Topic Overview Topic

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Resources for the TEKLA curriculum at Junior Secondary Topic: Business, Business Environment and Globalization Strategies and Management – Core Learning Elements

Module K7 Business Environment, Operations & Organisations

Topic Overview Topic Strategies and Management

K7 Business Environment, Operations & Organisations

Level S3

Duration 5 lessons (40 minutes per lesson)

Learning Objectives

1. State the meaning of business and identify different types of industry,

2. Describe the characteristics of Hong Kong economy and the linkage with the Mainland, 3. Identify various elements in business environment and how they affect business,

4. Explain the concept of globalzation and discuss its impacts on business in Hong Kong, and 5. Discuss the positive impacts and criticism of globalization and name key international trade

organizations.

Overview of Contents

Lesson 1 Basic concepts of business and different types of industrial structure Lesson 2 Characteristics of Hong Kong economy and the linkage with the Mainland Lesson 3 Environmental factors and their impacts on business

Lesson 4 Globalization and its impacts on Hong Kong business

Lesson 5 Evaluation on globalization and introduction to international trade organisations

Resources:

 Topic Overview

 PowerPoint Presentation with Teaching Notes

 Student Worksheets

 Classwork

 Home Assignment

Suggested Activities:

 Case Study

 Data Analysis

 Group Discussion

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Lesson 1

Theme Basic Concepts of Business and Types of Industry Duration 40 minutes

Expected Learning Outcomes

Upon completion of this lesson, students will be able to:

1. describe the basic concepts of business,

2. explain the role and importance of business, and

3. identify three types of industry and describe their interdependence.

Teaching Sequence and Time Allocation:

Activities Reference Time

Allocation Part I: Introduction

 Teacher starts the lesson by a story of a 10 year girl starting up her business.

 Teacher invites students to share their ideas on the meaning of business.

PPT #2 – 3 2 minutes

Part II: Contents

 Teacher explains the concepts of business. PPT #4 2 minutes

 Class Activity (1): Group Discussion

 Students form groups and answer case questions on GoGo Van and eBay.

 Teacher summarizes students’ points and guides students to note the role and importance of business to an economy.

Worksheet (1)

PPT #5 – 9

8 minutes

5 minutes

 Teacher explains three types of industry and illustrates their

interdependence with examples. PPT #10 – 15 4 minutes

 Class Activity (2): Industrial Structure - Part I & II

 Students are required to identify the trend of different types of industry from the statistical tables and suggest reasons for the trend.

 Teacher goes through the tables and explains the trend with reasons.

 With teacher’s guidance, students are required to identify the opportunities and risks under the existing industrial structure.

Worksheet (2) PPT #16

PPT #17 – 18

PPT #19 – 20

6 minutes

5 minutes

6 minutes

Part III: Conclusion

 Teacher concludes the lesson by reviewing the key points

covered. 2 minutes

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Lesson 2

Theme Characteristics of Hong Kong Economy and Linkage with the Mainland Duration 40 minutes

1. explain the characteristics of Hong Kong Economy,

2. state the close linkage with the Mainland and identify possible business opportunities, and 3. describe key cooperation arrangement between Hong Kong and the Mainland.

 Teacher recaps the types of industry and invites students to

highlight the characteristics of Hong Kong economy. PPT #2 – 3 3 minutes Part II: Contents

 Teacher explains the characteristics of Hong Kong economy.

 Teacher asks students to list the favorable factors for setting up offices/operation units in Hong Kong by a foreign

company.

 Teacher names some recent development of the Mainland.

 Students are required to share their ideas on the linkage with the Mainland.

PPT #4 – 5 PPT #6 – 9

PPT #10 – 13

Worksheet (3) PPT #14 – 15

3 minutes 4 minutes

3 minutes

6 minutes

 Teacher explains CEPA as a key cooperation arrangement

with the Mainland. PPT #16 – 19 5 minutes

 Class Activity (4): Reading about CEPA

 Students are required to read the article and answer the questions.

 Teacher goes through the article and identifies the business opportunities with students.

Worksheet (4) PPT #20 PPT #21 – 24

9 minutes

5 minutes

 Teacher concludes the lesson by reviewing the key points covered.

2 minutes

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Lesson 3

Theme Environmental Factors and the Impact on Business Duration 40 minutes

1. state the importance of environmental factors on business survival and success, 2. identify the various environmental factors, and

3. describe the impact of environmental factors on business.

 Teacher explains to students that business operation is affected by environmental factors.

 Teacher invites students to give examples on the interrelationship between business environment and business.

PPT #2 2 minutes

 Teacher outlines various environmental factors:

political-legal, economic, socio-cultural, technological and physical.

PPT #3 5 minutes

 Class Activity (5): Classification of Environmental Factors

 Teacher asks students to classify the different issues into types of environmental factors.

 Teacher goes through the answers with explanation.

PPT #5

5 minutes

 Teacher illustrates the factors with more examples and

explains how they affect business decisions. PPT #6 – 16 13 minutes

 Teacher asks students to discuss in group the challenges of setting up a small café in today’s business environment.

 Students are invited to present their views.

PPT #18

5 minutes

3 minutes Part III: Conclusion

2 minutes

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Lesson 4

Theme Globalization and its impacts on Hong Kong business Duration 40 minutes

1. define globalization and describe how globalization takes place，

2. identify the ways for business to go global, and

3. explain the impact of globalization on Hong Kong business.

 Teacher starts with an activity to introduce the idea of globalization and global business activities.

 Class Activity (7): Shopping in a Supermarket

 Teacher introduces the term ‘globalization’.

6 minutes

 Teacher explains the concept of globalization and reasons for business to go global.

 Teacher defines ‘multi-national corporation’.

 Teacher illustrates the ways for business to go global with examples.

PPT #3 – 4

PPT #5 – 6 PPT # 7 – 13

4 minutes

2 minutes 10 minutes

 Teacher asks students to discuss the impacts of globalization on business in Hong Kong.

 Teacher invites students to present their views and requires them to explain with examples.

 Teacher gives feedback and a summary.

Worksheet (8)

PPT #14

PPT #15 – 16

6 minutes

4 minutes

4 minutes Part III: Conclusion

2 minutes

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Lesson 5

Theme Evaluation on Globalization and Introduction to International Trade Organisations

Duration 40 minutes

1. state the positive impacts and criticism of globalization, 2. name the major international trade organisations, and

3. outline the key functions of the major international organisations.

 Teacher recaps the concept of globalization PPT #2 2 minutes Part II: Contents

 Students are formed into groups and share ideas on globalization.

 Based on the given cases, students in groups should identify and explain the positive impacts of

globalization.

 Teacher draws a summary of the positive impacts of globalization.

 With reference to the cases given, students should identify and explain the criticism against globalization.

 Teacher draws a summary of the criticism against globalization.

PPT #4 – 7

PPT #8

PPT #9 – 16

PPT # 17

2 minutes

9 minutes

4 minutes

9 minutes

4 minutes

 Teacher introduces key international trade organisations with their primary functions.

 Teacher encourages students to attempt the extended learning activity to learn about other international trade organisations.

PPT #18 – 29

PPT #30

6 minutes

2 minutes

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Arouse students’ learning interest by an interesting story.

Stimulate students to think that business involves a business idea and an investment, exchanging for something with value and getting reward for taking risks.

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Factors of production for a typical production unit include human

resources/labour, capital (equipment and machine, fund), natural resources and entrepreneurship.

If the business is successful, entrepreneurs will enjoy profit for taking risk.

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Students are asked to do Worksheet (1) on the examples of GoGo Van and eBay, teacher then explains the concept of “Business model”– how a business generates revenue and earn profit.

Uber is a similar example.

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It is an online person‐to‐person trading community on the Internet. Buyers and sellers are brought together in a manner where sellers are allowed to list items for sale and buyers to bid on items of interest, both sellers and buyers are also able to browse through all listed items.

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Teacher concludes students’ answer on Worksheet (1) and explains the meaning of business.

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Teacher wraps up by highlighting the role and importance of business in Hong Kong. These three types of industry have a close relationship and they are also interrelated.

Primary production needs products and inputs from secondary production, likewise, secondary production also needs inputs and raw materials from primary production, and finally, both industries will need services from tertiary production. This indicates the fact that economic activities usually are not confined to one single type of industry.

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More examples include fishing of salmon in Norway and Canada; planting coffee beans in Brazil; agriculture in Thailand and Vietnam; timbering in Indonesia, etc.

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There are a lot of manufacturing factories in the Mainland and it is called “The World’s Factory”. Owing to the rising costs in the Mainland, in recent years, more and more Hong Kong manufacturing factories are located in less‐developed countries such as Vietnam, Sri Lanka, Cambodia, etc. There remains some high‐value added manufacturing industries in Hong Kong now.

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Many affluent countries transformed themselves from a manufacturing‐based

economy to a service‐based one. These countries focus more on service industries. A good way to understand what any business does is to view it as a system for satisfying customers by transforming lower‐value inputs into higher‐value outputs, from primary to secondary and finally to tertiary production.

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Teacher distributes Worksheet (2) to students in groups of 4‐5, and asks them to study the data in detail and discuss their observations about the economic activities in Hong Kong.

Table 1: Percentage contribution to Gross Domestic Product (GDP) by economic activity (at current prices)

Table 2: Number of Establishments by industry section

Table 3: Number of Persons Engaged (other than those in civil service) by industry section

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Teacher asks each group to present their views and then concludes this part by summing up the trend of economic activities in Hong Kong.

Students may be able to observe other phenomenon, for examples:

 flourishing service sector: many property agencies during property market boom and many retail shops and restaurants

 lack of construction workers due to many infrastructure and construction work projects

 not many factories in Hong Kong

Teacher guides students to think about the reasons for the trend and checks the answers on Worksheet (2).

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Teacher asks students to discuss in groups and put the answer to the above questions on Worksheet (2).

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Teacher responds to students’ answer and wraps up by explaining the opportunities and risks that Hong Kong businesses are facing.

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Teacher recaps the meaning of business and Hong Kong industrial structure.

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Teacher asks students to describe the major characteristics of Hong Kong economy. Teacher wraps up:

 Lack of natural resources – insignificant primary production, limited land for large manufacturing plants

 Dependence on external trade – HK is an export‐oriented economy as it lacks natural resources and relies on trade with other countries, HK needs to export products and services to earn foreign exchange in order to pay for its imports of goods or services

 No foreign exchange control – capital is free to flow in and flow out

 Sound legal system and simple taxation system – the legal system is well‐

established and independent from the Mainland; the tax rate is relatively low and without sales tax/value added tax

 Efficient infrastructure & communication system – efficient transportation network such as airport and advanced communication facilities that facilitates free flow of information

 Free and open economy – HK government basically has been adopting the laissez‐faire policy; trade is free without barriers

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Teacher further explains the major features of free‐market economy:

 Markets are efficiently run that depend on demand and supply – “invisible hand”, prices of goods and services are determined by buyers and sellers.

 Competition is free as Hong Kong is primarily adopting capitalism/market economy in which producers have the freedom to produce and sell for the pursuit of own private profits.

 HK is basically free from government intervention (big market, small government), although recently the CE proposed that some “proactive measures” and “market enablers” are needed (適度有為).

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Teacher asks students to think about the favourable factors for foreign companies to set up their business in Hong Kong with consideration of the characteristics and features of Hong Kong economy.

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Teacher explains that foreign firms can enjoy all these advantages if they set up offices or operation units in Hong Kong, an international city.

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Teacher checks students awareness of major strategic development in the Mainland.

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Teacher can refer to supplementary handout for further details: “One belt one road Extract of Budget Speech 2015‐2016, Hong Kong Government” .

[Note 1]: In the policy address by Chief Executive Officer in 2016, the development plan was termed as “Belt and Road Initiatives”.

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Effective date of Special Drawing Rights (SDR): October, 2016. Special drawing rights were created by the IMF in 1969 and were intended to be an asset held in foreign exchange reserves.

Weighting:

US$ 41.73%

Euro 30.93%

Renminbi/Yuan: 10.92%

Japanese Yen: 8.33%

British Pound: 8.09%

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Teacher asks students to discuss in groups and put the answers to the above questions on Worksheet (3).

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Teacher asks each group to share their views, then wraps up the activity.

 Geographical proximity – many foreign firms use HK as a gateway to the Mainland

 Re‐export for the Mainland – the Mainland is a large trading partner for HK and HK serves as a “middleman” in importing and exporting goods from and to other countries

 Provision of supporting services, e.g., raising capital: HK is an international equity funding centre for the Mainland. Shares of the Mainland enterprises listed in Hong Kong take the form of H‐shares, red chips and the Mainland private enterprises, constituted about 60% of the total market capitalisation in 2014, other than financial services, other supporting services include insurance, accounting, marketing, etc.

 Knowledge and skill transfer, e.g. management expertise and IT knowledge – marketing managers will be employed in retailing companies in the Mainland and share the management and marketing knowledge

 Flow of people, e.g. Individual Visit Scheme – tourism in HK is affected by the policy in the Mainland and the increase or drop in number of tourists also affect other industries such as hotel and catering, retailing, etc.

Teacher can refer to supplementary handouts for further details.

1. CEPA benefits Hong Kong economy and business enterprises (HK Government) 2. CEPA助力兩地創富就業 (HK Commercial Daily Commentary, 28 Nov 2015) 3. “抓緊優惠商機爭取更大開放” (Sing Tao Daily, 28 Nov 2015)

4. “港與內地實現服貿自由化” (HK Commercial Daily, 30 Nov 2015) 5. “港要把握CEPA新機遇” (HK Commercial Daily, 1 Dec 2015)

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1. CEPA benefits Hong Kong economy and business enterprises(HK Government) 2. CEPA助力兩地創富就業 (HK Commercial Daily Commentary, 28 Nov 2015) 3. “抓緊優惠商機爭取更大開放” (Sing Tao Daily, 28 Nov 2015)

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1. CEPA benefits Hong Kong economy and business enterprises (HK Government) 2. CEPA助力兩地創富就業 (HK Commercial Daily Commentary, 28 Nov 2015) 3. “抓緊優惠商機爭取更大開放” (Sing Tao Daily, 28 Nov 2015)

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Teacher distributes the article:“ New Agreement signed under framework of CEPA to basically achieve liberalisation of trade in services between the Mainland and Hong Kong” (Trade and Industry Department, 27 November, 2015).

Students can work in groups or work at home to complete Worksheet 4.

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[Additional Information for reference]

The Agreement has liberalisation in a number of important sectors which further enhances the liberalisation measures and geographical coverage to the whole Mainland. National treatment will be applied to Hong Kong in 62 sectors now.

Restrictive measures are reduced in the positive lists for cross‐border services as well as cultural and telecommunication services. Service sectors under further liberalisation also include legal, accounting, insurance, securities, banking, transport, audiovisual, etc.

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Teacher can use an example of running a small grocery, boutique or stationery shop to introduce to students that business operation is affected by many external environmental factors.

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Teacher explains to students the five environmental factors affecting business decisions.

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Teacher asks students to classify the factors provided in Worksheet (5) to check their understanding of different environment factors.

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Teacher checks and explains the answers with students.

 Health consciousness – a kind of social values and thinking that affect daily life and purchasing habit Socio‐cultural factor

 Competition law – the new regulation may affect business practices, in particular, price setting Legal factor

 Consumer price index – the index indicates the general price level of products that may affect the pricing of products Economic factor

 Receptive to Korean culture – our society has a favourable attitudes towards some countries’ culture such as Japan and Korea Socio‐

cultural factor

 Robotic operation – some companies have adopted automation and even use robots in operations Technological factor

 Ageing population – this relates to the demographic composition, more aged people in the society that may affect the composition of workforce and product types Socio‐cultural factor

 Increase in interest rate –interest rate affects the cost of borrowings for doing business and affects people’s intention to spend  Economic factor

Teacher explains further the environmental factors with real‐life examples.

Political and legal environment involves political stability and political climate of a particular country or region, political system, government

policies/activities and legislation on many areas.

For example, HK has a relatively stable political condition which implies low political risk. Hence, foreign companies are willing to set up offices here.

For the legal aspect, there is Employment Ordinance and relevant labour legislation to protect employees; Trade Descriptions Ordinance and others to protect consumers; Protection of Investor Ordinance and others to protect investors, Copyright Ordinance and others to protect intellectual property rights, etc.

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If the standard working hours regulation is to be enforced, companies may need to employ more workers and the labour cost is also likely to increase.

Companies need to be aware of the infringement of others’ intellectual property, trade mark and original work or design.

With the enforcement of competition law on 14 December 2015, companies’

pricing practices may be affected and they need to observe:

 The First Conduct Rule prohibits anti‐competitive agreements;

 The Second Conduct Rule prohibits abuse of market power; and

 The Merger Rule prohibits anti‐competitive mergers and acquisitions.

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The general state of the economy can significantly affect the success or failure of a business.

 Economic growth and business cycle – slow down of economic growth will hurt people’s consumption power; booming and recession are two different economic conditions

 National income and level of GDP – high level of income and GDP means high consumption power and high potential to earn more income

 Inflation or deflation rate – the rise or drop in general price level; such rates will affect people’s purchasing power

 Unemployment rate and wage level – high unemployment rate may indicate less booming or stagnant economy; the level of wage increase will affect people’s consumption power

 Interest rate – monetary policy and money supply of an economy will affect interest rate and the level of interest rate will affect cost of borrowing or cost of investment

 Exchange rate – HK is an open economy and HK is adopted a linked exchange rate system in which HK dollars are pegged to US$, strong or weak US$ will affect the relative cost of products or services both at home and overseas

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Socio‐cultural factor cover broadly the demographics, population trend, gender, race, etc. Demographics help businesses define the markets for their products and also help determine the market size and composition of workforce (e.g. Generation X and Y, male vs female).

Social change is another challenging environmental factor. People’s attitudes, values and lifestyle shape the social environment. Nowadays, people prefer more freedom at work, better work‐life balance, job challenge and satisfaction. HK people’s values include materialism, convenience, justice, etc. All these will affect people’s consumption pattern, preference, spending priority, etc.

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Socio‐cultural factors usually are the invisible barriers to business success, especially in overseas market where national culture is a challenge issue to tackle.

E.g. The United States‐based consumer electronics retailer Best Buy failed in the Mainland because they neglected the culture and buying habits that Chinese like to bargain when buying products. Best Buy just offered a standard price and coupled with other market factors, it finally decided to withdraw from the Chinese market.

E.g. KFC has been adopting customisation in entering the Mainland market.

Many localised products like chicken roll of Old Beijing, herbal tea, Chinese pancake, congee, mushroom spring roll, etc. are offered to suit the local people’s tastes.

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Technological factor has a great impact on business operation. The application of technology can stimulate economic growth and improve quality of product/service. New machines will improve productivity and reduce costs (e.g. 3D printing and automated dish‐washing machines). New materials may help conserve environment (e.g. polysilicon raw materials for solar energy system and bio‐degradable materials for consumer products ) and new invention can better serve consumers’ need (e.g. mobile apps and electric cars). Also, with the help of advanced ICT, information flow and communication quality can be enhanced.

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Business may need to be aware of the technological development and explore opportunities to apply new technology in saving operation costs, designing new products or services, improving productivity and quality, etc.

Hence, business may need to spend more on research and development.

It mainly refers to the natural environment – use of land and natural resources, and sometimes the depletion of raw materials.

It also relates to the geographical and climatic conditions of a country or region. Environmental pollution and infrastructure (e.g. port and airport facilities) are also included.

Business has to take into consideration the physical factors and different weather conditions when they select plant site, transportation mode, communication means, product or service offerings, etc.

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Teachers can check students’ awareness of these infrastructure projects.

Physical factors will affect the efficiency of business operation. The delivery of materials and finished products relies on good

transportation system and the flow of information also relies on good communication network.

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 Overall consumption of the economy and the purchasing power of customers – economic factor: economic situation goes worse

 Operation/investment costs – economic factor: inflation and interest rate

 Spending habit, behavior and preference – social factor: people values change

 Efficiency in getting business information and transporting products/materials – physical factor

 Application of technology in business operation – technological factor

 Level of political risk and market risk – political factor: if political situation becomes unstable and uncertainly, the level of political risk is higher; social factor: if consumers’ taste and preference change drastically, market risk will be higher

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Students are divided into groups of 4 to complete Worksheet (6). Teacher can encourage students to think of as many challenges as possible, and then give feedback on their sharing of views.

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Students will likely pick some snacks like chocolate bars, potato chips, cup noodles, coffee, etc.

Teacher can guide students to think about the production process of these products

‐‐ where the raw materials (cocoa bean and coffee bean in South America, plant potatoes in the US, plastic making in the Mainland, etc.) came from, how they were transported to the production sites, how they were marketed all over the world.

For example, some large companies like M&M, Kraft, Pringles, Nissan, market their products worldwide but these products may be produced in some low cost regions like Mexico, the Mainland and some other South‐east Asia countries. These business activities demonstrate the concept of globalization and the globalization of world commerce has an impact on people.

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Globalization can be viewed as an integrated process that cover many aspects such as economic, cultural, social, technological and political.

As the Class Activity (7) demonstrated, usually standardised products are designed in one country, manufacturing and assembled in other countries, and finally sold globally. People of the world are “unified” into a single society or a “global village”.

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 Grasp global market opportunities – increase sales and profit; provide outsourcing possibilities; diversity business areas and markets

 Obtain materials/goods/labour at lower costs – some countries have unique and rare resources (e.g. iron and steel mines) or such resources are bulky to transport;

some countries can provide cheap labour; the mobility of resources are higher that facilitates global sourcing

 Enjoy economies of scale – increase the scale of production can lower the average cost

 Develop global brands and create global connection –develop and access strategic markets and international collaboration, and enlarge global market share

 Avoid trade barriers or restrictions – setting up factories or operation overseas can avoid barriers or restrictions such as import quota and tariffs, and have better control over direct investment overseas

 Favourable government treatment – some less developed countries may offer tax incentive and preferential tax rate to foreign firms in order to encourage foreign firms to invest in their countries

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Many large companies actually is operating in a borderless world. The multi‐

national corporation (MNC) is a business with facilities in many countries other than its own that operate on a global basis by making management decision regarding profits, facilities, sales and services in many parts of the world. MNCs often adopt the approach of “think global, act local”. They have to cope with very different environments, stages of economic development, legal, and taxation systems, and often bear higher political risks. They also have to cope with a variety of time zones and geographic distances, manage a work force of many different nationalities and cultures.

Students can visit CK Hutchison Holdings Ltd to find the firm’s global footprint http://www.ckh.com.hk/en/businesses/global.php

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 Companies can use licensing to get into an international market quickly while taking relatively risks.

 Sanrio (licensor) allows foreign firms (licensees) to sell its products or use its intellectual property (e.g. copyright, patent, trademark) by granting them rights and charging them royalties.

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 Forming a joint venture is a common way for companies to enter international markets.

 By an equity agreement with a local company, they can produce and/or market their products in other countries.

 Risk, capital, expertise can be shared between/among “partners”.

Additional example:

The German automaker BMW said Wednesday that it would significantly expand its operations in the fast‐growing Chinese market, doubling the number of models it produces thereand extending its alliance with a local partner …… Source: The New York Times 16, July, 2014

BMW formed a joint venture with Brilliance China Automotive Holdings Ltd. (華晨中國汽車集團控股有限公司)and called” “BMW Brilliance Automotive Ltd”(華晨寶馬汽車有限公司).

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 Similar to licensing, franchising is another popular way to expand business overseas .

 MNCs (franchisors) grant to other foreign companies (franchisees) the right to market their products in their countries under MNCs’ brand name and specified standards.

 The franchisee is responsible for all operations with franchisor’s support and established business model/operation mode.

 Same as licensing , franchisors will receive royalty and some other fees from franchisees.

 Some Hong Kong business such as jewellery chain store recruit franchisees in the Mainland to expand their business.

 Sometimes, companies may not involve equity arrangement and form a joint venture, instead, they will form a strategic alliance.

 Strategic alliance is an agreement between companies to combine their capabilities and resources to accomplish global objectives and gain mutual benefits or synergy effect.

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 As the market expands, some companies will decide to invest directly in other countries to gain better access to the market and gain competitive advantages.

 Foreign Direct Investment (FDI) is the formal establishment of business operations on foreign countries. For example, building factories and plant sites, employing local people and setting up distribution network.

 It involves higher cost and risk but with better control and greater potential return.

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Teacher can guide students to think of more examples.

Depending on students’ ability, teacher can give hints to students on the advantages and disadvantages of various ways to go global. Criteria include risk level, extent of control, profit potential, cost, flexibility, potential conflicts with joint venture partners, etc.

Students are divided into groups of 4 and start discussion on the impacts of globalization on Hong Kong business and complete Worksheet 8.

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Teacher invites each group to share their views and then wraps up. Suggested answers are provided for reference.

 Business will become more integrated and interdependent with the world economy – greater influence from other countries, e.g. financial tsunami, able to obtain resources and talent from the global global sourcing.

 More cooperation with companies in other countries – establish global network and connection, form strategic alliance or joint venture with foreign companies.

 Not only compete on the local market, but also foreign markets – HK companies can expand overseas and therefore they need to compete with companies overseas and vice versa.

 Face challenges on financial, tourism and logistics industries from countries and regions nearby – competitiveness of nearby places and regions are keen, e.g Shenzhen and Singapore.

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Teacher can check students’ understanding on globalization learnt last lesson.

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Teachers can ask students to form groups and hint them to think about the positive impacts of globalization and criticism against globalization.

Forthcoming cases and questions might help give them some ideas before discussion.

The Giordano Group launched a lot of brands in other countries. In 2013, it won the Emerging Market Retail Award and Giordano Middle East was ranked 19th by Forbes Magazine as "Top 100 Making an Impact in the Arab World”. Giordano entered other countries mainly via franchising.

Watsons continually sets the highest standards in the health, wellness and beauty market, providing personalised advice and counseling in health, beauty and personal care on top of its market‐leading product range. Since 2009, Watsons has been the No. 1 Pharmacy/ Drugstore brand in Asia*. In Europe, Watsons is also the leading Health & Beauty retailer in Ukraine.

Positive Impacts:

More business opportunities to access world wide markets – globalization means more free trade between countries and different overseas markets can be developed by various modes, trade among countries becomes borderless and companies can reach different markets worldwide quickly.

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In order to save production cost, H&M outsources its production process to some low‐cost countries such as Bangladesh.

Additional example: Li & Fung sources great products from suppliers around the world. The company evaluates factories based on their capability to supply the right product and based on their commitment to quality, safety and compliance. Li & Fung works with over 15,000 suppliers in multiple ways to meet our customers’ needs.

Positive Impacts:

Allow global sourcing of materials and talent – low‐cost workforce and expertise, goods and raw materials, can easily be obtained from other countries with more efficient global transportation facilities .

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Positive Impacts:

Create employment opportunities – large international companies create wealth and foreign currency to less‐developed economies when they buy local resources, products and services., and transfer

knowledge and technology. The extra money created by this investment can be spent on education, health and infrastructure of those host countries.

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Positive Impacts:

Freer flow of capital and information – globalization facilitates flow of capital because of integration and interdependent financial markets; free and fast flow of information because of advancement of IT and other communication technologies

All the positive impacts of globalization promote better integration of the world –resources, knowledge, invention, goods and services can be shared and enjoyed by different parts of the world, less developed countries can benefit from investment by developed countries

Based on the cases illustrated, each group should sum up the positive impacts of globalization and complete Part I of Worksheet 9.

Teacher then explains the summary of points and concludes that all the positive impacts of globalization promote better integration of the world – resources, knowledge, invention, goods and services can be shared and enjoyed by different parts of the world, less developed countries can benefit from investment by developed countries

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Teacher can hint students to think about the criticisms against globalization by the forthcoming questions and case illustrations.

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Students should be able to list the common products offered by these global companies. Expected answers include hamburgers, French fries, Mickey Mouse, Buzz Lightyear and Coca Cola, etc.

Criticism:

Invasion of local culture – some MNCs sell one particular standardised products to all over the world, local culture may be replaced by global culture, local culture may be “diluted” and not be respected

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Additional example of invasion of local culture and values.

Link of the news –

http://hk.apple.nextmedia.com/international/art/20151211/19407208

The case illustrates that some people are losing jobs and competitiveness because of globalization.

Link for the case:

https://www.globalpolicy.org/globalization/cases‐of‐globalization/51770‐‐

chinese‐imports‐and‐contraband‐make‐bolivias‐textile‐trade‐a‐casualty‐of‐

globalization.html?itemid=id#652) Criticism:

Reducing employment opportunities for domestic workforce – some MNCs set up factories and operations in low cost regions and countries that decrease working opportunities for people in home countries; or import of cheaper products may also hurt local people’s job

opportunities.

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The example shows that greater economic fluctuation and market volatility resulted from higher interdependence among countries.

Hong Kong experienced an economic setback because of financial tsunami a few years ago.

Link of the news –

http://hk.apple.nextmedia.com/news/art/20121031/18053395 Criticism:

Greater economic fluctuation and higher volatility in markets – higher interdependence among countries means each country or region is easily influenced by other countries, e.g. financial tsunami in the US.

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In order to stop the exploitation of farmers and foreign dominance in the marketing of agricultural products, the World Fair Trade

Organisation sets some principles to protect the poor and

disadvantaged farmers in developing countries (e.g. South Africa and countries in South America) and ensures farmers have a fair share of benefits from global trade. In the case of Starbucks, it refers to coffee beans farmers.

Criticism:

Increased poverty: larger income gap between rich and poor– globalization, coupled with capitalism (main enabler of globalization), has been associated with rising inequality and exploitation, and that the poor do not always share the gains from trade, appropriate policies may be needed to benefit the poor from globalization.

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Additional example: People protested against capitalism – an “enabler” of globalization, which increase the wealth gap and bring about poverty problem.

Globalization that results in frequent economic activities among countries will pollute the global environment, deplete the natural resources and worsen the global warming problem.

Criticism:

Contamination of environment and depletion of resources – frequent economic activities as a result of globalization will bring different kinds of pollution such as air and water pollution to factories in the Mainland, resources may also be depleted due to business opportunities and overconsumption.

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Based on the cases illustrated and questions, each group should sum up the criticisms of globalization and complete Part II of Worksheet (9).

Teacher wraps up with highlight on the summary of note in PowerPoint.

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The above are some major international trade organisations. Hong Kong has been participating actively in some of the above organisations, including WTO and APEC.

ASEAN, just like European Union (EU) and North American Free Trade Agreement (NAFTA), are trading blocs, or common markets, it is a regional organisation that promote trade among member nations.

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WTO is the “successor” of GATT – General Agreement on Tariffs and Trade.

As of 30 November, 2015, there were totally 162 members.

This organisation deals with the global rules of trade between nations.

Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. It is a rules‐based, member‐driven organization in which all decisions are made by the member governments, and the rules are the outcome of negotiations among members.

For details: https://www.wto.org/

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APEC has 21 member economies (as at 20 January, 2016).

For details: http://www.apec.org/

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Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near‐global membership.

The IMF’s primary purpose is to ensure the stability of the international monetary system ‐‐ the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.

Member countries work to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high

employment and sustainable economic growth, and reduce poverty around the world.

For details: http://www.imf.org/external/index.htm

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The Association of Southeast Asian Nations, or ASEAN, was established in 1967 and currently there are ten Member States.

For details: http://www.asean.org/

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The original news:

東盟基建需求盛港融資機遇大

共有6.25億人口的東盟10國區域在2015年的最後一天正式成立東盟共同體，加強在政治和安全、經濟及社會文化3方面的連繫。當中，東盟經濟共同體謀求在2025年時已高度融合，同時增加行業間的合作，融入環球經濟。

港出口東盟升逆市增長源頭

要達到以上目標，關鍵之一是完善東盟各國有助於人貨往來的相關基礎設施（下簡稱「基建」）。亞洲開發銀行研究所在2012年指出，亞洲地區發展基建的一個重要意義，就是釋放亞洲的經濟發展潛力，讓資訊更加流通，以及消除不同國家人民之間的收入差距，避免衝突，成為亞洲「和平的橋樑」。其實東盟基建的情況，不止是東盟的事，也與香港息息相關。從貿易出發，香港與東盟現正談判自由貿易協定，去年12月便完成了新一輪會議，而行政長官梁振英去年預計在今年內可以達成協議。

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Students are encouraged to search other similar international organisations and identify each of their primary roles and functions, then share their findings in the next lesson.

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Worksheet (1) -- Class Activity 1

Group Discussion – What is Business?

Please answer the following questions:

Case 1: GoGo Van

1. What is the business idea/opportunity of running

“GoGo Van”?

2. Where can the owners get the capital when starting

“GoGo Van” business?

3. Where and how are the transactions taken place?

4. How do the owners market and promote their business?

5. In what ways does “GoGo Van” generate revenue?

6. Do you think “GoGo Van” is a profitable business?

Why does a business owner need profit?

Case 2: eBay

-- D1

“eBay ”?

-- D2

8. Where can the owners get the capital when starting

“eBay” business?

-- D3

-- D4

-- D5

11. In what ways does “eBay” generate revenue?

12. Do you think “eBay” is a profitable business? Why does a business need profit?

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Student Worksheet / p.2

Topic Overview Topic

Lesson 1

Lesson 2

Lesson 3

Lesson 4

Lesson 5

Worksheet (1) -- Class Activity 1

Group Discussion – What is Business?

Suggested Answers

Worksheet (1) – Class Activity 1

Group Discussion – What is Business?