1e-Business & the internation Flashcards
Q: What is globalisation?
A: Globalisation is the economic integration of countries through trade, finance, technology, and movement of people.
Q: What are imports and exports?
A:
Imports – Goods/services bought from other countries (e.g., UK imports cars worth £3.25 billion).
Exports – Goods/services sold to other countries (e.g., China’s biggest export in 2022 was smartphones worth $21.4 billion).
What are the reasons for globalisation?
1-Technology
2-Improved transport
3-Deregulation
4-Government support
5-Market Saturation
6-Familiarity with Global Brands
What are the reasons for globalisation?
Technology
Technology
Faster communication, online sales, and data transfer.
What are the reasons for globalisation?
Improved transport
Improved Transport
Easier international business travel & distribution.
What are the reasons for globalisation?
Deregulation
Deregulation
Fewer trade barriers and simpler financial systems.
What are the reasons for globalisation?
Gov support
Government Support
Policies encouraging free trade and investments.
What are the reasons for globalisation?
Market saturation
Market Saturation
Businesses expand internationally when domestic markets become full.
What are the reasons for globalisation?
Familiarity with Global Brands
Familiarity with Global Brands
Tourism and media increase consumer awareness of global brands.
How does globalisation benefit businesses?
A:
1-Larger Markets
2-Economies of Scale
3-Access to Labour
4-Favourable Tax Rates
How does globalisation benefit businesses?
Large markets
Larger Markets
More customers worldwide, increasing revenue.
How does globalisation benefit businesses?
Economies of scale
Economies of Scale
Higher sales reduce costs and increase competitiveness.
How does globalisation benefit businesses?
Access to labour
Access to Labour
Overcomes domestic labour shortages, finds skilled workers globally.
How does globalisation benefit businesses?
Favourable Tax Rates
Favourable Tax Rates
Companies locate headquarters in low-tax countries (e.g., Ireland).
How does globalisation benefit businesses?
Case study: Huawei
Case Study Example:
Huawei sells electronics in 170+ countries, earning CN¥73.05 billion in 2023.
Unilever operates in 190 countries, benefiting from economies of scale.
What risks does globalisation create for businesses?
1-Increased Competition
2-Need for a Niche
3-Takeover Risks
4-External Shocks
Exam Tip: When asked about globalisation’s impact, check whether the question refers to businesses, workers, or consumers.
What risks does globalisation create for businesses?
Increased competition
Increased Competition
Foreign businesses may have lower costs and economies of scale.
What risks does globalisation create for businesses?
Need for a Niche
Need for a Niche
Businesses must differentiate to survive.
What risks does globalisation create for businesses?
Takeover risks
Takeover Risks
Local PLCs can be acquired by larger global firms (e.g., Cadbury’s takeover by Kraft in 2009).
What risks does globalisation create for businesses?
External Shocks
External Shocks
Global crises impact interconnected businesses (e.g., 2021 Suez Canal blockage delayed supply chains worldwide).
What is a multinational corporation (MNC)?
A: An MNC is a business that operates in multiple countries, like Starbucks (80+ countries, 32,000+ stores).
Why do MNCs expand globally?
Lower costs – Cheaper labour & raw materials (e.g., Nike manufactures in China & Vietnam).
Large customer base – Global presence increases sales.
Brand recognition – Helps dominate markets.
Bypass trade barriers – Setting up in trade bloc countries avoids tariffs.
Tax Benefits – Some MNCs locate in low-tax countries like Ireland or Cyprus.
What are the drawbacks of being an MNC?
1-Complex Tax Laws
2-Reputation Issues
3-Political Instability
What are the drawbacks of being an MNC?
Complex tax laws
Complex Tax Laws
Different tax rules increase costs.
What are the drawbacks of being an MNC?
Reputation issues
Reputation Issues
Accused of exploiting workers and resources.
What are the drawbacks of being an MNC?
Political instability
Political Instability
Corruption or conflicts disrupt operations.
What are the drawbacks of being an MNC?
Case study
Case Study Example:
Samsung shares patented tech for free to support South Korean SMEs.
Diageo (drinks company) trains and employs 6,500 workers across Africa.
How do MNCs impact local stakeholders?
Local Residents
Local Residents
pos :Job creation, better training
Neg: Low wages, poor working conditions
How do MNCs impact local stakeholders?
Local Businesses
Local Businesses
Increased demand for supplies
MNCs outcompete small firms
How do MNCs impact local stakeholders?
Government
Government
Higher tax revenue
MNCs sometimes evade taxes
How do MNCs impact local stakeholders?
Economy
Economy
Investment in infrastructure
Resource depletion
How do MNCs impact local stakeholders?
Case study
Case Study Example:
Nissan in Sunderland brought jobs and funding for local infrastructure.
China invested $600m in Costa Rican roads and sports facilities in exchange for market access.
What is an exchange rate?
A: The value of one currency in terms of another (e.g., £1 = €1.18).
Q: What is appreciation and depreciation?
A:
Appreciation – Currency value increases (e.g., £1 = €1.18 → £1 = €1.25).
Depreciation – Currency value decreases (e.g., £1 = €1.18 → £1 = €1.05).
How do exchange rate changes affect businesses?
Appreciation (Strong £)
Appreciation (Strong £)
impact on exporters: More expensive, harder to sell
impact on importers : Cheaper imports reduce costs
How do exchange rate changes affect businesses?
Depreciation (Weak £)
Depreciation (Weak £)
impact on exporters: Cheaper, more competitive abroad
impact on importers : More expensive imports increase costs
How do exchange rate changes affect businesses?
Example
Example:
SPICED – Strong Pound Imports Cheaper, Exports Dearer.
Dublin’s Nana’s Upholstery buys fabric from Scotland at £8,500 × 1.18 = €10,030.
