Theme 4 A Level Business > Theme 4.1 : Globalisation > Flashcards

Theme 4.1 : Globalisation Flashcards

(59 cards)

Study These Flashcards
1
Q

Gross Domestic Product (GBP)

A

The size of the economy, the higher the GDP the greater the size of the potential market

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2
Q

GDP per capita

A

Shows the average income per person

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3
Q

High GDP per capita

A

Higher income, the greater the potential to export to the country

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4
Q

Low GDP per capita

A

Lower value, the better to produce products there (unless skilled labour is required)

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5
Q

Economic Growth

A

Shows the increase in output per year

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6
Q

High economic growth

A

Good if you are looking to sell to the country or are a business locating there

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7
Q

Employment patterns

A

Shows the workforce of the country

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8
Q

Human Development Index (HDI)

A

The skills and education of the population

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9
Q

Low HDI

A

May be acceptable for textiles

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10
Q

Purchasing Power Parity (PPP)

A

Shows the purchasing power in countries. HIC = Higher prices, LIC = Lower prices

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11
Q

China’s population

A

1.4 billion

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12
Q

China’s economy

A

2nd in the world

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13
Q

Goods made in China

A

Western products like iPhones

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14
Q

China’s economic growth

A

Around 6% each year

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15
Q

British brands succeeding in China

A
  • Rolls Royce
  • Burberry
  • Land Rover
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16
Q

British brands failing in China

A
  • Tesco
  • B&Q
  • M&S
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17
Q

India’s Population

A

Nearly 1.5 billion

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18
Q

Goods/services from India

A

Large call centre and textile industries

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19
Q

India’s economy

A

Growing at around 7% each year

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20
Q

British companies operating in India

A
  • BT
  • BP
  • HSBC
  • Tesco
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21
Q

Tata

A

An Indian company who took over Jaguar-Land Rover

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22
Q

China and India opportunities

A
  • Large export market
  • Many millionaires for luxury goods
  • Cheap outsourcing
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23
Q

China and India threats

A
  • Cheaper options put UK manufacturers out of business
  • Copying IP (Land Wind)
  • Foreign companies operating in UK
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24
Q

Advantages to host country of FDI

Study These Flashcards
A
  • Skills and tech transferred
  • Jobs
  • Economic growth
  • Positive multiplier
25
Disadvantages to host country of FDI
- Local businesses close down - Take profits to home country - Skilled jobs to their own country’s people - Avoiding tax
26
Advantages to the multinational of FDI
- Economies of scale - Target market expands - Avoid tax - Access trading blocs
27
Disadvantages to multinationals of FDI
- Higher costs - Exchange rates - Local businesses close down - Cultural differences - Language barrier
28
Specialisation
Some countries specialise in certain products and produce them more (Malaysia and palm oil)
29
Comparative Advantage
Countries should produce what they’re good at, in exchange for goods they aren’t good at
30
Advantages of a business specialising
- Specialist staff experienced in one area - R&D is focused on one thing - Consumers associate one brand with product - Premium price
31
Disadvantages of a business specialising
- Risky (all eggs, 1 basket) - Competitors can have major impact on sales - Changing market conditions - Consumer tastes/trends
32
Advantages to a country of specialisation
- The country can reap economies of scale - Country becomes associated with the product, so businesses go there - Job creation
33
Disadvantages to a country of specialisation
- All eggs one basket - New countries enter the market - May be undercut by cheaper countries - Market conditions (ie coffee prices decrease, impacts Columbia)
34
Exports
Sending goods to another country
35
Imports
Getting goods from another country
36
Protectionism
Protecting domestic industries from foreign interference
37
Tariff
A tax on imports
38
Export subsidy
Money given to domestic firm to reduce costs below overseas competitors
39
Quota
Limit put on the amount of imports allowed in a country
40
International marketing
Selling goods overseas
41
Overseas agent
Salesperson in an overseas market who is employed on a commission basis to sell imported products
42
Overseas subsidiary
setting up a factory in another country to produce the product
43
Integration of economies is made possible by…
- tech and transport - communication - internet - trading blocs
44
Benefits of trade
- choice of goods - growth for developing economies - employment - tech to developing economies
45
Disadvantages of trade
- increased poor/rich gap - exploiting workers - tax avoidance - loss of cultural identity
45
Corporate expansion
- MN and TNCs operate in other countries with home office in original country - Globalisation allows this
46
Corporate domination
- Environment - Exploiting labour - Damage to cultures - Tax evasion - Monopoly
47
Factors contributing to globalisation
- Reduced trade barriers - Political change - Reduced transport costs - Migration - Global companies
48
Advantages to a business of globalisation
- Larger markets - Global brand - Source raw materials - International labour force
49
Disadvantages to a business of globalisation
- Extreme competition - Local firms can’t compete - Undercut due to foreign subsidies
50
The EU
European trading bloc, complete free trade & movement of people
51
NAFTA
North American Free Trade Agreement Free Trade only - ended by Trump
52
ASEAN
Asian free trade area
53
Common market
an area where goods capital and labour are free to move without restriction. Tariff free trade
54
Customs union
All barriers are removed, members protect against other non members
55
Economic and Monetary Union
Single market and currency (ie Euros in the EU)
56
Free Trade Area
Complete free trade, with different barriers against non members
57
Single market
All barriers removed, common laws regarding trade
58
Trading bloc
Group signed a regional trade deal to reduce or eliminate tariffs, quotas and protectionist measures
Theme 4 A Level Business
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