SUMMARY FOR CHAPTER 2

In chapter two, I have learned that the economic environment is a major determinant of global
market potential and opportunity. In today’s global economy, capital movements are the key driving
force, production has become uncoupled from employment, and capitalism has vanquished
communism. Based on patterns of resource allocation and ownership, the world’s national economies
can be categorized as market capitalism, centrally planned capitalism, centrally planned socialism, and
market socialism. The final years of the twentieth century were marked by a transition toward market
capitalism in many countries that had been centrally controlled. Nevertheless, great disparity still exists
among the nations of the world in terms of economic freedom.

Besides that, according to their economic growth stage, nations can be divided into four groups:
low income, lower-middle income, upper-middle income, and high income. Gross national income
(GNI) and the gross domestic product (GDP) are two frequently used indicators of economic growth.
The BRICS countries, which include Brazil (lower-middle income), Russia (upper-middle income),
India (low income), China (lower-middle income), and South Africa, are among those whose economies
are noteworthy for their rapid growth. (upper-middle income). The Organization for Economic Co-
operation and Development (OECD), the Group of Seven (G-7), the Group of Eight (G-8), the Group
of Twenty (G-20), and High-income countries are working to spread democratic values and free market
principles throughout the rest of the world through the Group of Seven (G-7), Group of Eight (G-8),
Group of Twenty (G-20), and Organization for Economic Co-operation and Development (OECD).
Japan and Greater China, the US, and Western Europe account for the majority of global revenue;
businesses with global ambitions typically operate in all three regions. A product's market potential can
be assessed by calculating product saturation levels in relation to revenue levels.

Lastly, foreign exchange provides a means for settling accounts across borders. A country's
economy as well as the success of specific businesses can be significantly impacted by the dynamics of
foreign finance. A nation's central bank may decide to devalue or revalue currencies as a consequence
of its decisions. Devaluation may also result from foreign currency trading by speculators. A country's
currency typically gains value when its economy is robust or when there is high demand for its products.
Global businesses are exposed to different kinds of economic risk when currency prices change. By
hedging, businesses can control their exposure to exchange rate risk.