1
Q
Give some example analysis points for increased demand for domestic goods (4)
A
2
Q
Give some example analysis points for increase in employment opportunities (5)
A
3
Q
Give some example analysis points for increase in exports (5)
A
4
Q
Give some example analysis points for increased competition for domestic businesses (7)
A
5
Q
Give some example analysis points for increased competition for domestic businesses that links to the business cycle (7)
A
6
Q
Give some example analysis points for MNC recruit from local labour supply (8)
A
7
Q
What does GDP stand for?
A
Gross domestic product
8
Q
Give the formula for calculating GDP
A
Consumption + Investment + Government Spending + (Exports - Imports)
9
Q
Define GDP with examples
A
GDP is the measure of national income, output or expenditure. It is the value of all the goods and services produced in an economy in a given time period (usually a year)
10
Q
What happens when GDP goes up?
A
The economy is growing
11
Q
What is a recession?
A
a period of significant economic decline, specifically two consecutive quarters (six months) of negative economic growth (falling GDP)
12
Q
Describe the business cycle
A
The business cycle illustrates the changes that occur in economic activity measured by GDP. Each change has a name e.g. boom, recession, slump, recovery. The economy will naturally go through each of the stages over time .
13
Q
What is the business cycle also known as?
A
The trade cycle and the economic cycle
14
Q
Draw out the business cycle
A
15
Q
Describe boom within the business cycle
A
the peak of the cycle- GDP is growing fast due to the performance of the economy
16
Q
Describe recession within the business cycle
A
-GDP falls at the bottom of the cycle
-falling levels of consumer spending and confidence leads to less profit for businesses so less investment
-increase in spare capacity and increased unemployment as businesses cut back and reduce stock
17
Q
Describe slump within the business cycle
A
-a prolonged period of declining GDP- very weak consumer spending and business investment
-many business failures
-rapidly rising unemployment
-prices may fall (deflation)
18
Q
Describe recovery/growth within the business cycle
A
-GDP starts to rise again
-increased consumer spending
-business feels a little more confident and starts to invest again and build stocks
-takes time for unemployment to stop growing
19
Q
Give a LOA for the drawback of a recession within the business cycle (9)
A
20
Q
Give a LOA for a potential long term benefit of a recession (8)
A
21
Q
Give a LOA for the benefit of a recession linked to spreading risk (7)
A
22
Q
Give a LOA for the benefit of a boom (9)
A
23
Q
Give a LOA for the drawback of a boom linked to inflation risk (8)
A
24
Q
Give a LOA for the effect of economic uncertainty on the business environment (8)
A
25
What are some indicators of economic growth
GDP per capita
HDI
26
What is the human development index made of?
Life expectancy at birth
Expected years of schooling
Mean years of schooling
Gross national/ average income
27
What are some features of n emerging market?
-fast growing GDP but not fully developed
-development of secondary and tertiary structures
-increased GDP
-increase in middle class increases income and spending
28
What does BRICS represent?
5 major emerging economies
29
What does BRICS stand for?
Brazil
Russia
India
China
South Africa
30
What do the countries in BRICS have in common?
Large population (40% of the worlds population)
Cheaper labour costs than other developing countries
Lots of large businesses relocate to take advantage
China has removed previous trading barriers
31
Which sectors of UK economies are likely to see an increase in demand from overseas as the national income of emerging countries increase?
Banking
Insurance
Other financial services
Tourism
Luxury goods
32
What does the term MINT represent?
four emerging market economies that are considered to have high growth potential and significant economic importance
33
What does MINT stand for?
Mexico
Indonesia
Nigeria
Turkey
34
Give a LOA for the benefit of emerging economies linked to opportunities for UK businesses (10)
35
Give a LOA for the drawback of an emerging economy linked to GDP (7)
36
Give a LOA for the drawback of an emerging economy linked to liquidity (9)
37
Give a LOA for the drawback of an emerging economy linked to liquidity (9)
38
Describe international trade
the exchange of goods and services across national borders, primarily involving exporting (selling abroad) and importing (buying from abroad)
39
Define the term import
The act of selling goods and services to another country
40
Define the term export
Goods brought from another country
41
Give a LOA for the benefit of exports in international trade (6)
42
Give a LOA for the drawback of exports in international trade (7)
43
Give a LOA for the benefit of imports in international trade (6)
44
Give a LOA for the drawback of imports in international trade (6)
45
What are the reasons that a country might be better suited to the production of one type of good?
-the country is relatively productively efficient than another
-the country can produce one good at lower opportunity cost than another
46
Give some arguments in favour of a country specialising
-increases productivity,output and GDP
-lower prices and increased value for money for consumers and improves living standards
-lower prices increase international competitiveness and increases exports
-education system geared towards these sectors
47
Give some arguments against a country specialising
-‘all eggs are in one basket’ so more vulnerable to shocks
-rise in unemployment
-reduced tax
-fall in GDP if they experience external shocks
48
Give a LOA for the benefit of a country specialising in an industry (11)
49
Give a LOA for the drawback of a country specialising in an industry (8)
50
What does FDI stand for?
Foreign Direct Investment
51
Define FDI
Investment into a foreign country
52
Give a LOA for the benefit of increased productivity for FDI (11)
53
Give a LOA for increased domestic demand within FDI (8)
54
Give a LOA for the drawback of increased competition within FDI (8)
55
Give a LOA for the drawback of increased costs within FDI (6)
56
Describe FDI
-the jobs created by FDI may not be highly skilled or highly paid, but high may have a negative impact on average income e.g. primary opening factories in Bangladesh
-FDI may have a negative impact on the environment by increasing pollution
-FDI could lead to resource depletion if there is more competition for raw materials which may be in limited supply
57
Define protectionism
a government policy to restrict imports (like through tariffs or quotas) to shield domestic industries, businesses, and jobs from foreign competition, aiming to boost local production and self-sufficiency by making imported goods more expensive or limited
58
Define tariffs
Tax on imports
59
Describe the impact of tariffs
Increased cost of imported good. Makes domestic producers more price competitive.
60
Define import quotas
Limit on volume of imports
61
Describe the impact of import quotas
Reduced supply of good in a country, increases cost, makes domestic producers more price competitive
62
Define government legislation
Restrictions such as health and safety or quality standards
63
Describe the impact of government legislation
Additional bureaucracy increases cost of importing goods
64
Define domestic subsidies
Financial contributions from government to domestic producers
65
Describe the impact of domestic subsidies
Reduces cost of production, allowing domestic businesses to become more price competitiveness
66
What are the protectionist policies?
Tariffs
Import Quotas
Government Legislation
Domestic Subsidies
67
Compare a foreign and a domestic business
A domestic business is local (within its own country) whereas a foreign business is overseas
68
Give a LOA for the benefit of tariffs for a domestic business (8)
69
Give a LOA for the benefit of tariffs linked to increased FDI (8)
70
Give a LOA for the drawback of tariffs linked to inflation (8)
71
Give a LOA for the drawback of tariffs linked to reduced exports (7)
72
Give a LOA for the benefit of import quotas (7)
73
Give a LOA for the drawback of import quotas (6)
74
Give a LOA for the benefit of subsidies (8)
75
Give a LOA for the drawback of subsidies (6)
76
Give a LOA for government legislation as a protectionist policy (7)
77
Describe the drawback of government legislation as a protectionist policy
Increased price of foreign materials/goods - increased cost of sales - potential cost push inflation
78
Define globalisation
The process by which countries are becoming increasingly economically integrated and interdependent
79
What factors can contribute to increased globalisation?
Containerisation
Political change
Migration
Trade liberalisation
80
Define trade liberalisation
the reduction or removal of barriers—such as tariffs, quotas, and regulations—that restrict the free flow of goods and services between nations (freedom of trade)
81
What can higher trade barriers do?
For businesses, they raise costs and reduce competitiveness, weakening the links between economies
For national economies, reduced trade lowers efficiency and economic growth
82
What is trade liberalisation also known as?
Reduction of international trade barriers
83
Give a LOA for the benefit reduction of international trade barriers/trade liberalisation (4)
84
Give a potential drawback of the reduction of international trade barriers/trade liberalisation
Imports will be cheaper so increased imports makes domestic businesses less competitive as foreign goods are more widely accessible
85
Give a LOA for political change (6)
86
Give a LOA for the reduced cost of transport (containerisation) (7)
87
Give a LOA for the reduced cost of communication (4)
88
Describe the increased significance of global (transnational) companies
Multinational companies operate in many countries and spread production globally.
They increase global trade, lower costs, and create jobs.
However, they can dominate markets, avoid tax, and reduce competition.
89
Give a LOA for the increased significance of global (transnational) companies (4)
90
Give a LOA for increased investment flows (FDI) (4)
91
Describe migration with and between economies
Migration increases as countries become more connected.
Migrant workers fill labour shortages, increase output, and send money abroad (remittances).
However, it can cause political pressure, wage pressure in low-skilled jobs, and staffing problems if migration is restricted.
92
Give a LOA for migration within and between economies (5)
93
Describe growth of the local labour force
The global labour force has grown, especially from countries like China and India.
This increased production, lowered costs, and allowed outsourcing.
However, it has caused wage pressure and inequality in some developed countries.
94
Give a LOA for growth of the local labour force (4)
95
Describe structural change within globalisation
Structural change = shift from manufacturing to services.
Production moves to lower-cost countries.
Advanced economies focus on finance and technology.
This increases global supply chains but can cause job losses in some regions.
96
Give a LOA for structural change (4)
97
What are the factors that contribute to increased globalisation?
-reduction of international trade barriers/ trade liberalisation
-political change
-reduced cost of transport (containerisation)
-reduced cost of communication
-increased significance of global TNCs
-increased investment flows (FDI)
-migration
-growth of the global labour force
-structural change
98
What is a trading bloc?
Formed when a group of countries form an agreement to reduce trade barriers between the countries (trade liberalisation)
99
What are the benefits to a businesses demand if their country is in a trading bloc?
-being part of a trading bloc means that a businesses can become more price competitive to foreigners as they can buy them without a tariff
-due to the law of demand this new lower price leads to increased demand abroad which increases sales volume for the business
100
What is the benefit to a businesses cost of sales if their country is in a trading bloc?
-if a business is purchasing foreign goods they can do so without paying a tariff so can buy raw materials at a lower price leading to a lower cost of sales
101
How may trading blocs have a negative impact on businesses within the country?
-consumers may switch to foreign imports as they now become tariff free
-this lowers the price and it makes the price lower than that charged by domestic businesses
-then consumers will switch to the foreign imports causing a fall in demand
102
Give a LOA for the benefit of expansion of trading blocs linked to increased demand (8)
103
Give a LOA for the benefit of expansion of trading blocs linked to lower cost of sales (6)
104
Give a LOA for the drawback of expansion of trading blocs (8)
105
What are the factors prompting trade?
Push factors
Pull factors
106
What is meant by a push factor?
Where businesses feel they have to expand internationally because of domestic market issues
107
What is meant by a pull factor?
Where businesses are attracted by compelling opportunities to grow by expanding internationally
108
Name two push factors prompting trade
Saturated markets
Increased competition
109
Describe saturated markets as a push factor prompting trade
sales growth has stalled or is falling so difficult for firms to grow revenue except from taking market share from competitors. There may be a lack of product innovation so businesses may look for growth opportunties for the same product in overseas markets
110
Describe increased competition as a push factor prompting trade
Domestic firms may be faced with new market entrants who take market share, resulting in lower revenue in the domestic market which creates the incentive to pursue revenue elsewhere
111
Nama two pull factors prompting trade
Risk spreading
Economies of scale
112
Describe risk spreading as a pull factor prompting trade
Ansoffs matrix suggests that moving into new markets (overseas) involves greater risk (market development). However, trading internationally can spread the activities and revenue of a business over more markets, making the business less dependent on domestic demand and less vulnerable to sudden changes
113
Describe EOS as a pull factor prompting trade
Extending a business opportunities overseas provides an opportunity to increase output and access EOS, thereby reducing unit costs. This might involve offshoring production to lower cost economies.
114
What does offshoring mean?
Offshoring means moving production to another country with lower costs (tends to be in emerging economies)
115
Describe some benefits of offshoring
-lower costs if offshoring in specialist countries, improve efficiency, inc output, spread FC over more units, lower unit cost
-lower costs- labour costs
-may give business access to trading blocs, distribution without tarriffs/quotas = more price competitive
-marketing point, strengthens brand, improves PED
116
Describe some drawbacks of offshoring
-ethical issue if seen to be exploiting unregulated labour
-damage customer relations language barrier in a call centre
-increased costs associated with relocation/ shipping costs
-lack flexibility, difficult to keep up either fluctuations in demand, damage customer service
117
118
Describe what is meant by outsourcing
Outsourcing means contracting out part of the production process, a business function or project to a specialist external provider
119
Give some benefits of outsourcing
-lower costs, invest into establishing these operations themselves, lower costs= reduce price
-choose specialist business, quality of service provided is superior
-specialist business benefits from EOS, efficiency and productivity, lower costs
120
Give some drawbacks of outsourcing
-lack of control over the production process, reduced quality, damage brand image and customer relations, inc PED
-lack of flexibility, difficult for business to account for fluctuations in demand
-damage customer relations if outsourced business is located abroad and staff have language barriers
-if outsourced business located abroad, longer lead times, damages customer relations
121
Describe what is meant by assessment of a country as a market
Looking at a country and deciding if it is suitable to sell to
122
What are some factors to consider in the assessment of a country as a market? (5)
Ease of doing business score
Infrastructure
Political stability
Levels and growth of disposable income
Exchange rates
123
Give a LOA for the benefit of levels and growth of disposable income in the assessment of a country as a market location (6)
124
Give a LOA for the drawback of levels and growth of disposable income in the assessment of a country as a market location (7)
125
Give a LOA for the ease of doing business in the assessment of a country as a market location (7)
126
What should you consider for the however for the ease of doing business during the assessment of a country as a market location
Look at the case to see if there are other possible countries with a higher score or try and find a specific issue with that country. Also consider the fact that the score could change with time- e.g. in the long term there may be a lack of government investment into infrastructure which would reduce the score and make the area less attractive to invest in
127
Give a LOA for infrastructure in the assessment of a country as a market location (6)
128
What should you consider for the however for infrastructure during the assessment of a country as a market location
However, depends on the reliability of suppliers which may be effected by employer and employee relations- explain the impact a strike could have on the delivery of goods or choose an example from the case to say why the goods may not be delivered on time or why the country is not a suitable market location
129
Give a LOA for political stability in the assessment of a country as a market location (6)
130
Give a LOA for exchange rates in the assessment of a country as a market location (7)
131
What is meant by the assessment of a country as a product location?
Looking at a country to determine the best place to set up manufacturing or service facilities
132
What factors contribute to the assessment of a country as a production location (11)
Cost of production- average income/ wages
Costs of production- lack of legislation
Drawback of low cost of production
Skills of the labour force
Infrastructure
Location in a trade bloc
Government incentives- subsidies
Government incentives- tax rates
Political stability
Ease of doing business
Natural resources
133
Give a LOA for costs of production- average incomes/ wages in the assessment of a country as a product location (7)
134
Give a LOA for the benefit of costs of production- lack of legislation in the assessment of a country as a product location (7)
135
Give a LOA for the drawback of low cost of production in the assessment of a country as a production location (7)
136
Give a LOA for skills of the labour force in the assessment of a country as a production location (10)
137
Give a LOA for infrastructure in the assessment of a country as a production location (9)
138
Give a LOA for location in a trade bloc in the assessment of a country as a production location (8)
139
Give a LOA for government incentives- subsidies in the assessment of a country as a production location (8)
140
Give a LOA for government incentives- tax rates in the assessment of a country as a production location (8)
141
Give a LOA for political stability in the assessment of a country as a production location (9)
142
Give a LOA for ease of doing a business in the assessment of a country as a production location (10)
143
Give a LOA for natural resources in the assessment of a country as a production location (8)
144
Describe what is meant by global competitiveness?
How competitive a business’s products are on a global scale- link to porters generic strategies
145
What is glocalisation?
Glocalisation describes a product or service that is developed and sold globally, but is also adapted to meet the wants and needs of customers in a local market
146
What are the marketing approaches?
Ethnocentric
Geocentric
Polycentric
147
What is a ethnocentric marketing approach also known as?
Domestic
148
What is meant by an ethnocentric approach?
Selling the same product in multiple countries with the same marketing mix
149
What is a geocentric approach also known as?
Mixed
150
What is meant by a geocentric approach?
Selling the same product in multiple countries with a different marketing mix (although product remains the same)
151
What is a polycentric approach also known as?
International
152
What is meant by a polycentric approach?
Changing the entire marketing mix to suit the needs of customers in the new country
153
Define global niche markets
Targeting a niche consumer in multiple countries
154
Give a LOA for the benefit of global niche marketing (8)
155
Give a LOA for the drawback of global niche marketing (8)
156
What is meant by cultural and social factors in a global market?
Doing business across cultures can be challenging. Without understanding national and corporate cultures and languages, businesses are more likely to offend and can cause significant damage. Businesses must overcome ethnocentrism (the tendency of people to view their own cultures ethics and norms as superior and their own values as absolute). In other cultures there may be a different view of proper/ improper or right/wrong
157
What does MNC stand for?
Multinational company
158
What is an MNC?
A business that has operations in more than one country e.g. factories in one country, stores/shops in another
159
Give some key reasons for the emergence of MNCs
-global brands seeking to drive revenue and profit growth in emerging economies (particularly brands seeking rising demand from increasingly affluent customers)
-the search for EOS to reduce unit costs by focusing production in few key international locations
-the perceived need to supplement demand in existing, developed economies
-the need to operate in many countries to avoid protectionism
-increased takeover activity that has built businesses with widespread international operations
160
Give some benefits of MNC’s to the local economy
-MNC’s provide significant employment and training to the labour force in the host country
-transfer of skills and expertise, helping to develop the quality of the host labour force
-MNC’s add to the host country’s GDP through their spending e.g. local suppliers and capital investment
-competition from MNC’s acts as an incentive to domestic firms in the host country to improve their competitiveness, by raising quality or efficiency
161
Give some drawbacks of MNC’s to the local economy
-MNC’s may use transfer pricing and other tax avoidance measures to significantly reduce the profits on which they pay tax to the government in the host country
-MNCs may not feel that they need to meet the host country expectations for acting ethically or in a socially responsible way
-MNC’s may be accused of imposing their culture onto the host country, perhaps at the expense of richness of local culture
-domestic businesses may not be able to compete with MNC’s and some will fail
162
What is a host country?
A country that hosts an MNC’s assets
163
Why may some MNC’s have low levels of public trust?
Tax avoidance by MNC’s
Exploitation of workers & supply chain
Are MNC’s damaging domestic firms?
164
Why does tax avoidance by MNC’s create low levels of public trust?
MNCs are accused of using sophisticated tax planning schemes to avoid paying taxes on their activities. A challenge of addressing MNC tax is that they operate across so many different countries
165
Why does exploitation of workers ans supply chains cause low levels of public trust?
Some MNC’s are accused of exploitation of working conditions in developing economies in search of low production costs. The complexity of international supply chains makes it harder for MNC’s to control & monitor all aspects of their production
166
Why does MNCs potentially damaging domestic firms creates low levels of public trust?
Uber is one of the fastest growing MNCs and has faced significant resistance from national markets it has entered. However, in many national markets, domestic firms are proving able to compete with MNCs effectively, particularly in China
167
What are the ethical impacts of MNCs
Pay and working conditions
Environmental impact
Supply chain management
Marketing
168
Describe how pay and working conditions is an ethical impact of MNCs
Outsourcing production to capitalise on lower labour costs in LIDCs e.g. Bangladesh or Vietnam
169
Describe how environmental impact may be an ethical impact of MNCs
-MNCs operate globally so must ensure they do not deplete the worlds natural resources as environmental damage could cause financial and reputational damage whereas sustainability could lead to price inelastic
170
Describe how supply chains management can be an ethical impact of MNCs
A multinational business can’t claim to be an ethical firm if it ignores unethical practices by its suppliers e.g.
-use of child labour and forced labour
-production in sweatshops
-violating basic rights of workers
-ignoring health, safety and environmental standards
-an ethical business has to be concerned with behaviour of all businesses that operate in the supply chain (suppliers, contractors, distributors)
171
What is a ‘sweatshop’
A factory or workshop, often in the garment industry, where employees work long hours for extremely low wages under unsafe, unhealthy, or abusive conditions. These workplaces typically violate multiple labor laws regarding minimum wage, overtime, safety, and child labor
172
Describe how marketing could be an ethical impact of MNCs
Marketing is an ethical minefield for most businesses. Several MNCs have been damaged after being caught marketing in an apparently unethical (and illegal) way, particularly around pricing and false advertising
173
Name all the impacts of MNCs on the local economy (5)
-labour supply- impact on local businesses
-wages- impact on local businesses
-wages- impact on local community
-working conditions- impact on local community
-impact on the environment
174
Give a LOA for the impact of a MNC on labour supply for local businesses (7)
175
176
Give a LOA for the impact of MNC’s on wages for local businesses (8)
177
Give a LOA for the impact of MNCs on wages for the local community (7)
178
Give a LOA for the impact of MNCs on labour supply for local businesses (8)
179
Give a LOA for the impact of MNCs on working conditions on the local community (10)
180
Give a LOA for the impact of MNCs on the environment (local) (7)
181
Name the impacts of MNCs on the national economy (5)
-FDI flows
-Balance of payments
-Technology and skills transfer
-Consumers
-Business Culture
182
Give a LOA for the impact of MNCs on the national economy linked to FDI flows (8)
183
Give a LOA for the impact of MNCs on the national economy linked to balance of payments (7)
184
Give a LOA for the impact of MNCs on the national economy linked to technology and skills transfer (7)
185
Give a LOA for the impact of MNCs on the national economy linked to consumers (7)
186
Give a LOA for the impact of MNCs on the national economy linked to business culture (8)
187
What is transfer pricing?
An accounting practice that allows the establishment of prices for goods and services to be exchanged between the same business in different countries e.g. its lower tax rates to reduce corporation tax
188
How is transfer pricing done?
Companies have divisions that buy and sell from each other. The price they charge internally (transfer price) decides how profits are split between divisions. Higher prices move profit to the seller; lower prices move profit to the buyer. Companies may use this to shift profits to lower-tax countries.
189
Give a LOA for tax revenues and transfer pricing (8)
190
what is the difference between balance of payments and balance of trade?
Balance of trade is the difference in value between a country's imports and exports whereas balance of payments summarises the economic transactions of an economy with the rest of the world
191
Give a LOA for tax revenues and transfer pricing (8)
A Level Business
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