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final theme 4 Flashcards

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1
Q

What is meant by the term GDP?

A

GDP is gross domestic product, the total value of goods/services produced in an country over a specific time period.

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2
Q

What is an emerging economy?

A

An emerging economy is one that has increasing growth rates but relatively low income per head.

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3
Q

How does economic growth impact individuals?

A

-reduced unemployment
-increased average incomes
-Access to quality public services

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4
Q

What are the four key indicators of growth?

A

1) GDP per capita
2) Health
3) Literacy
4) HDI

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5
Q

How does economic growth impact businesses?

A

-increased trade opportunities
-potential for increased profits
-increased demand for goods which increases profitability

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6
Q

What does HDI measure?

A

The health development index combines the three aspects of development: income, education and life expectancy to determine the quality of development of citizens in a country.

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7
Q

What does literacy refer to?

A

Literacy refers to the number of people in a country who can read or write

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8
Q

What are imports?

A

Imports are goods/services bought by people/businesses in one country from another country

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9
Q

What are exports?

A

Exports are goods/services sold by domestic businesses to people/businesses in another country.

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10
Q

What is specialisation?

A

Specialisation occurs when a country/business decides to focus on producing a particular good/service.

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11
Q

Explain how specilisation can benefit a business.

A

1) lower costs due to economies of scale as costs are spread out over larger units
2) lower unit costs allows businesses to lower prices for consumers, which will increase sales
3) If they however decide to keep prices the same it will increase the businesses profit margins

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12
Q

What is foreign direct investment (FDI)?

A

This is when a business in another country invests in a business abroad.

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13
Q

How can specialisation give a country/business a competitive advantage?

A

It gives them a competitive advantage by adding value to their products

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14
Q

How can a country benefit from FDI

A

1) Increased economic growth, as there is an inflow of money
2) increased job opportunities
3) Access to knowledge/expertise from foreign investors

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15
Q

What is meant by an inward FDI?

A

This is when a foreign business invests in a local economy

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16
Q

What is meant by an outward FDI?

A

This occurs when a domestic business expands its operations to a foreign country

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17
Q

What is meany by globalisation?

A

Globalisation is the economic integration of different countries around the world

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18
Q

What is trade liberalisation?

A

Trade liberalisation is the removal/reduction of barriers to trade between countries

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19
Q

give me 2 advantages and disadvantages of trade liberalisation

A

Advantages:
1) increased international trade allows businesses to increase their market size. This increases their output and leads to economies of scales
2) Removal of trade barriers reduces costs for businesses

Disadvantages:
1) Domestic firms may not be able to compete with international firms
2) some industries may be subject to dumping abroad.

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20
Q

Give me 4 influences which have led to the pace of globalisation increasing

A
  1. Migration
  2. Reduced costs of transportation
  3. Increased investment flows
  4. Trade liberalisation
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21
Q

define the term protectionism

A

Protectionism is when a government seeks to protect its domestic industries form foreign competition

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22
Q

What is a tariff?

A

A tax placed on imported goods from another country

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23
Q

Give 2 advantages and disadvantages of tariff’s

A

advantages:
1) increased government tax revenue
2) Protects industries so that hey can become more competitive globally.

Disadvantages:
1) increases the cost of imported goods which may increase prices for consumers
2) reduces consumer choice

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24
Q

Give 2 advantages and disadvantages of import qutoas

A

advantages:
1) Domestic businesses face less competition and benefit from a larger market share
2) countries are easily able to change import quotas based on their market conditions

Disadvantages:
1) Quotas limit the supply of goods, which increases prices
2) They may generate tension with trading partners

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25
What is an import quota?
This a government imposed limit on the amount of a particular product allowed into the country.
26
What are two other forms of protectionism?
-Government legislations -Domestic subsidies
27
What does the term dumping mean?
When business's sell goods/services abroad below the cost of production
28
What is a trade bloc?
A trading bloc is a group of countries that form an agreement to reduce or eliminate trade barriers.
29
What are the 3 largest trading blocs in the world?
the EU, ASEAN and USMCA
30
Benefits for businesses due to trade blocs?
1) access to more markets 2) higher supply of labour 3) infrastructure support
31
drawbacks for businesses due to trade blocs?
1) increase in internal competition 2) retaliation from other countries 3) rules/regulations that have to be followed
32
What is a push factor?
This is internal factors which pushes a business to expand outside of its own country
33
What are two examples of push factors?
-Intense competition -saturated markets
34
What is offshoring?
This is when a country moves part of the production process or all of it to another country.
35
What is a pull factor?
These are external opportunities which encourage a business to operate in markets abroad
36
What are two examples of pull factors?
1. Economies of scale 2. Spreading risk
37
What is outsourcing
This occurs when a business hires and external organisations to complete certain tasks or business function.
38
Give two advantages and disadvantages of offshoring
Advantages: 1) lower labour costs will keep costs down and increase profitability 2) Access to specialised suppliers in countries abroad which leads to better quality products Disadvantages: 1) increased costs in the short term like relocation costs 2) possible poor customer service due to language and cultural differences.
39
Give 2 advantages and disadvantages to outsourcing.
Advantages: 1) Businesses can take advantage of specialise skills that another business has which can increase efficiency 2) business can benefit from higher labour productivity in other countries Disadvantages: 1)Poor communication between businesses can lead to increased costs and disruptions 2) Damage to brand image, as the values of the two businesses may not align
40
What are the five factors a business must consider when assessing new markets abroad?
1. Infrastructure 2. Exchange rates 3. Level of disposable income 4. Political stability 5. Ease of doing business
41
What is meant by infrastructure?
This considers factors like roads, transportation and communication.
42
what is meant by ease of doing business?
Rules and regulations involved in establishing a business in a market.
43
What are the 9 factors a business must consider when assessing a country as a production location?
1. Cost of production 2. Political stability 3. Government incentives 4. Ease of doing business 5. Infrastructure 6. Location in trading bloc 7. Return on investment 8. Natural resources 9. Skills/availability of labour force
44
What is a global merger?
A global merger is a permanent agreement between two businesses from two different countries to join together.
45
What is a joint venture?
A joint venture is when two businesses join together to share skills, resources and knowledge for a limited time.
46
What are 4 reasons for a global merger/joint venture?
1. Economies of scale 2. Entering new market/trading bloc 3. Increasing global competitiveness 4. Acquiring brand names/patents
47
Give two advantages and disadvantages to global mergers/joint ventures
advantage: 1) Economies of scales gained from costs spread out over output which can increase profit margins 2) The diversification of risk due to having products in several markets Disadvantages: 1) The initial cost of merging can be significantly high 2)Diseconomies of can occur and also a clash of cultures
48
define the term global competitiveness?
Refers to the ability of a business to perform better then its rivals across markets in different countries.
49
What is a factor that can affect global competitiveness?
Fluctuations in exchange rates can influence the competitiveness of a business. Specifically appreciations and depreciations of currency.
50
How can a business increase its global competitiveness?
By gaining a competitive advantage
51
Two ways a business can gain a competitive advantage?
1) Cost competitiveness ( being the lowest cost producer in the market) 2) Differentiation
52
What can impact a businesses ability to gain a competitive advantage?
A shortage of suitably skilled labour can limit a firm’s ability to differentiate products and/or achieve low costs, reducing its competitive advantage.
53
Define the term global marketing strategy?
This is the selling and promoting the same product in the same way across different countries.
54
What are the types of marketing strategies
-Polycentric -Ethnocentric -Geocentric
55
define the term glocalisation?
Glocalisation is adapting a global product to suit local tastes, culture and needs.
56
What is the ethnocentric approach?
Businesses see the domestic market and foreign markets as similar. Businesses market the goods the same way across every country
57
What is polycentric approach?
businesses adapt their marketing strategy by tailoring their products to the local markets.
58
Give 2 advantages and disadvantages of polycentric approach.
advantages: 1) sales are likely to increase as the product is tailored to meet the needs of customers 2) This helps with brand loyalty in overseas markets Disadvantages: 1) additional costs in the market due to market research 2) Product development to adapt the product may increase average cost per unit.
59
What is the geocentric approach?
This strategy is a mix of both ethnocentric and polycentric.
60
Give 2 advantages and disadvantages of an ethnocentric approach.
advantages: 1) businesses can benefit from economies of scales due to production on a large scale 2) costs are also lowered due to no product development to adapt the good Disadvantages: 1) This approach is cultural insensitive and may not resonate with local customers. This means sales could be lost
61
What are the four P’s in the marketing mix?
place Price Promotion Product
62
Give 2 advantages and one disadvantage to using the geocentric approach.
Advantages: 1) sales are likely to increase as the product is tailored to overseas markets 2) This helps develop brand loyalty in overseas markets markets Disadvantages: 1) costs associated with market research and due to product development to tailor their products to local markets.
63
How can adapting a businesses marketing mix help them globally?
By adapting the marketing mix to meet local needs, companies can effectively penetrate global markets and build a strong global brand.
64
What is Ansoff’s matrix?
A strategic planning tool used to identify possible growth potential oppurtunities in the market.
65
What are the four strategies in Ansoff matrix.
1. Market development 2. Market penetration 3. Product development 4. Diversification
66
Define the term cultural diversity
Cultural diversity is the differences in ideas, customs and social behaviour of a particular people or society in global markets.
67
Define the term global niche market.
These are small segements of global markets, characterised by unique and specific consumer needs .
68
What are four features of a global niche market.
1. Excellent customer service 2. Top quality products 3. Innovation 4. Prioritising profit over market share
69
What must businesses consider when expanding across borders?
Must consider various cultural and social factors to effectively market their products/service.
70
What are 3 different social and cultural factors that need to be considered?
1. Cultural differences 2. Different tastes 3. Unintended meaning from promotion/marketing
71
What is a multinational corporation?
This is a business that is registered in one country but has manufacturing operations in different countries
72
What factors have contributed to the growth of MNCs?
globalisation and deregulation
73
Give 2 advantages and 1 disadvantages to how MNCs can impact the local community/environment.
advantages: 1) Local residents may benefit from jobs opportunities leading to growth in local economy 2) MNCs often invest in improving infrastructure Disadvantages: 1)MNCs may damage local environment/habitats through production processes
74
how do MNCs affect the national economy through foreign direct investment?
There will be an inflow of money into a country if an MNC decides to invest through foreign direct investement
75
Give 2 advantages and 1 disadvantages MNCs provide for local businesses.
Advantages: 1) Local firms may learn new skills and production methods that make them more efficient 2) There may be possible merger/joint venture opportunities with MNCs for local firms Disadvantages: 1) MNCs can reduce the supply of labour for local firms if they offer better wages and working condition.
76
Give 2 advantages and disadvantages MNCs provide in terms off employment.
advantages: 1) MNCs lead to job creation in local communities 2) MNCs may offer better working conditions then local businesses Disadvantages: 1) MNCs mag exploit local workers if regulations/laws are weak 2) MNCs tend to establish production facilities in areas where labour costs are low so employees may be paid low wages.
77
How do MNCs impact the balance of payments for a country?
MNCs can improve the balance of payments by increasing money in the economy. (Balance of payments shows all the financial transactions between a country and the rest of the world)
78
How do MNCs impact consumers?
MNCs can benefit consumers - wider choice of goods.services -Access to better quality goods/services -Improve living standards -Lower prices if MNCs pass on their cost advantage.
79
How do MNCs impact technology and skills in new countries?
MNCs can bring new technologies and skills to local businesses, this can help improve productivity and efficiency, which can make domestic business more internationally competitive.
80
How do MNCs impact tax revenue in new countries?
1. They can increase tax revenue for host countries 2. Some MNCs might avoid taxes to maximise their profits.
81
What is meant by business ethics?
Refers to the principles and norms that govern business behaviours.
82
What are some unethical supply chain practises MNCs partake in?
1. Child labour in production factories is a common method used by MNCs 2. Workers are exploited to poor working conditions and low wages.
83
What are some unethical environmental practises that MNCs partake in?
1. MNCs dispose of waste in LEDs due to cheaper costs, increasing environmental pollution. 2. Emissions are often released by factories which produce products made by MNCs
84
How can unethical decision making impact a business?
Unethical decisions can damage the brand image of a business and result in a loss of profitability.
85
Why do LEDc and MEDs struggle with controlling MNCS?
Because MEDc and LEDc often benefit from the profits of MNCs, and these firms influence government policies. (Corrupt governments)
86
What are the four ways a country can control a MNC?
1) Political influence 2) Legal control 3) Pressure groups 4) Social media
87
How can political influence control MNCs?
By enforcing laws and regulations which MNCs must adhere to which prevents them from making unethical decisions.
88
How can Legal control, control MNCs?
Governments can enforce legislation and regulations to control the operations of MNCs
89
How can pressure groups control MNCs?
Pressure groups can partake in protests, strikes, boycotting and shaming MNCs for their unethical operations, putting pressure on the firms to change.
90
How can social media control MNCs?
Social media enables stakeholders to freely share information about the unethical behaviour of MNCs, which forces them to respond to protect their brand image.
91
What are pressure groups?
Organisations that operate to influence companies and government decisions in the interest of a particular cause.
theme 4
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