Business Environment and International Business Questions

Business Environment and International
Business Revision Questions

1. Hassan, who runs a loss making sweet shop, has shifted to the chocolate
business. On the eve of Valentine’s Day, he offered chocolates in attractive
packages at reasonable prices at his shop. Anticipating huge demand, he created
a website; lovechocolate.com for taking orders online. He secured a lot of orders
and earned huge profits by selling the chocolate. Explain the dimensions of the
business environment discussed in the above case. (6 marks)
 Social aspects
 Competitive
 Technology
2. International fast food chains like Subway, KFC and Debonairs are increasingly
investing in Africa because as rising incomes change lifestyles and increase
demand for Western fast food. Describe three challenges that they are facing in
the external environment when doing business in Africa using examples. (9
marks)
 Politics - gov’t regulations passed such as using local materials instead of
importing which reduces the quality of output
 Economic - increase in interest rates in a particular economy
 Technology - levels of tech in the country, processing might take longer to do
or are less efficient
3. The betting industry in Africa is experiencing a high rate of growth. For

example, Kenya has more than 40 betting companies. Using your knowledge of
business environments, discuss three factors that are causing this growth. (9
marks)
 Technology -most people in the region have more access to smartphones
which facilitates easier betting and receiving of betting rewards.
 Politics -The government has replaced laws on betting, leading to more

companies registering their betting companies’, hence resulting in a higher
growth rate of the betting companies.
 Social -Peoples attitude towards gambling has changed hence a positive

attitude towards betting to the population hence increasing the rate of
growth of the betting industry.
 Competitive - There are so many people who want to gamble and so there is
room for setting competitive measures that increase the rate of growth of
this industry.
4. Public universities around the world are facing a financial crisis due to
reduced funding from government. Using your knowledge of business
environments, discuss three opportunities that public universities could exploit
in order to improve their revenue streams. (9 marks)
 Politics - encourage the govt put laws on public funding of these universities
 Technology - introduce e-learning for those who can’t attend physical classes
online.
 Social - lease out some of their grounds for social events to generate revenue,
offer short courses to business executives.
5. Describe five challenges Kenyan banks are facing in their external

environment using current examples. (10 marks)
 Economics - the govt tried to tell banks to fix their interest rates against their
set prices, people avoid investing their money in banks because they’d rather
hold on to the physical money
 Technology - hacking of people’s bank accounts causes people to rely on
mobile wallets like Mpesa, hence giving the banks competition
 Competition - competition from other banks due to high bank charges when
transferring money
6. Discuss four strategies local companies can use to stand up to foreign

competition in international business. (8 marks)
 Customizing their products - adding something extra to differentiate your
product from others e.g different designs of face masks during the COVID-19
pandemic by local companies.
 Lobbying the govt to protect local industries - local buss coming together and
going to the members of parliament to change some of the laws because it’s
much harder to compete with international companies. Kenya produces
sugar in Western areas, yet the cost of sugar int the country is more
expensive, compared to imported sugar. This is because our cost of
production is high. So if the govt prevents foreign products from entering the
country to give local industries time to grow for economies of scale to benefit
them, our products will be cheaper in the market.
 Hiring local labour/ talent and developing it - hiring qualified employees does
not come cheap, so training unqualified employees ensures they improve
their skills while the labour costs are cheap, but they are loyal to the
company and in the long run the labour costs will be cheaper.
 Scaling your business - not growing immediately but trying to expand the
business gradually to other areas as soon as that aspect of your business is
profitable.
7. Describe three features of the strategy that Apple Incorporated uses to sell its
products worldwide using examples. (9 marks)
 International business strategy - you buy the product as it is because they
have low local responsiveness. They market it the same everywhere. Their
phones are sold by distributor's shops, because they do not make direct
investments with the countries they are selling to. This is because they have
a low global integration.
8. When McDonald’s started its business in India, it changed its product menu to
accommodate the vegetable burger given the large vegetarian population. It also
altered its store design and even reduced the product price by close to 15%.
 Identify this strategy and give two reasons for your answer: They have
high local responsiveness due to the alterations the made to suit the local
market such as the product menu as well as the product price by 15%. They
also made their own decisions when they altered their store design which
means the store had high global integration. Hence, they used a multi-
domestic strategy
 What are two benefits of this strategy? (2 marks)
 What is the main disadvantage of this strategy? (1 mark)
9. Describe any three business strategies used when expanding internationally to

new markets. (9 marks)10. Currency exchange rates are an important factor in
international trade and often determine how much a country will benefit from
international trade.
i. Define the terms:
 Strong currency: one can buy more products with it and when exchanging it
with other currencies you get more for less of it
 Weak currency: when you exchange for a higher currency you will get less
money, one can’t buy much with it.
ii. Using the following exchange rate: 1 British Pound = 2 Euros, explain what
effect this will have on:
 British tourists who are travelling in Europe: when they exchange
pounds for euros, they will get twice what they have and be able to buy
more.
 British businesses exporting goods to Europe: they will get less for their
goods by a half
 British businesses importing goods from Europe: they will get twice as
many goods for a cheaper price
11. During business news at 9 pm, the business reporter states that the US dollar
to Kenya shilling exchange rate is expected to rise. Explain the impact that this
information will have on:
 Kenyans who export goods to America: they will need
 Kenyans who import goods made in America:
 American tourists who are planning to visit Kenya:
Exchange rate: to facilitate businesses in different economies be able to sell to each other

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Business Environment and International

Business Revision Questions

3. The betting industry in Africa is experiencing a high rate of growth. For

 Politics -The government has replaced laws on betting, leading to more

 Social -Peoples attitude towards gambling has changed hence a positive

5. Describe five challenges Kenyan banks are facing in their external

6. Discuss four strategies local companies can use to stand up to foreign

9. Describe any three business strategies used when expanding internationally to

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