ព្រះរាជាណាចព្ក្សក្សម្ពជា

ជាតិ សាសនា ព្រះម្ហាក្សសព្ត

សាកលវិទ្យាល័យ វវវ្ទើន

WESTERN UNIVERSITY OF CAMBODIA

ឆ្ន ាំសិក្សា ២០២១-២០២២

SEMESTER 1 YEAR 1
COURSE: BUS & ECO
TOPIC: INFLUENCES ON BUSINESS

LECTURER: SEM PISETH

MADE BY: CHEA OUDORM PUTHIK

LIM CHHOMDANE
NGET LIN
SENG CHORONAI
SAYCHHOK PHALLA
❖ Content

Topic: INFLUENCES ON BUSINESS

Chapter 1: Business in a Global Economic……………………1

Chapter 2: The Role of Government in Our Economy……….7

Chapter 3: Money and Financial Institutions………………12

 WESTERN UNIVERSITY OF CAMBODIA COURSE: BUS & ECO

Chapter 1: Business in a Global Economic

In this chapter we will focus on two main point which is:

• The Global Marketplace

• Global Competition

The Global Marketplace

There are two main question that related to The Global Marketplace
• why the world has become a global economy?
• why people and countries specialize in producing goods and services?
Global Competition
There are two main question that related to Global Competition
• What is free trade?
• Who benefits and who does not benefit from free trade
After we finish this lesson, we will know how to answer that question .
1.1 The Global Marketplace

• Vocabulary
global economy corporation
imports comparative advantage
international trade trade
exports exchange rate
multinational
balance of trade

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• Key Concepts
• The Global Economy
• International Trade
• The Main Idea
International trade has increased because more countries specialize and offer
their goods and services to other countries. Also, the value of one nation’s
currency in relation to other currencies affects what it buys and sells to other
nations.
❖ The Global Economy Meaning

The global economy is the interconnected economies of the nations of the

world. We live in a global economy fueled by international trade. International
trade involves the exchange of goods and services between nations. The
development of the global economy is often referred to as globalization. A
multinational corporation is a company that does business in many countries and
has facilities and office around the world. Sony is a multinational corporation.

❖ International Trade Meaning

Trade has several meanings. It can be a specific area of business or

industry, such as the book trade. It can refer to a skilled occupation, such as auto
mechanics. It can also refer to the people who work in a specific area of business
or industry, such as construction workers. This chapter looks at trade as the
activity of buying and selling goods and services in domestic or international
markets. Trading goods and services allows countries to meet their individual
wants and needs as well as to help their own economy.

❖ Type of Trade
Domestic trade is the production, purchase, and sale of goods and services
within a country. World trade is the exchange of goods and services across
international boundaries. In many cases, a country cannot produce a desired
good because it does not have a suitable climate or the necessary raw materials.
In other cases, businesses in one country may produce better products or services

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at cheaper prices than businesses in other countries. As a result, world trade takes
place.
Since the 1970s, world trade has increased considerably. Better transportation
and telecommunications, along with a decrease in trade barriers, enables more
world trade. These changes also help many countries’ economies to grow.

❖ Imports and Exports

Imports are goods and services that one country buys from another
country. Exports are goods and services that one country sells to another country.
Countries can also invest in other nations by opening businesses there. They
import and export the services of professionals, such as doctors and engineers.
One country’s exports are another country’s imports.

❖ Balance of Trade
When a country exports more than it imports, it has a trade surplus. When
a country imports more than it exports, it has a trade deficit. A balance of trade
is the difference in value between a country’s imports and exports over a period
of time. A country can have a trade deficit with one country and a trade surplus
with another. For example, the United States has a favorable balance with
Australia. That means it takes in more money from sales to Australia than
Australia takes in from sales to the United States. The United States has an
unfavorable balance with France, which means the United States takes in less
money from sales to France than France takes in from sales to the United States.

❖ Specialization
To specialize means to focus on a particular activity, area, or product.
Specialization builds and sustains a market economy. Countries specialize in
producing certain goods and services. Many take advantage of their specialties
by trading them with other countries in the global marketplace. Similarly,
individuals specialize by concentrating their activities in a particular area or field,
such as carpentry, medicine, or office administration. Each worker’s income
buys goods and services that others have specialized in producing.

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❖ Using Resources to Specialization

Countries also specialize and trade some of the items that they produce in
order to obtain other countries’ goods and services. For example, the United
States, Japan, and Germany are the world’s top automobile producers. They have
the technology, factories, and labor forces needed to produce lots of vehicles.
Therefore, these countries have a comparative advantage in producing vehicles.
A comparative advantage is the ability of a country or company to produce a
particular good more efficiently than another country or company. Money
gained from auto sales to other countries is then used to buy items that other
countries produce. This helps to improve the standard of living for each country.
❖ Currency
Countries have to pay for products and services with currency. Currency
is another name for money. Just as different countries use different languages,
they also use different currencies. Mexico uses pesos, Japan uses yen, and India
uses rupees. Some countries use the same name for their currency. The United
States, Canada, and Australia all call their currency dollars. Currency exchange
financial institutions fulfill many different functions. What does an exchange
rate specify? Think about how a comparative advantage might help a country to
compete in a global marketplace. To trade with another country, businesses and
countries must convert their money into that nation’s currency. To do that, their
currency is exchanged on the foreign exchange market. The foreign exchange
market is mostly made up of banks where different currencies are exchanged.

1.2 Global Competition

• Vocabulary
protectionism
tariff
quota
embargo free trade

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• Key Concepts
• Protectionism and Free Trade

❖ Main idea
Protectionism is the practice of putting limits on foreign trade to protect
businesses at home. However, protectionism decreases competition and generally
increases the prices that consumers pay for goods and services. More nations are
moving toward free trade.
❖ Protectionism and Free Trade Meaning
In the global marketplace, countries benefit from buying one another’s products.
Countries compete by making the same products. Global competition often leads to
trade disputes, which occur when nations put barriers on trading particular items with
another country. For example, the United States decides that no Chinese-made steel
can be imported into the country. The Chinese may respond by not allowing any more
U.S. cars to be imported into China. At the heart of most trade disputes is whether there
should be limits on trade or whether trade should be unrestricted. Protectionism and
free trade are two opposing points of view involved in trade disputes.
❖ Protectionism
Protectionism is the practice of the government putting limits on foreign trade
to protect businesses at home. Many companies want to sell what they produce at home.
They often want to keep out foreign competitors. For example, rice farming and auto
production are two major contributors to the Japanese economy. To limit competition
from other countries, Japan practices protectionism in these segments. Some countries
also do not want to share what they produce with other countries. Reasons to restrict
trade include the following:
• Foreign competition can lower the demand for products made at home.
• Companies at home need to be protected from unfair foreign competition.
• Industries that make products related to national defense (Such as satellites, aircraft,
and weapons) need to be protected.
• The use of cheap labor in other countries can lower wages or threaten jobs at home.
• A country can become too dependent on another country for important products such
as oil, steel, or grain.
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 WESTERN UNIVERSITY OF CAMBODIA COURSE: BUS & ECO

• Other countries might not have the same environmental or human rights standards.
❖ Free Trade
Free Trade Economic or foreign policy often determines which countries trade
with each other. Free trade occurs when there are few or no limits on trade between
countries. Supporters of free trade think all countries should be free to compete
anywhere in the world without restrictions. Free trade offers several benefits:
• It opens up new markets in other countries. There are more than 298 million people
in the United States, but more than 6 billion worldwide.
• It creates new jobs, especially in areas related to global trade, such as shipping,
banking, and communications.
• Competition forces businesses to be more efficient and productive.
• Consumers have more choices in the variety, prices, and quality of products.
• It promotes cultural understanding and encourages countries to cooperate with each
other.
• It helps countries raise their standard of living.

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 WESTERN UNIVERSITY OF CAMBODIA COURSE: BUS & ECO

Chapter 2: The Role of Government in Our Economy

This Chapter We are going to talk about the two main point:
• Government as Regulator

• Government as Provider

❖ Government as Regulator
There is a question that related to the Government as Regulator:
• What are the four ways in government regulates business?

❖ Government as Provider
There are three question that related to the Government as provider:
• What are the five aspects of the government’s role in society?
• Describe three items that the national government provides and
three items that local governments provide?
• how government can stimulate or restrict economic activities?
After you Finish this lesson, you will know how to answer that question.

2.1 Government as Regulator

❖ Vocabulary
Interstate Monopoly
Commerce Copyright
Contract Oligopoly
Intrastate Patent
Commerce Trust
Breach of contract Trademark

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Antitrust laws
❖ Main ideas
Our government’s role is to foster success in the economy. One way it does
this is by creating rules and regulations that organizations and consumers must
follow. Laws cover aspects of the economy. They protect competition. They protect
business agreements and creative properties. They are also used to regulate the
production process.
❖ Key Concept
• How the Government Regulates Business
❖ How the Government Regulates Business
One of government’s roles is to foster economic success. It also tries to aid
in the quality of life of its citizens. In a market economy, a country’s economic
health depends on businesses doing well. In some cases, government helps people
so that they are not abused by businesses. To fulfill these duties, local, state, and
national governments pass laws to protect and regulate business. There are three
levels of government: federal, state, and local. The federal government runs the
country. State governments run their state. Local governments run counties,
townships, cities, and towns. The federal government oversees interstate commerce.
Interstate commerce is business that takes place between states. State governments
oversee intrastate commerce. Intrastate commerce is business that takes place
within states. Laws govern the workings of the economy. These laws regulate the
production process and protect competition, business agreements, and creative
properties.
Companies that break the law can be fined, sued, or forced to close. People
who do not follow the rules also face penalties.
❖ Protecting Competition
A monopoly occurs when a company controls an industry or is the only one
to offer a product or service. An oligopoly occurs when a small number of
companies control an industry. A trust is a group of companies that band together
to form a monopoly and cut out competition. Antitrust laws allow the federal
government to break up monopolies, regulate them, or take control of them.
❖ Protecting Business Agreements

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One of the most basic ways that governments protect business is by enforcing
contracts. A contract is a legally enforceable agreement between two or more parties.
It can be written, verbal, or even formed over a handshake. A rental agreement, a
car-repair order, and the warranty on a CD player are all types of contracts.
Breach of contract occurs when one party fails to live up to the terms of a
contract. It is easier to prove a breach of contract occurred if there is a written
contract. For example, suppose you are in a band that plays at a coffeehouse, and
the manager refuses to pay you. It can be very difficult to prove that the manager
agreed to pay if the agreement is not written in a contract.
❖ Protecting Creative Properties
Laws also protect the right to own creative properties. Creative properties,
items such as inventions and art, can be protected with a copyright, a patent, or a
trademark.
2.2 Government as Provider
• Vocabulary
revenue
tax
privatization
tax incentive
subsidies
• Key Concepts
• Government’s Role in Society
• How Government Is Funded
• How Government Allocates Resources

• The Main ideas

The different levels of government do more than regulate business activities.
One of their main roles is to provide goods and services. These are provided using
tax money collected from people and organizations.

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❖ Government’s Role in Society

The role of government in business is not limited to law making. Government
also plays a big role in society. It provides key services to the public. It also gives
incentives to businesses and people. Other services include providing jobs and
distributing income. These activities occur at every level of government.
❖ How Government Is Funded
A tax is an amount of money people and businesses pay governments to help
run the nation, state, county, city, or town. For some goods, such as gasoline, taxes
are included in the purchase price. If you have a job, income taxes are deducted
from your wages. Your income tax revenue helps pay for public goods and services
and provide money for transfer payments. The purpose of taxes is to pay for public
goods and services by spreading the cost among many people.
❖ How Government Allocates Resources
Governments allocate resources by deciding the best ways to spend tax
revenues. They determine which projects are priorities for funding. For example,
the government may decide to pay more for projects in rural areas than projects in
urban ones. Such a decision can help the economies in rural areas. Government
spending also affects the distribution of income. For example, people who receive
transfer payments such as unemployment pay can see their income rise or fall if the
government raises or lowers the amount of their payments.
❖ Providing Goods and Services
Government is the largest provider of services in the country. Businesses
offer goods and services to people to make a profit. However, government provides
services to the public as a whole for the good of society. Highways, bridges, water
treatment plants, and national defense are examples of public goods and services.
Public goods and services are items provided by government and paid for using tax
money. They are different from private goods and services. Private goods and
services are items that consumers purchase directly from businesses. They include
CDs, clothing, food, and housekeeping services.

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❖ Providing Employment
The government is the largest employer in the United States. More than 3
million people work for the federal government. State and local governments also
employ millions of people. Mayors, firefighters, and the U.S. president are all public
workers.
❖ Consuming Goods and Services
Government is also the largest consumer of goods and services. It has to buy
computers, furniture, and supplies for schools and government offices. To maintain
the military, it has to buy uniforms, food, ships, aircraft, and weapons. Government
buys most of its equipment directly from businesses or has equipment specially
made. It also hires businesses to build aircraft, courthouses, schools, and roads.
❖ Supporting Business
The government is involved in many activities that support business. The
Small Business Administration (SBA) is a U.S. agency that encourages the
development of small businesses. The SBA offers loans and advice to people who
want to open small businesses. The U.S. government helps some businesses
compete internationally by providing subsidies. Subsidies are monetary grants
given to producers or consumers to encourage certain behaviors.

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 WESTERN UNIVERSITY OF CAMBODIA COURSE: BUS & ECO

Chapter 3: Money and Financial Institutions

In this Chapter We are going to talk about the two main point Which is:
• Money and Banking

• Types of Financial Institutions

❖ Money and Banking

There are two main question that related to Money and Banking:
• What are the functions and characteristics of money?
• What are the three main functions of a bank?

❖ Types of Financial Institutions

There are two main question that related to Types of Financial Institutions:
• What are the three types of banks that are found in our economy?
• Explain the major functions of the Federal Reserve System in the U.S
economy?
After you Finish this lesson, you will know how to answer that question.
3.1 Money and Banking
• Vocabulary
money collateral
electronic interest
funds monetary system
transfer (EFT) financial institution
direct deposit bank account
withdrawal deposit
mortgage

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• Main Idea
Money functions as a standard of value, a medium of exchange or payment,
and a store of value. Most countries create and circulate their own money. Banks
are in the business of handling money.
• Key Concepts
• The Purpose of Money
• The Functions of Banks
❖ The Purpose of Money
Money enables people and businesses to buy and sell goods and services
more easily around the world. Money is a standard of value and a means of
exchange or payment. It can be anything that people accept as a standard for
payment. Goods and services are directly exchanged using money. The seller of the
goods or services can then take the money and exchange it for other goods and
services.
❖ The Functions of Banks
A financial institution is a firm that manages money. Banks are the main
types of financial institutions. Banks offer a variety of financial services. They help
other businesses and consumers manage their money.
❖ Storing Money
One of the main services banks provide is storing money in bank accounts.
To store money means to place or leave it for preservation or later use. A bank
account is a record of the amount of money a customer has deposited into or
withdrawn from a bank. The money put in a bank account is called a deposit. The
money taken out is called a withdrawal. The two main types of bank accounts are
checking accounts and savings accounts. Checking accounts are used for storing
money in the short term. Banks usually charge a fee for checking accounts. Savings
accounts are used for storing money over a longer period of time. An advantage of
a savings account is that it earns more interest than most checking accounts. Interest
is a rate that the bank pays customers for keeping their money.

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 WESTERN UNIVERSITY OF CAMBODIA COURSE: BUS & ECO

❖ Lending Money
Lending money is the primary way banks generate profits. The money you
deposit in a bank makes it possible for the bank to lend money to other customers.
Just as banks pay customers interest on their savings, customers pay interest on the
money they borrow from banks. Banks then use the interest they earned to pay
interest on customers’ savings accounts.
3.2 Types of Financial Institutions
• Vocabulary
Commercial banks Finance companies
Savings and loan Insurance companies
Associations Brokerage firms
Credit unions Federal Reserve System
Mortgage companies Reserve

• Key Concepts
• Financial Institutions
• The Federal Reserve System

❖ Main Ideas
There are three types of institutions that operate as banks. They are
commercial banks, savings and loan associations, and credit unions. A Federal
Reserve Bank is a banker’s bank. The Federal Reserve System manages the banking
system and controls the money supply.
❖ Financial Institutions
Banks operate on state, national, and international levels. There are strict
rules for starting one because banks handle large amounts of money. To open a
federal or a state bank in the United States, the owners have to meet special
requirements. They must also apply for a charter from the federal or state
government. The owners need to prove they have enough capital to start a bank.

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❖ The Federal Reserve System

The Federal Reserve System (or Federal Reserve) is the central bank of the
United States. Also known as “The Fed,” the Federal Reserve is the banker’s bank.
It monitors the money supply.
❖ Commercial Banks
Most of the banks in the United States are commercial banks. Commercial
banks offer the entire range of banking services, such as checking and savings
accounts, loans, and financial advice. They are often called full-service banks.
Commercial banks serve individuals and businesses. To make a profit, commercial
banks charge more interest on the money that they lend than the interest they pay
on savings accounts.
❖ Savings and Loan Associations
Savings and loan associations are financial institutions that hold customers’
funds in interest-bearing accounts and invest mainly in mortgage loans. Savings and
loans were originally set up to offer savings accounts and home mortgage loans.
Their purpose was to encourage people to save money and make it easier to buy a
home or start a business. To do this, they charged lower interest rates on loans and
paid higher interest on savings accounts than banks.
❖ Credit Unions
Credit unions are not-for-profit banks set up by organizations for their
customers to use. Credit union customers are also called members. Credit unions
offer members credit cards, checking accounts, low-interest loans, and high interest
savings accounts. Many of them also pay interest on checking accounts.

THE END

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