The Advantages of Taking a Loan to Pay for a House

Question 1 

An advantage of taking a loan to pay a house is that it makes the purchase becomes affordable. The payment is spread over many years hence reducing the monthly payback to a manageable amount. A loan can spread up to 25 years, and this makes it easier for the person to pay back the loan in due time. Other than affordability, taking a loan could turn out to a cost-effective way of borrowing especially when the interest rates are lower. A disadvantage of taking loans for buying houses is that an individual will have to pay more than they had initially borrowed. Secondly, some banks have strict requirements before giving an individual the go-ahead to borrow for instance some would require collateral. 

Question 2 

One of the main advantages of International Monetary Fund (IMF) and the World Bank is that they promote financial stability and monetary co-operation among countries. Countries that find themselves in a temporary debt can get temporary financial help. The two international bodies further support economic growth. The notable disadvantages of these international monetary organizations include the fact that they do not give financial advice making the borrowing countries to suffer. Borrowing will only occur if the countries agree to certain conditions, which might be harsh and act to increase poverty in the nations. 

Question 3 

Güven (2012) illustrated that tackling corruption is an essential step in enhancing economic stability. However, more so the developing nations have been faced with massive corruption especially when dealing with borrowed funds from the World Bank and the IMF. One classical example is when the IMF gave Zaire a loan of approximately $13 billion. Audit reports found out that close to 50% of the amount was stolen and channeled to Western banks such as in France and Switzerland. The World Bank on its part lent Indonesia a total of $30 billion. World Bank officials in the country reported that between 20 and 30% of the amount was diverted into the private pockets of politicians and staff members ( Güven, 2012). Factors that promote corruption include lack of accountability, poor leadership, and lack of strict corruption policies from IMF and World Bank. 

Question 4 

Political factors determine the Union Pacific's long-term profitability in a certain country or market. Economic factors such as interest rates, savings rate, and inflation will determine its ability to invest in an economy. The culture of a society will influence the way Union Pacific operates in a given environment. Technology on its part influences the way the union fairs with its competitors and also impact on its production. In other countries, the legal systems are not reliable enough to protect the union's intellectual property. 

Question 5 

Political instability and military invasion will not provide a peaceful environment for its operation. An economic system and microenvironment factors such as inflation and exchange rates will determine its operation in a market. Social factors such as shared beliefs and attitudes will give it an impetus to operate. Technology will improve product offering. Environmental factors such as weather and waste management will determine its success in new markets. Good laws regarding intellectual property will safeguard the union’s interests. 

Question 6 

Nike has maintained an efficient pricing power on its product. Due to its huge number of factories, the suppliers hold a huge amount of power. The threat of substitutes is also high with plenty of apparel and equipment producing companies. However, its excellent reputation mitigates the threat. The possibility of new entrants is possible, but its reputation protects it from the power of new entrants. The industry is attractive because of its reputation as a leading producer of quality sports equipment and apparel. It is, therefore, free from competition and threat of new entrants. 

Reference 

Güven, A. B. (2012). The IMF, the World Bank, and the global economic crisis: exploring paradigm continuity.  Development and Change ,  43 (4), 869-898.