Global Business

Question 1

EMERGING ECONOMY

Answer 1

An economy in the process of rapid growth and industrialisation

Question 2

GDP

Answer 2

The measure of the size and health of a country’s economy over a period of time, measuring the total value of goods and services produced

Question 3

What is meant by the acronym BRIC?

Answer 3

BRAZIL
RUSSIA
INDIA
CHINA

Question 4

What is meant by the acronym MINT?

Answer 4

MEXICO
INDONESIA
NIGERIA
TURKEY

Question 5

Two implications of economic growth for individuals and businesses:

Answer 5

Lower unemployment, more business confidence, trade opportunities for business

Question 6

Four indicators of growth:

Answer 6

GDP per capita, Health, Human Development Index (HDI) (life expectancy, education and income of population), literacy

Question 7

EXPORTS

Answer 7

Goods or services produced by one country are then sold to another country e.g. goods made in UK THEN sold abroad

Question 8

IMPORTS

Answer 8

Goods and services that are purchased by one country from another country e.g. UK buys European car parts

Question 9

Foreign direct investment

Answer 9

Investment from one country into another that involves establishing operations or acquiring tangible assets, including stakes in other businesses

Question 10

Greenfield FDI

Answer 10

Build a complete new factory/ business. Creates new jobs. E.g. Google set up new establishments in India

Question 11

Brownfield FDI

Answer 11

Buy an existing business and grow it. New tech and business sinnovation

Question 12

The link between business specialisation and competitive advantage:

Answer 12

Specialisation results in greater efficiency, which allows for goods and services to be produced at a lower cost, which then allows for a business to lower its prices or increase its profits

Question 13

TRADE LIBERALISATION

Answer 13

Trade liberalisation involves a country lowering import tariffs and relaxing import quotas and other forms of protectionism.

Question 14

Benefits of trade liberalisation

Answer 14

Increased trade opportunities, Increased economic growth (make an economy more open to trade and investment), lower prices for consumers, EoS

Question 15

drawbacks of trade liberalisation

Answer 15

Increased job outsourcing, Environmental costs, inferior quality, increased dependence on other natons

Question 16

GLOBALISATION

Answer 16

The growing integration of the world’s economies into one single market.

Question 17

Benefits of globalisation

Answer 17

Technology and skills transfer, More competition leading to lower prices for consumers

Question 18

Globalisation drawbacks

Answer 18

Degradation of environment, Vulnerability to external economic shocks – e.g. global financial crisis, exploits cheaper labour markets

Question 19

Factors contributing to increased globalisation:

Answer 19

Increased significance of global (transnational) companies, Reduced cost of transportation and communication, Political change

Question 20

What’s the difference between:

TARIFFS AND IMPORT QUOTAS

Answer 20

A tariff is a tax or duty that raises the price of imported goods and causes a reduction in domestic demand and in increase in domestic supply; whereas import quotas are volume limits on the levels of imports allowed into a specific country

Question 21

Two other forms of trade barrier

Answer 21

Subsidy, Government legislation

Question 22

benefits of trade barriers

Answer 22

Protects domestic producers and infant companies, Increased consumption of locally produced goods and services, if a country is self-sufficient they avoid the risk of becoming reliant on other countries that could be prone to shortages like bad weather ruining crops

Question 23

Drawbacks of trade barriers

Answer 23

Higher costs on imported products, Might limit the range of goods and services available

Question 24

Three examples of trading blocs:

Answer 24

European Union
NAFTA (now known as US-Mexico-Canada Agreement)
ASEAN

Question 25

What is meant by the term, trading bloc:

Answer 25

A group of countries in specific regions that manage and promote trade activities between them.

Question 26

The impact on businesses of trading blocs:

Answer 26

Increased trade opportunities as barriers are lifted between markets; Can allow for economies of scale as market becomes bigger; Increased competition can lead to price pressures, need to differentiate and to improve efficiency;

Question 27

Advantages of trading bloc

Answer 27

Increased ms so eos, increased demand, lower cost so CA, less red tape so more efficient, freedom of movement so more talent to employ

Question 28

Disadvantages of trading blocs

Answer 28

Encourages reliance as trade is limited, encourages monopoly and predatory pricing, neo-colonialism (bigger countries dictate smaller countries, retaliation

Question 29

Examples of push factors in relation to conditions that prompt trade:

Answer 29

High levels of domestic competition, | Saturated market with limited growth opportunities

Question 30

Examples of pull factors in relation to conditions that prompt trade:

Answer 30

Spread risk globally, Achieve economies of scale as production output increases

Question 31

Difference between outsourcing and offshoring

Answer 31

Off-shoring is the relocation of a business function, usually manufacturing, to a location overseas; whereas outsourcing is where a business function is contracted out to a third party, and can be either local, national or international.

Question 32

How the product life cycle can be used to prompt trade

Answer 32

Products can be at different stages of the life cycle in individual markets; a product in the growth stage in another country represents an opportunity for a business to trade internationally

Question 33

four factors a business might consider when assessing a country as a market:

Answer 33

Levels and growth rate of disposable income Exchange rate Ease of doing business Infrastructure

Question 34

nine factors a business might consider when assessing a country as a production location:

Answer 34

``` Ease of doing business, Political stability, Cost of production, Infrastructure, Skills and availability of labour force, Location in trade bloc, Government incentives, Natural resources, Likely return on investment ```

Question 35

List five reasons for global mergers or joint ventures:

Answer 35

Spread risk over different countries/markets, Entering new markets/trade blocs, Acquiring national/international brand names/patents, Securing resources/supplies, Maintaining/increasing global competitiveness

Question 36

How an appreciation of the exchange rate can impact on a business:

Answer 36

SPICED AND WPIDEC

Question 37

Two ways a business can achieve a global competitive advantage:

Answer 37

Cost competitiveness/leadership Differentiation

Question 38

How skills shortages can impact on international competitiveness:

Answer 38

Increase in labour costs Decrease in labour productivity

Question 39

Globalisation

Answer 39

A product or service that is developed and sold globally, but is also adapted to meet the needs and wants of customers in a local market

Question 40

DOMESTIC / ETHNOCENTRIC

Answer 40

Assumes that what marketing strategy works in the home market will work in all markets

Question 41

Mix/ geocentric

Answer 41

Main aim of marketing is a global brand but recognizes needs of individual markets

Question 42

INTERNATIONAL / POLYCENTRIC

Answer 42

Recognises that every market requires a different marketing mix, with products designed to meet local needs

Question 43

Is it best to be ethnocentric, geocentric or polycentric

Answer 43

Polycentric

Question 44

How can the marketing mix be applied and adapted to global markets?

Answer 44

Cultural and logistical differences might demand different forms of promotion, different distribution channels, more appropriate pricing strategies and products with different features depending on the local needs

Question 45

How can Ansoff’s matrix be applied and adapted to global markets?

Answer 45

All of Ansoff’s proposed growth strategies can be applied: market penetration refers to growing the existing market more, increasing market share; market development looks at new countries as markets which will require adapted strategies; product development is evident in adapting products specifically for local needs; and diversification requires a totally new marketing strategy as it involves completely unfamiliar territory for the firm.

Question 46

GLOBAL NICHE MARKET

Answer 46

Small, specialized parts of the global market – where customers in many countries have specific needs and wants that are not satisfied by mass market products or services

Question 47

Recognition that groups of people across the globe have different interests and values

Answer 47

CULTURAL DIVERSITY (IN RELATION TO GLOBAL NICHE MARKETS)

Question 48

Two features of a global niche market:

Answer 48

Clear, specific needs of customers 1 Higher profits from charging a higher price

Question 49

How can the marketing mix be adapted to suit global niche markets?

Answer 49

Product: emphasis on quality as point of difference Price: higher, more premium-priced products to reflect meeting of specific needs/wants Promotion: strong brand, more targeted promotional activity, tailored to individual markets Place: more selective in choice of distribution, with exclusivity an option (reduced access to appear more premium)

Question 50

Cultural / social factors a business needs to consider in relation to global marketing:

Answer 50

language History and traditions weather

Question 51

A business that has operations in more than one country

Answer 51

MULTINATIONAL COMPANY (MNC)

Question 52

Possible impacts a MNC may have on the local economy:

Answer 52

Local labour: wages, working conditions and job creation, Local businesses – more consumption, more competition/ Impact on local environment and community

Question 53

Possible impacts a MNC may have on the national economy:

Answer 53

FDI flows, Balance of payments (imports v exports), Skills transfer and technology

Question 54

Two potential stakeholder conflicts resulting from the operation of a MNC in a less-developed country:

Answer 54

Resource depletion allowing greater profits but polluting environment, Job creation versus transfer pricing and tax avoidance

Question 55

How pay and working conditions may differ in relation to the operation of a MNC in a less-developed country:

Answer 55

LEDCs might have different legislative constraints on pay and conditions which might make it more attractive for MNCs to exploit in order to maximize profits; this leads to ethical issues as MNCs look to do the right thing whilst maximizing wealth for shareholders

Question 56

Two environmental considerations a MNC may need to consider when operating in another country:

Answer 56

Emissions, waste disposal

Question 57

Two supply chain considerations a MNC may need to consider when operating in another country:

Answer 57

Explotation of labour, child labour

Question 58

Two marketing considerations a MNC may need to consider when operating in another country:

Answer 58

Misleading product labelling 2 Inappropriate promotional activities

Question 59

Four factors that may need to be considered in relation to controlling MNCs:

Answer 59

Political influence, Legal control, Pressure groups, Social media