3.1.2 Patterns of production, distribution and consumption Flashcards
Containerisation
A system of standardised transport that uses standard-size steel boxes to transport goods. These can be transferred between ships, trains and lorries, enabling cheaper, efficient transport.
Protectionism
A deliberate policy by governments to impose restrictions on trade in goods and services with other countries – usually done with the intention of defending home-based industries from foreign competition.
Footloose
When a business can locate anywhere with internet and can serve customers worldwide.
Tariffs
A tax or duty placed on imported goods with the intention of making them more expensive to consumers so that they do not sell at a lower price than home-based goods.
High-level services
Services to businesses.
E.g. Finance, investment, law, advertising
Low-level services
Services to consumers. E.g. Cleaning, travel, call centres, communication services
Global marketing
Strategies that are affecting the structure of a modern global business.
E.g. Sony, a Japanese tech company moved their global HQ from Japan to the US in 2017 in order to have all decisions made closer to where it happens.
Conglomerates
A collection of different companies or organisations which may be involved in different business activities but all report to one parent company.
E.g. Most TNCs.
TNC
An organisation that operates in one or more countries, with no centralised management system.
E.g. Apple
Economies of scale
The cost advantages that result from the larger size, output or scale of an operation as savings are made by spreading the costs or rationalising operations.
Production
The manufacturing from raw materials to the point when they are ready for delivery.
Distribution
Networks and organisational routes trough which goods are transported or delivered to their markets.
Consumption
The act of purchasing the goods for final/end use.
The Global Shift
Where manufacturing moved from HICs to NEEs.
Likely causes of the global shift
- Technological advancements with improved distribution
- More unionised workforce in HICs, with strict regulations and higher wages.
- Relaxed or non-existent environmental regulations in NEEs
What did the global shift cause in HICs?
De-industrialisation
What happened to employment in manufacturing in the 30 years between 1983 and 2013?
Fell by around 50%
Nissan in Sunderland
Nissan moved to North East England (Sunderland), with the aim of gaining access to EU markets. The CEO of Nissan said Nissan would likely withdraw from the UK if Brexit happened (but they haven’t left).
This was encouraged by the government providing free land – this was a large piece of brownfield land, with good infrastructure. It is flat and close to nearby ports.
Why did Nissan move to Sunderland?
By moving to the UK, they could get quota/tariff free trade in the EU market.
- (They went against the global shift).
What did de-industrialisation do to the North East?
The North East was home to many skilled industries (e.g. coal mining/steel) which closed down, leaving many unemployed.
Special Enterprise Zones (SEZ)
Area of land given by the government which comes with benefits for investors, such as reduces taxes and regulation.
Why do TNCs relocate?
- Special Enterprise Zones (SEZs)
o Tax incentives
o Cheaper land - Cheaper/plentiful labour
- Relaxed regulations
- Unionised HICs
- Technology
- Stable government
- Trade agreements/access to markets
Positives of the global shift
- Cut costs for consumers
- New industry for new country
- Cheaper manufacturing, and therefore more profits for TNCs
- Jobs in NEEs
- Investment from TNCs (FDI)
- New markets for NEEs
- Information/service shift of employment in HICs.
- Opportunity to retrain
Negatives of the global shift
- Job losses
- Deindustrialisation
- Long-term generational and structural unemployment in HICs
- Poorer working conditions; vulnerable to exploitation
- Unskilled labour unemployed
- Decline of industrial heartlands – negative multiplier effect.
- Relaxed environmental laws, leading to exploitation
- Created outmigration
Marks & Spencer in China
M&S is a UK brand started in Leeds, however one of their largest stores is in Beijing, China.
A new consumer/middle class is emerging In China, as they moved from producers to consumers.
China is known as a “two speed society” because there is economic inequality.
M&S first opened a store in China (Shanghai) in 2008.
Specialisation
Where a company focuses on a specific task. This helps to improve efficiency and means resources can be better allocated, allowing for production to be increased.
Case study for specialisation
Songxia (umbrella city)
Umbrella City (Songxia)
- Around 70% of the world’s umbrellas are made in China.
- Described as the umbrella capital of the world.
- Half a billion umbrellas are made here annually in 1200 factories.0
- A single worker makes 300 umbrellas per day.
Comparative advantages
Where a country/company can produce a good or service at a lower opportunity cost than another.
Application of comparative advantages to Umbrella City
To apply to this situation, Songxia is able to produce umbrellas at a lower cost than other places. This gives them an advantage and encourages production to stay in the region.
Opportunity cost
The value foregone on the next best alternative.
