Geb 2350 Study of International Business

Michael Madeiros

GEB 2350 Study of International Business

Chapter 2 Case Questions

1. A) How important is it for nations to control natural resources?

It is extremely important for countries to preserve their natural resources for a variety of reasons. Extraction of the minerals, ores and oils reserves beyond a certain extent cause an irreparable damage to the environment. Also once these natural reserves are completely drained they cannot be replaced or reproduced easily.

B) Is China’s growth threatened if it needs to rely on foreign-owned sources of raw materials?

        The growth of China will be affected if it relies on foreign-owned sources of raw material because it will cause China to lose the control over the market. When a country source raw material from outside, its dependency on suppliers increases. High prices of the raw material from foreign markets affect the economy of country to an extent. Thus the great reliance on foreign owned resources is to affect the country's economy.

1. Should countries have special rules for acquisitions of natural resource companies by foreign-based companies?

Countries should have definite rules in common to control companies from acquiring natural resource companies. This is extremely important because companies entering into foreign countries and buying natural resources may not contribute in the foreign country's growth. If countries create laws for acquisition of natural resources it will help them to make efficient utilization of the resources available and use the resources for the development of the country. Making these laws will only help further the foreign countries growth.

1. Should there be separate rules for state-owned acquirers like Sinopec?

There should not be separate laws for governing the activities of companies like Sinopec. Instead certain recommendations can be made to accommodate its operations. A strict surveillance mechanism and controlling mechanism is required to supervise and regulate their activities. This we ensure that companies are engaged in socially responsible activities.

1. If China’s growth slows, what will be the impact on commodity prices?

If the growth rate of China dips, the commodity prices of China will increase. This is because the cost of living will increase due to per capita income, savings capacity of public, buying capacity of public etc. falling because is growth slowing down