1. Which of the following is a concern employees of an expanding bus.docx

1. Which of the following is a concern employees of an
expanding business would have?
A.)Ensure that customer requests are responded to promptly and
professionally.
B.)Ensure sensitive information about specialty offerings
remains undisclosed until the new location opens.
C.)Ensure that fair hiring and firing practices are incorporated
at the new location.
D.)Ensure the team develops strongly in new locations.
Passage to Answer the Question
What Is Ethics?
Ethics
is simply the principles of right and wrong and the morality of
the choices involved.
Now, it's also important to define what ethics is
not
. Ethics is not emotions or religion. It's not science or norms of
a society, necessarily. It's also not simply following the law,
because it's perfectly acceptable to follow the law yet be an
unethical person.
term to know Ethics The principles of right and wrong
and of the morality of the choices
1a. Business Ethics

Business ethics
is closely tied to what ethics is. It's the principles of right and
wrong of the morality of the choices made in the
business
world. Essentially, what we're doing is taking the principles or
the definition of ethics and applying it to business.
hint Whether you're looking at business ethics or other
types of ethics, ethical people will always follow the same
ethical principles
all the time
, not just when it suits them.
term to know Business Ethics The principles of right
and wrong and of the morality of the choices made in the
business world
1b. Managerial Ethics
Managerial ethics
is simply ethics again. It is the principles of right and wrong
and of the morality of the choices made in the context of
management
.
Managerial decisions impact employee behavior. How you hire
or fire, the wages that you pay, or the working conditions at
your business are all ethical decisions, and they can greatly
impact employee attitudes and productivity.
Managerial ethics decisions can also impact behavior toward an
organization. Do you have conflicts of interest or allow them? A
conflict of interest
is simply a circumstance in which the judgment of an

individual or group may be impaired because of a difference in
primary or secondary interest.
Is customer information kept confidential?
Confidentiality
is simply keeping private trusted data out of the hands of the
public and other people who don't need to see it.
think about it We hand our personal information, like
credit card numbers, to a lot of different people online when we
are shopping. What do you think it would do for a business if
we suddenly found out that our information wasn't as
confidential as we thought it was? That would have a big impact
on that particular business.
Collusion
is an attempt by business to conspire to the detriment of
customers, businesses, or the general public.
Lastly, managerial ethics decisions can also impact behavior
toward economic agents, such as your customers or your
competitors, stockholders, and suppliers. Competitors can take
advantage of unethical behavior, and then customers may not
want to do business with you anymore.
terms to know Managerial Ethics The principles of right
and wrong and of the morality of the choices made in the
context of management Conflict of Interest A circumstance in
which the judgment of an individual or group may be impaired
because of a difference in primary and secondary interest
Confidentiality Keeping private trusted data out of the hand of
the public and other people Collusion An attempt by
businesses to conspire to the detriment of customers, other
businesses, or the general public

Ethical Behavior and Norms
A business assesses ethical behavior in the following ways:
They have to listen and learn, and collect the facts about the
decisions that they've made.
They create and analyze those facts and relate them to moral
values that are appropriate to that condition.
They make judgments based on the rightness and wrongness of
the situation.
Some businesses add a fourth step by editing those practices in
order to limit unethical behavior.
There are also a set of ethical norms that are important to
consider for each particular case involving a question of ethics:
Utility: What's best for the organization as a whole?
Fairness: Can this decision be considered fair and just?
Rights: Are the rights of other people being infringed upon?
Care: Is this a thoughtful way to be responsible and kind to the
other parties?
As mentioned before, these need to be considered in each case,
and each case is not always clear-cut. There are also other

factors that may affect your decision, such as:
Individual factors, such as an individual experience of the
person making the decision, or their own personal values and
goals
Social factors, such as the cultural norms for the country or
environment that you're working in. What are your coworkers
doing or thinking?
Relationships with your stakeholders and the persons within
your organization
Technology, which could play a very important role
Keep in mind, these factors are by no means an exhaustive list.
Culture of Ethics
Now, businesses can encourage or discourage ethical behavior.
One of the ways they do this is through a written guide that
defines the policies and standards of the business, which is
called a
code of conduct
. This is an organizational set of rules that encourage
responsibility and ethical behavior.
Businesses can also help set up an ethical environment. You
see, businesses have to have an environment or a culture that
encourages not only participation in the ethics program, but also
rewards that participation and ethical behavior. One of the ways
to do that is to have an employee representative that looks at
each case and is responsible for the ethics of those decisions.
The program should be company-wide; it shouldn't be limited to

one particular set of people within an organization. The size of
the company is simply the scale of the program.
term to know
Code of Conduct Organizational rules to encourage responsible
and ethical behavior
Ethics and Values
An ethical business person should do the following:
They should follow a core set of beliefs, and those beliefs
should be used regardless of the circumstances.
They should behave in accordance with those beliefs all the
time, not just when it suits them or when it is convenient. Do
you run a red light when people aren't looking?
Encourage right and discourage wrong. They should actively
strive to be right and ethical and discourage unethical behavior.
Act in line with others' advice on how to be an ethical person.
2 — Models of Social Responsibility and Considering the
Stakeholder
Understand different kinds of social responsibility and their
benefits.

2.Which statement applies to the economic model of social
responsibility?
A.)Businesses cannot ignore social issues.
B.)Business does not create problems in society.
C.)When businesses focus on profits, society benefits.
D.)Businesses have the resources to help solve social problems.
The Passage to Answer this Question
Social Responsibility and Stakeholders
Up until the 1930s, businesses were free to do virtually
anything they wanted. They could make whatever claims they
chose, put anything on a billboard, or put anything they wanted
into the products that they sold to consumers.
did you know "Caveat Emptor" was the phrase of the day
during this time period, which is a Latin phrase meaning "let the
buyer beware."
Around the time of the Great Depression, there were a plethora
of economic problems. The president at the time, Franklin
Delano Roosevelt, began a program of improving social
conditions that has continued up until today.
Social responsibility
is defined as the responsibility to act in a way that benefits
society at large. In other words, it involves thinking not just of
yourself, but of society as a whole. Companies must consider

their impact on society because they play a big role in our
everyday lives. They have to consider the consequences of their
decisions--the potential benefit or detriment of those decisions
to society as a whole.
term to know Social Responsibility The responsibility
to act in a way to benefit society at large
1a. Two Models
There are two basic models of social responsibility:
Models of Social Responsibility
Economic model
Socioeconomic model
In this model, society benefits when companies make profits.
When companies make profits, they're able to produce more
product, which improves the lives of individuals. They're also
able to hire more people and pay them more, which provides
jobs and allows employees to have a better standard of living.
In this model, businesses have a responsibility to the
stakeholders and society. The focus is not just on the profits, or
the people "inside"; they need to consider the stakeholders as
well.
Stakeholders
are the people and parties directly affected by an organization.
They can be any of the following:
Customers, who deserve and want safe products. They don't
want products that are going to injure them in some way.
Employees, who want a safe, stable work environment.

Investors, who want safe investments. They want to know that
the money they invest is going to be well cared for and put to
work, not squandered.
Communities and the environment, because we all want clean
air, clean water, and clean land.
Social Responsibility
Advantages
Disdvantages
Can't ignore social issues: Being socially responsible is
really a part of business because it can increase profits,
customers are more loyal, and people will want to invest in the
business. Responsibility to shareholders: A manager's primary
job and responsibility are to the shareholders or the owners of
the business. Therefore, anything that a manager does that
distracts from that job takes away from the primary reason he or
she is there. Have the resources to cause change: Businesses
have resources that they can use to help solve some of these
social issues--technically, financially, and managerially. Use
resources for profit: Resources made by a business belong to the
business, and they should be used to create profit, jobs,
more
resources and products for the community at large, and to
increase employee morale and well-being. Creation of stable
environment: By businesses helping, it creates a more stable
environment for the rest of us. Social problems from society,
not business: Businesses feel like this is not something that they
should have to solve if they haven't caused the problems in
society. Decreases need for government intervention: If
businesses are socially responsible to their stakeholders, this
will decrease the need for government intervention with the
business community and our everyday lives. Government

accountable, not business: If government officials are falling
down on the job, then they should be the ones held accountable,
not necessarily the business.
As you can see, social responsibility isn't just a catch phrase.
It's a lot of hard work, and the arguments for and against a
company being socially responsible--depending on how you
personally define it--are valid on both sides.
Ethics vs. Social Responsibility
Let's compare ethics to social responsibility because, clearly,
there is some overlap between the two. To be ethical and to be
socially responsible are very close to each other.
Ethics focuses on behaviors and actions--those individual
things, similar to the concept of microeconomics.
Social responsibility involves a big-picture view. It's how those
ethical decisions as behaviors and actions affect the world at
large--more like macroeconomics.
How do you balance the needs of the business with the needs of
the other stakeholders that you can affect on an everyday basis?
Determine how social responsibility programs are implemented.
3.Which of the following represents ongoing leadership?
A.)Victoria's friend worked at the local youth group and
mentioned to Victoria that they were always looking for more
volunteers.
B.)Victoria and her committee decided what their goal was for

the program and also discussed the scope of the program.
C.)Victoria checked in on the program to make sure it was being
followed appropriately. She conducted an audit and refined a
few of the practices based upon her findings.
D.)Victoria appointed specific responsibilities to each member
of the program committee to ensure a clear organization of
duties.
The Passage for this Question
1. Steps in a Social Responsibility Program
A company can set up a social responsibility program to ensure
that it acts in a socially responsible way. There are six different
steps in setting up a social responsibility program:
step by step
Step 0: Need Recognition:
Let's start with 0, because this first one is a pre-step, in a way.
This step is need recognition, meaning that someone in the
organization or a client notices that there's a need for a social
responsibility program, or that there is a deficiency in the
company's current social responsibility program.
Step 1: Planning:
This is where the goals and objectives, the funding, and the
scope of the program come into play. Now, in planning this
particular step, it's vital that the leadership and the higher-ups
in the company get involved. If a program--any program--is
going to succeed, it must start from the top of the company.
Step 2: Action:
Next is action, or implementing the program. This involves
getting the program started and off the ground.

Step 3: Results:
Then, you want to look at the results that the program is
generating. It's important to clearly identify measurable results
that you can then track and observe, to see if you're hitting your
desired targets. Often, this is accomplished with a committee
within the organization that is committed specifically to that
program.
Step 4: Ongoing Leadership:
In this step, the company sets up a clear organization of
responsibilities to the program to ensure it stays on track.
Step 5: Follow-Through:
Lastly, you want to check the program and make sure that it's
being followed. You'll need to conduct audits, and when you
find instances where the program isn't succeeding as well as it
should, you'll need to alter and refine the practices that are
involved, to ensure that the company stays on track. Now, these
steps are going to be true regardless of what size company you
have. With small businesses, it's easy to get distracted by the
day-to-day operation of the business. If you remember,
partnerships and sole proprietors have limited resources on their
hands, as far as personnel is concerned, so they're going to be
busy running the business. Keeping up with a recycling program
in addition to those daily responsibilities can be a big
distraction.
Larger businesses, however, have their own issues. Often,
they'll need to roll out the program in multiple phases and
across different locations. For instance, if you have a recycling
program that you're trying to implement in stores across the
country, that's a big task and simply can't be done all at once.
2. Change Management
Now, what is change management? People get comfortable in
certain situations, and they're typically resistant to change. If
you're going to implement any type of change within an

organization, you'll need to manage that change.
We'll cover this in much more detail in a later tutorial, but
especially with a social responsibility program, it's important to
have a change management team to ensure that the program
works and is accepted throughout the organization.
In this case, leadership is absolutely vital, and not just a leader
for the team. You will need the approval and support of higher-
ups and executive management in any company to help drive
this change. If the leadership doesn't set the tone and create an
environment that is adaptable to the change, then it simply
won't happen.
Jake told Oliver that walking should be promoted as a part of a
healthy lifestyle. Since they were developing a walking app, he
wanted to promote exercise in their community. Jake explained
his idea in which users could participate in a walking scavenger
hunt. The registration fees could be donated to physical
education programs at local schools.
Oliver loved the idea, and told Jake that they should implement
that program when the app was introduced. They both wanted
the company to provide a service and to be a leader in raising
health awareness in the community. Social responsibility would
be a priority for their company from its beginning.
4.Based on Oliver and Jake's conversation, the company will
take a(n) __________ stance towards social responsibility.
A.)accommodative

B.)disruptive
C.)ethical
D.)proactive
The Passage to answer this Question
1. Responses to Social Responsibility Issues
There are different stances or responses that companies can
have to social responsibility issues--or
any
change for that matter.
Stances Description Example
Obstructionist
An approach to social responsibility in which the organization
actively tries to avoid, slow down, or stop social responsibility.
The U.S. automotive industry is a good example of an
obstructionist stance when it comes to the installation of seat
belts in cars. When seat belt laws were first passed, requiring
that they are installed in cars, the companies went out of their
way to say that it was dangerous, or that it was too expensive.
They tried every tactic to avoid, slow down, or stop this change
from happening.
Defensive
will fight any allegations of social responsibility. This may
involve statements along the line of, "No, I didn't do that." or
"That didn't really happen." You might see the tobacco
industry taking this type of a stance, in the way that they
profess that they have no responsibility for what people do with
their own bodies, and certainly no responsibility for the fact

that people using tobacco are getting cancer. They are simply
producing a product, and it ultimately up to people to choose to
use that product or not.
Accommodative
goes beyond the minimal standards of social responsibility, but
doesn't necessarily seek to make major changes. In
international trade, companies taking an accommodative stance
abide by all the laws and ensure they're not cheating anybody or
doing something overt, but they're not going to go out of their
way to change the market in a way that might benefit the people
who are producing the actual product for them.
Proactive
goes beyond the minimal standards of social responsibility by
actively anticipating future issues. Recently, Ben and Jerry's,
the ice cream company, changed their entire recipe for Coffee
Heath Bar Crunch. They stopped using Heath bars and sourced
another producer who was engaged in free trade practices and
used more organic material, something that was in line with Ben
and Jerry's stance on social responsibility. In doing this, they
took a big risk of alienating people who eat that particular ice
cream, but it was how that company wanted to act, and it fits
their social responsibility stance.
It's important to note that these stances may not occur in
isolation. For instance, companies will generally take the same
stance, but businesses may vary in their stance based on the
specifics of their situation. Some departments, even within the
same company, may take the same stance, but that stance may
be different than others.
You can see that because of the difficulty involved in defining
something as ambiguous as social responsibility, it can get a bit
complicated, even within the same company that generally holds
one particular stance on an issue.

Recognize both classic and modern examples of business ethics.
5.Which of the following was an aspect of the Enron scandal?
A.)Overstatement of profits
B.)International clothing market
C.)General labor conditions
D.)Poor quality construction
The Passage to this Question
1. Ethics
Recall that
ethics
comprises the principles of right and wrong and the morality of
the choices we make in everyday life.
Business ethics
involves the principles of right and wrong and the morality of
the choices made in the
business world
, which is a narrowing down of the overall view of ethics.
Managerial ethics
involves the principles of right and wrong and of the morality
of the choices made in the context of

management
.
Let's explore two different case studies that serve as examples
of unethical behavior at the company-wide level.
term to know Ethics The principles of right and wrong
and of the morality of the choices Business Ethics The
principles of right and wrong and of the morality of the choices
made in the business world Managerial Ethics The principles
of right and wrong and of the morality of the choices made in
the context of management
2. Classical Example: Enron
Suppose you are an investor in 1999, and your broker
approaches you with a great deal that you want to get in on. So
far this year, the stock for this company has gone up 56%,
beating the market by 36%. You think that is rather impressive,
so you go ahead and buy it, putting all the money that you have
into it.
The next year, in 2000, that stock goes up 87%. At this point,
the sky's the limit.
Well, that company was Enron, and it made a lot of people very
wealthy for a while. The problem was that they weren't doing it
ethically.
Enron was an energy, commodities, and service business. They
were in the business of providing, selling, and transmitting
electricity and natural gas, among other things. The problems
began when they started using something called mark-to-market
accounting in the early 1990s. Mark-to-market accounting is an
accounting practice that--while perfectly legal at the time--had

never been used for Enron's particular sector.
hint Suppose, for instance, you have a security, bond, or
stock. Using mark-to-market accounting, you can account for
the entire future value of that stock on today's financials.
Meaning, all the future value of that stock, you would count
today
. However, this is the only time you can take that income; you
can't use it again in the future.
Well, Enron was using mark-to-market accounting to hide the
failures in their business. They were hiding the debt they had
incurred. This created a huge problem for them. As a matter of
fact, in 2000, the press finally started to notice and began to dig
deeper into Enron's books. Suddenly people realized that they
had no idea how Enron was making their money.
At this point in the story, Arthur Andersen enters the picture.
Arthur Andersen was the accounting firm that did the books for
Enron. Not only did they do the books for Enron, but they also
consulted. This created a conflict of interest for Arthur
Andersen. You see, having the same firm advise you on how to
do your accounting and then turn around and audit those very
same practices is probably not a good idea.
At this point, Enron was pressuring the CEO of Arthur
Andersen to make their calculations work and to hide things
from the general public on their annual statements.
After Enron collapsed in 2000, the CEO of Enron, Jeffrey
Skilling, and a few other people from that company went to jail.
The company went into bankruptcy, and the stockholders were
devastated.
did you know The demise of Enron also resulted in the
creation of the Sarbanes-Oxley Act. This act requires company

executives of any publicly-traded company to personally sign
the annual statements to the stockholders, certifying them as
true under penalty of law. Therefore, if something is amiss in
the financials, and the CEO knows about it and signs his or her
name, he or she is automatically going to jail. This act cracked
down on conflict of interest situations like the one that
happened with Arthur Andersen.
So, circling back to the fall of Enron, suppose, once again, that
it's 2000, you own that stock, and you're up 100+ percent. Then,
the collapse occurs. The beginning of the graph below shows
August of 2000. The end of the graph is January 2002. Enron
lost $90.00 and change in a two-year period. 3. Modern
Example: Rana Plaza
The Rana Plaza building in Bangladesh was owned by a man
named Sohel Rana, who was an international shirt manufacturer,
among other things. This was the business he owned in this
particular building--manufacturing shirts to be sold on a
worldwide stage.
So, Rana would make the shirts there, taking advantage of the
country's cheap labor, and crank out shirts at a ridiculously low
price in order to undersell the competition internationally. Of
course, this attracted buyers from all over the world.
In April of 2013, people ran from the building in terror after
hearing explosion-like sounds inside. An evacuation was
ordered after an engineer inspected the building and deemed it
unsafe. Now, the problem with the building was that it was
never engineered or designed to house a factory. In addition, it
was illegally raised from one story to five stories a few years
earlier. Do you see an issue yet?
The Rana employees were forced to return to work, despite the
building being unsafe. Mr. Rana himself had a press conference

on the bottom floor of the building on April 24, 2013. He
assured everyone that everything was fine, that it was just the
plaster cracking. He claimed that the engineers had no idea what
they were talking about.
On April 24, everyone went back to work. A generator on the
roof started, which sent vibrations through the building, and the
building collapsed. Over 1,100 people lost their lives in that
collapse. Not only did all of these people perish, but there were
2,500 injured, and it sent the global market into disarray for
shirt manufacturers.
Determine the considerations of business and trade.
6.Which of the following is an example of a trade deficit?
A.)China exports more goods to the United States than the US
does to China.
B.)The United States imports more goods from China than
China does from the United States.
C.)China and the United States both import and export the same
amount of goods to one another.
D.)China can produce clothing more efficiently than the United
States.
The Passage of this Question
1. Basis of Trade
The way countries trade is based on a couple of key concepts.

Absolute advantage:
This is the capacity to produce a higher number of goods or
services using the same amount of resources as competitors.
EXAMPLE
Think about Saudi Arabia and oil. They have an absolute
advantage because they can produce more oil with the same
amount of resources as other countries around the world.
Comparative advantage:
This is a trading advantage achieved over another company due
to lower opportunity cost.
EXAMPLE
Consider China and shirt manufacturing. There's less of an
opportunity cost loss in China to manufacture shirts than other
places around the world, which is one way to think of it. 2.
Balance of Trade
When thinking about trade between the products of two
countries, we first need to consider the products in or out:
Imports:
Goods sold domestically but produced in a foreign nation
Exports:
Goods produced domestically but sold to a foreign nation

Trade surpluses occur when the balance of trade between two
particular countries is in one country's favor
Trade deficits occur when that balance of trade is in another
country's favor.
Look at the graph below, which shows net imports and exports
for Japan from 1979 to 2008. The imports are shown in red and
the exports are in blue. 3. Globalization
Globalization
is the expansion of business into international markets. Now,
much of this is due to less restriction, both physical and
nonphysical. We have better modes of transportation and fewer
trade restrictions on countries around the world. It's becoming a
flattening world. 4. Business and Trade
Now, let's discuss business and trade on an international level.
International management of trade is rather unique. You see,
products that work well at home may not necessarily work well
overseas. You also have to consider the actual demand for that
product you're going to sell overseas, depending on the cultures
and the norms of that particular nation. Will the product be
accepted? Are there any changes that you have to make in
packaging or marketing that will improve the acceptance of that
product overseas?
Here are some other issues to consider in the context of
business and trade:
Do you need to use an independent agent? You may need to hire
somebody within that country that understands the lay of the

land to help market the product for you?
Would a strategic alliance with a company already doing
business in that same sector be a good idea?
Identify the influence of the World Bank on the global markets.
7.Which statement is true regarding global markets?
A.)The World Bank is an agency of the UN.
B.)The UN method is used to calculate GNI per capita.
C.)There are very few opportunities in low income markets.
D.)The three main marketplaces are North America, Europe and
South America.
This the Passage for this Question
1. Three Main Markets
The global economy is centered around three main markets--not
just physically, but also economically. Remember, it's a
connected world, so physical geography, at least as far as the
markets go, tends to mean less and less. The three main markets
are:
North America

Europe
Asia
However, just because the world revolves around these markets,
it doesn't mean that they represent the whole picture.
2. World Bank
The
World Bank
is an international banking organization connected to the
United Nations. It is focused on developing poorer nations. In
fact, to quote the World Bank, "We offer support to developing
countries through policy advice, research and analysis, and
technical assistance. Our analytical work often underpins World
Bank financing and helps inform developing countries' own
investments."
The World Bank does a lot of work as an agency of the United
Nations. They examine per capita income, the wealth of nations,
and they help develop poorer nations based on their own
economic standing.
term to know World Bank An international banking
organization connected to the United Nations and focused on
developing poorer nations
3. Per Capita Income
The World Bank divides countries into different categories
based on
per capita income
, which is defined as the average income of a group. In the
World Bank's case, this is calculated by taking the gross

national income of a country, divided by the number of people
living in that country. This determines how they divide
countries into different categories, such as:
High-income countries, such as the United States or Canada, are
countries that make $12,616 or more per year in per capita
income. This means that each person in the country is making
at least
this amount of money.
Upper middle-income countries are defined as countries that
have a per capita income of $4,086 through $12,615. This
category includes countries like Bosnia and Herzegovina.
Lower middle-income countries have a per capita income
between $1,036 and $4,085. Bangladesh is representative of
countries that fall into this category.
Low-income countries are often referred to as developing
countries. These are countries where the per capita income is
below $1,035. This category includes countries like the
Democratic Republic of the Congo.
8. Understand how interactions with the global economy are
regulated.
What would it be called if the United States government set a
specific limit for the amount of coffee that can be imported into
the country?
A.)Import tariff
B.)Import quota

C.)Import tax
D.)Import embargo
This is the Passage for this Question
1. International Trade
One of the rules of the road for international trade is a tariff. A
tariff
is defined as any import or export tax that is placed on a group
of products. International trade has increased in importance, and
a lot of other nations are getting involved. As a matter of fact,
you can see a globalized effort on the part of countries to get
involved in international trade.
Tariffs are put in place to protect certain industries within a
country. They can be revenue tariffs or protective tariffs.
Another important concept to cover are
quotas
, which, in international trade, are limiting the amount of a good
that can be traded to a specific amount or specific value. An
embargo
is a trade restriction that stops trade with a specific country.
EXAMPLE
A quota might dictate that you're only allowed to import 100
million tons of sugar every year into the U.S. An embargo
would be restricting any trade with Iran at all.

Another method that nations can use to help limit trade or create
embargoes or quotas would be foreign exchange controls.
Foreign exchange controls are restricting the use or import of
currency within a nation. This is achieved by fixing a particular
exchange rate within a country. They can ban the currency
altogether from entering the country, or they can restrict the
amount that can be used or the amount that can be possessed by
its citizens. 2. Trade Restrictions
Trade restrictions
are put in place to equalize the nation's balance sheet--that
balance of trade we discussed in an earlier tutorial. Trade
restrictions can also help protect new or weak industries, like
the sugar industry mentioned previously. It can be done for
national security reasons or to protect the health of citizens.
They are also used politically as a means of retaliation between
nations. For instance, an embargo may be imposed to restrict
the flow of material that can be used to produce nuclear power
plants in Iran.
Lastly, countries can set up trade restrictions in order to protect
new jobs or new, weak industries within that country. 3. Trade
Agreements
Trade agreements
are a trade treaty between nations which sets rates of tax and
limit on any limit on restrictions. What is that, exactly?
Basically, it's an agreement between two countries that helps to
encourage trade between those two nations. There are several
trade agreements and trade alliances that exist, and before you
enter into a particular international market, you would need to
consider these particular trade alliances.
Some examples of these trade agreements are:

North American Free Trade Agreement (NAFTA): Between the
United States, Mexico, and Canada.
European Union (EU): Includes all of the countries within
Europe, such as France, Germany, Belgium, Italy, and Spain, to
name a few.
Association of Southeast Asian Nations (ASEAN): Covers
nations around the South Pacific.
World Trade Organization (WTO): Represented by countries
worldwide to discuss trade policy.
Note, more trade alliances exist, but this is simply an
introduction to get you started. 4. Sourcing
Sourcing
is determining the product location of goods based on external
and internal variables. Companies will source different products
around the world, depending on these factors. In fact,
businesses often have whole departments or dedicated
consultants that will focus solely on where to manufacture
different products and where to source the resources needed to
manufacture them. This can change from year to year.

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