QUESTION FOUR

$[20]$

Read the following extract and answer the question that follows:

According to the International Monetary Fund, the baseline global economic growth rate is set to

slow from $3\mathrm{.}5\%$ in $2022$ to $3\%$ in $2023$ and $2\mathrm{.}9\%$ in $2024$ sitting well below the historical average of

$3\mathrm{.}8\%.$ This is in part a result of high interest rates, rising energy prices, geopolitical risks and

conflicts, and a slowdown in gross domestic product $($GDP$)$ for the worlds two leading economies:

the United States and China.

These shifts in economic systems, which play out on a global scale, can have profound knock$-$on

effects on international business activities effects that are keenly felt by business leaders.

Research by J$.$P$.$ Morgan indicates that less than half of UK business leaders are optimistic about

the global, national and regional economies, citing threats such as the Russia$-$Ukraine war, general

market volatility, cost of debt and energy prices.

The reasons why a business might choose to become multinational are generally divided into two

overarching categories: strategic or operational needs. Strategic needs include factors such as

avoiding stagnation, increasing business sales and profitability, and mitigating future changes in

external environments. Operational needs include factors such as shifting a surplus of production,

and sourcing or providing technology, materials or equipment. However, economic activity whether

national or global presents both challenges and opportunities for these globalised businesses

operating on the international stage.

Discuss how economic factors impact on global business operations and explain the strategies

multinational organisations can implement to safeguard against economic instability