Business Concepts Overview

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Questions and Answers

What is the primary purpose of tariffs imposed by the government?

To eliminate foreign competition
To facilitate international investments
To subsidize domestic producers
To generate revenue and regulate foreign trade (correct)

Which of the following best describes vertical integration?

Acquisition of suppliers or distributors for supply chain control (correct)
Ownership of multiple firms across different industries
Establishing a separate entity for product innovation
A partnership with foreign businesses for resource sharing

What characterizes a joint venture?

An equity arrangement where parties may share ownership and resources (correct)
Full ownership by one party only
A temporary arrangement with no shared resources
A government-led initiative for foreign direct investment

What is the effect of economy of scale for a firm?

<p>Reduction of cost per unit with increased production (D)</p> Signup and view all the answers

What is an embargo?

<p>An official ban on trade with a specific country (B)</p> Signup and view all the answers

Flashcards

Tariffs

A tax imposed by a government on imported or exported goods.

Vertical Integration

A firm taking ownership of its suppliers, distributors, or retail locations, increasing control over the supply chain.

Joint Ventures

A type of Foreign Direct Investment (FDI) where two or more companies share ownership, technology, or assets.

Embargo

A government-imposed ban on trade with a specific country.

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Economy of Scale

A company's ability to produce goods at a lower cost per unit as production increases.

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Study Notes

SDN BHD

Invented to overcome high capital costs in interwar years
Focused on technology and knowledge decentralization
Aims to reduce decision-making complexity

Tariffs

Taxes imposed by the government on imports/exports
Source of revenue for the government
Used to regulate foreign trade policy to protect domestic industries

Embargo

Official ban on trade with a particular country
A form of trade restriction
Example: USA imposed embargo on Cuba (1960)

Joint Ventures

Type of equity arrangement (Foreign Direct Investment)
May involve sharing ownership, technology, labor
Advantages include access to high-tech or market knowledge

Vertical Integration

Firm takes control of suppliers, distributors, or retail locations
Aims to gain greater control of supply chain
Results in increased efficiency and reduced costs

Economies of Scale

Obtaining lower cost prices due to increased firm production

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Description

Explore key business concepts such as tariffs, embargoes, joint ventures, and vertical integration. This quiz covers how these strategies impact trade and firm efficiency. Test your understanding of how businesses navigate complexities in their operational environments.