4.1 - Global Business

Question 1

Globalisation

Answer 1

Increasing interconnectedness of economies, businesses and cultures worldwide, leading to greater trade and investment between countries

Question 2

Key features of globalisation

Answer 2

1. Increased international trade
2. Greater Foreign Direct Investment
3. Expansion of Multinational Corporations
4. Advancements in technology and communication
5. Labour migration

Question 3

Factors contributing to globalisation

Answer 3

1. Trade liberalisation
2. Containerisation
3. Growth of Multinational Corporations
4. Advancements in technology

Question 4

Advantages of globalisation

Answer 4

1. Access to larger markets
2. Lower production costs
3. Greater consumer choice
4. Job creation
5. Transfer of knowledge and technology

Question 5

Disadvantages of globalisation

Answer 5

1. Small firms may struggle to compete with large Multinational Corporations
2. Job losses in developed countries
3. Exploitation of workers
4. Environmental damage
5. Economic dependence

Question 6

Emerging economy

Answer 6

Country experiencing rapid industrialisation, economic growth and increasing global trade

Question 7

Examples of emerging economies

Answer 7

1. Brazil
2. Russia
3. India
4. China
5. South Africa

Question 8

Advantages of operating in an emerging economy

Answer 8

1. Lower labour costs
2. Expanding consumer markets
3. Great potential for joint ventures and acquisitions

Question 9

Disadvantages of operating in an emerging economy

Answer 9

1. Political and economic instability
2. Cultural differences
3. Weak infrastructure

Question 10

Human Development Index

Answer 10

Measure to assess a country’s overall development based on health measured by life expectancy at birth, education measured by average years of schooling and standard of living measured by Gross National Income per capita

Question 11

Advantages of the Human Development Index

Answer 11

1. Holistic measure
2. Easy to compare
3. Focus on human welfare

Question 12

Disadvantages of the Human Development Index

Answer 12

1. Ignores inequality
2. Doesn’t include environmental factors
3. Doesn’t take into account income distribution

Question 13

Advantages of international trade

Answer 13

1. Increased competition
2. Economies of scale
3. Can create jobs reducing poverty

Question 14

Disadvantages of international trade

Answer 14

1. Environmental impact
2. Overdependence on foreign markets
3. Structural unemployment as patterns of trade change

Question 15

Exports

Answer 15

Goods and services produced in one country and sold to buyers in another country

Question 16

Imports

Answer 16

Goods and services bought from foreign countries for domestic consumption

Question 17

Specialisation

Answer 17

When individuals, business or countries focus on producing a limited range of goods or services that they are most efficient at producing

Question 18

Advantages of specialisation

Answer 18

1. Increased efficiency
2. Economies of scale
3. Increased innovation and higher quality products

Question 19

Disadvantages of specialisation

Answer 19

1. Overdependence on one industry
2. Job losses in some sectors
3. Supply chain disruptions

Question 20

Foreign Direct Investment

Answer 20

When a business or individual from one country invests in a business or assets in another country

Question 21

Advantages of Foreign Direct Investment

Answer 21

1. Boosts economic growth
2. Technology transfer
3. Improves infrastructure

Question 22

Disadvantages of Foreign Direct Investment

Answer 22

1. Loss of domestic control
2. Profit repatriation
3. Risk of exploitation

Question 23

Free trade

Answer 23

Exchange of goods and services between countries without tariffs, quotas, or other trade barriers. It allows businesses to import and export products without government restrictions

Question 24

Advantages of free trade

Answer 24

1. Greater consumer choice
2. Encourages competition and innovation
3. Encourages specialisation

Question 25

Disadvantages of free trade

Answer 25

1. Domestic firms may struggle 2. Job losses in some industries 3. Environmental concerns

Question 26

World Trade Organisation

Answer 26

International organisation that regulates and promotes global trade by ensuring that trade flows smoothly, predictably, and freely

Question 27

Protectionism

Answer 27

Government policies that restrict international trade to protect domestic industries from foreign competition

Question 28

Methods of protectionism

Answer 28

1. Tariffs 2. Import quotas 3. Subsidies

Question 29

Tariff

Answer 29

Tax or duty placed on imported goods, making imported goods more expensive in order to reduce foreign competition and protect domestic industries

Question 30

Import quota

Answer 30

Government-imposed limit on the quantity of a specific good that can be imported into a country over a set period

Question 31

Subsidies

Answer 31

Financial support provided by the government to businesses, industries, or individuals to encourage production, reduce costs, or make goods and services more affordable

Question 32

Advantages of protectionism

Answer 32

1. Protects domestic jobs 2. Infant industry protection 3. Protection against import dumping

Question 33

Disadvantages of protectionism

Answer 33

1. Higher prices for consumers 2. Retaliation from other countries 3. Extra costs for exporters

Question 34

Trade bloc

Answer 34

Group of countries that agree to reduce or eliminate trade barriers between them, such as tariffs, quotas, and import restrictions. This helps to increase trade and economic cooperation amongst member nations

Question 35

Advantages of trade blocs

Answer 35

1. Increased trade 2. Increased Foreign Direct Investment 3. Greater competition means lower prices for consumers

Question 36

Disadvantages of trade blocs

Answer 36

1. Exclusion of non-members 2. Trade diversion 3. Loss of sovereignty

Question 37

European Union

Answer 37

Political and economic union of 27 European countries that work together to promote economic growth, trade, and political cooperation

Question 38

Four freedoms of the European Union

Answer 38

1. Free trade in goods 2. Mobility of labour 3. Free movement of capital 4. Free trade in services

Question 39

Main export partners for the UK economy

Answer 39

1. United States (16.1%) 2. Germany (8.8%) 3. Netherlands (7.7%)

Question 40

Main import partners for the UK economy

Answer 40

1. Germany (12.5%) 2. United States (10%) 3. China (9.8%)