% upward adjustment in international market pricing of Musonda's mango juice will have
several effects on various stakeholders:

Local Producers:

The increased international market pricing may provide an opportunity for local producers of
mango juice in Zambia to compete more effectively against Musonda's imported juice.

If the local producers can offer their products at a relatively lower price compared to the higher-
priced imported juice, they may attract more customers and increase their market share.

Local Consumers:

Local consumers may be negatively impacted by the upward adjustment in international market
pricing. As Muscoda’s mango juice becomes more expensive due to the price increase,
consumers may experience higher prices when purchasing this imported product.

However, if local producers are able to offer competitive prices in response to the price increase,
consumers may have more affordable options to choose from.

The Foreign Company (Musonda):

The upward adjustment in international market pricing may initially benefit Musonda, as it can
potentially lead to increased revenue per unit sold.

However, if the higher price reduces demand for Musonda's mango juice in Zambia, the
company may face challenges in maintaining its market share and profitability.

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Musonda will also need to consider the competitive response from local producers, who may
offer lower-priced alternatives to attract customers.

The Tariff System:

The current tariff system that charges specific tariffs to the foreign company, Musonda, may
need to be reviewed in light of the adjusted international market pricing.

If the tariff remains unchanged, it may result in higher import costs for Musonda, potentially
reducing their competitiveness in the local market.

The government may need to assess the impact of the new international market pricing on the
competitiveness of local producers and adjust the tariff system accordingly.

Advice for the Government:

Conduct a thorough analysis of the market dynamics, including the competitiveness of local
producers and the potential impact on local consumers, before making any policy decisions.

Consider the overall goals of the government, such as promoting domestic industries or ensuring
affordable access to essential products.

Evaluate the effectiveness of the current tariff system and its impact on the foreign company and
local producers. Adjust the tariff rates if necessary to maintain a fair and balanced market.

Explore other policy measures, such as promoting local producers through subsidies or
incentives, to support their competitiveness against imported products.

Engage in dialogue with stakeholders, including Musonda and local producers, to understand
their concerns and perspectives, and work towards finding mutually beneficial solutions.

COPPER INVESTMENT: ZAMBIA VS. BOTSWANA

To advise Mr. Yu on where to start purchasing copper from between Zambia and Botswana, we
need to consider the exchange rates and the potential profitability of the investment. Based on the
exchange rates provided, Mr. Yu should consider starting to purchase copper from Zambia rather
than Botswana. Although both countries have abundant copper resources, the exchange rate of

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$1=K23 in Zambia is more favorable compared to $1=12 pula in Botswana. This means that Mr.
Yu can get more Zambian Kwacha for his investment of 70,000,000 Yen in Zambia compared to
Botswana. Therefore, he would have a greater purchasing power and potentially be able to
acquire a larger quantity of copper in Zambia.

Let's evaluate the situation:

Exchange rates:

In Botswana: $1 = 12 pula

In Zambia: $1 = K23

Investment amount: Mr. Yu intends to invest 70,000,000 yen.

Considering the exchange rates provided, we need to convert the investment amount from yen to
US dollars for comparison.

As of my knowledge cutoff in September 2021, the exchange rate between the yen and the US
dollar was approximately 1 USD = 110 yen. Let's assume this rate for the conversion:

Investment in US dollars:

70,000,000 yen / 110 yen per dollar = $636,363.64

Now, let's calculate the amount in local currency that Mr. Yu can obtain with this investment in
each country:

In Botswana:

$636,363.64 * 12 pula per dollar = 7,636,363.68 pula

Now, let's consider the potential profitability:

With the investment amount of 7,636,363.68 pula, Mr. Yu can purchase copper in Botswana.
However, it's important to evaluate other factors such as production costs, transportation, taxes,
and market conditions to assess the profitability accurately.

In Zambia:

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$636,363.64 * 23 Kwacha per dollar = 14,628,181.72 Kwacha

Now, let's consider the potential profitability:

With the investment amount of 14,628,181.72 Kwacha, Mr. Yu can purchase copper in Zambia.
Similarly, further analysis is required to determine the profitability based on factors such as
production costs, transportation, taxes, and market conditions.

Based on the exchange rates and the potential investment amounts, it seems that Mr. Yu would
have a larger purchasing power in Zambia compared to Botswana. However, it's essential to
conduct a detailed analysis of various factors, including production costs, market conditions,
political stability, and logistical considerations, before making a final decision.

I recommend Mr. Yu to consult with experts in the copper industry, conduct market research,
and evaluate the overall business environment of both countries to make an informed decision on
which country to start purchasing copper from.

Based on the exchange rates mentioned, Botswana's environment is more favorable for exports to
China. With $1 equal to 22 pula in Botswana and $1 equal to 12 in Zambia, it means that
Chinese importers will get more value for their money when importing goods from Botswana.
This favorable exchange rate for Botswana would make its products relatively cheaper for
Chinese buyers, encouraging more exports from Botswana to China.

Engaging Mr. Haalyoka in establishing a copper refinery plant in Zambia has several benefits for
the country, particularly in the context of international trade. Here are some points to consider
when advising the government:

a) Value addition:

Establishing a copper refinery plant allows for the processing of raw copper into higher-value
products. This increases the value of Zambia's copper exports and leads to higher revenue
generation for the country.

b) Diversification:

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By engaging in copper processing and exporting processed copper products, Zambia can
diversify its economy. This reduces dependence on raw material exports and opens up
opportunities for the development of manufacturing industries and job creation in the country.

c) Trade balance:

Exporting processed copper products instead of raw copper can help improve the trade balance
of Zambia. Processed products typically have higher value and fetch better prices in the
international market, leading to increased export earnings.

d) Technological transfer and skill development:

Establishing a copper refinery plant involves adopting advanced technologies and processes.
This can facilitate technological transfer, knowledge sharing, and skill development within the
country, which contributes to the overall industrial development of Zambia.

e) Increased competitiveness:

Processed copper products have a higher competitive advantage in the global market compared
to raw materials. By engaging Mr. Haalyoka and supporting the establishment of a copper
refinery plant, Zambia can position itself as a key player in the international market for copper
products, attracting more investors and boosting the country's reputation in the industry.

f) Long-term sustainability:

Processing copper locally ensures that Zambia retains more value within its borders. It reduces
the risk of price fluctuations in the global raw copper market and provides stability and long-
term sustainability for the country's economy.

In summary, engaging Mr. Haalyoka and supporting the establishment of a copper refinery plant
in Zambia offers significant benefits such as value addition, diversification, improved trade
balance, technological transfer, skill development, increased competitiveness, and long-term
sustainability.

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