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MS ELHABASSI BUSINESS > 4.1 Globalisation > Flashcards

4.1 Globalisation Flashcards

1
Q

What are the features of emerging economies?

A
  • Rapid industrialisation
  • have potential to become developed countries
  • faster long term economic growth
  • many still in poverty with economic growth taking many out.
  • businesses struggle to access global markets.
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2
Q

What are the perceived business threats from emerging countries?

A
  • Large pool of labour and cheap labour = comp prices
  • undervalued protection of brand and other intellectual property (fake goods)
  • state subsidy of industry to make them more competitive globally
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3
Q

What are business opportunities in emerging economies?

A
  • Growing number of educated middle class consumers = increase spending
  • cultural shifts - higher demand for personal products, private and healthcare
  • demand for infrastructure and other products and services from developed economies
  • source of high skilled labour but low cost
  • great potential for joint venturer.
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4
Q

What is a joint venture?

A

2 businesses came together to share resources

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5
Q

What is an acquisition?

A

Takeover more than 50% of the business

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6
Q

What is economic growth?

A

Increase in a countries productive capacity, usually measured using GDP

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7
Q

What are the BRICS countries?

A

Brazil, Russia, India, China, South Africa

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8
Q

What are the MINT countries?

A

Mexico, Indonesia, Nigeria, Turkey

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9
Q

What are the main effects of globalisation?

A
  • Expansion of trade between countries
  • increase in transfers of financial capital across national boundaries
  • global brand
  • production and consumption shifts
  • labour migration
  • shifts in economic and political strength
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10
Q

Why are emerging economies likely to continue having high rates of growth?

A
  • Urbanisation process continues to develop quicker
  • industrialisation - especially in east Asia and south Africa
  • population growth = large pool of labour
  • per capita income growth rise of middle classes and consumer society
  • workforce continually improves skills and be more productive
  • technological innovation in many emerging countires
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11
Q

What are employment patterns?

A
  • changes in migration, working women, multi-jobs, home working
  • moving away from agriculture
  • structural change in employment from primary to tertiary sectors
  • increase service sector as incomes rise
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12
Q

What are the 6 indicators of economic growth?

A
  • GDP
  • GDP per capita
  • PPP
  • health
  • literacy
  • HDI
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13
Q

What is international trade?

A

Exchange of capital goods and services across international borders or territories

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14
Q

What factors need to be considered when trading internationally?

A
  • exchange rates
  • tariffs
  • stage of the econ cycle abroad and here
  • transport of goods
  • external shocks
  • international competitiveness
  • time zones
  • cost
  • freight shipping in bulk
  • customs
  • legislation
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15
Q

What is an import?

A

Goods that are made in specific countries and bought in another country

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16
Q

What is an export?

A

Goods that are manufactured in a country and sold abroad

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17
Q

What is specialisation?

A

Comes from the division of labour - workers specialise in specific / particular productive activity

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18
Q

What is a comparative advantage?

A

The ability of a country to produce goods and services at a lower opportunity costs than other firms or individuals can be found through specialisation

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19
Q

What is a competitive advantage?

A

Advantage over competitors through differentiation/cost advantage. Allows businesses it achieve a higher position in the market

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20
Q

Benefits of specialisation?

A
  • increased productivity and output
  • reduced average costs
  • economies of scale
  • comparative advantage over next best country
  • GDP growth
  • economic growth
  • increasing sales
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21
Q

Drawbacks of specialisation?

A
  • over reliant on one industry
  • harder to compete (other countries become cheaper)
  • DEOS
  • lack of communication
  • coordination
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22
Q

What is FDI (foreign direct investment)?

A

The purchase of a foreign company or setting up production in another country. It is the movement of cash from one country to another via a business venture

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23
Q

How can FDI occur?

A
  • through a new factory una another country
  • through acquisition or a merger with a foreign country
  • through investment in an existing foreign country
24
Q

What is greenfield/vertical FDI?

A

Build a completely new business in another country
Eg a MacBooks processor is built in LA and the main body in Taiwan

25
Q

What is brownfield/horizontal FDI?

A

Same production activity in multiple countries

26
Q

Benefits of FDI to nations?

A
  • brings jobs and employment
  • employees have disposable income
  • boost to the economy known as the multiplier
  • new tech and new markets
  • increases exports
27
Q

What is trade liberalisation?

A

Removing barriers to trade. Process by which trade is made easier through a relaxation of rules which govern it

28
Q

What are the benefits of trade liberalisation to businesses?

A
  • Diversified risk and channels resources to where returns on investment are the highest
  • cheaper raw materials
  • larger market
  • competition, investment and increased productivity
29
Q

What are the features of globalisation?

A
  • Goods and services being traded
  • People can live and work in any country of choice
  • high level of interdependence
  • capital flows freely between countries
30
Q

What is the reduction of international trade barriers?

A

Trade liberalisation = process by which international trade is made easier, reduction in tariffs and quotas

31
Q

Benefits of trade liberalisation?

A
  • Consumes can access cheaper products
  • reduces cost of raw materials
  • larger range of goods
  • Broader quality
  • diversifies risk
  • opens up competition
  • increase investment
  • Increase productivity
  • promote innovation
  • lower prices (possibly)
32
Q

Drawbacks of trade liberalisation?

A
  • Squeezed profit margins
  • Employment created but is mostly temporary
  • pollution - carbon emissions
  • over cultivation
  • competition may increase
  • developing nations can become economically dependent on developed economies
33
Q

What are the factors contributing to increasing globalisation?

A
  • trade liberalisation
  • political change
  • reduced cost of transport communication
  • Increased significance of transnational company’s
  • increased FDI
  • migration
  • growth of Labour force
  • structural change
34
Q

How does the cost of transport and communication affect globalisation?

A
  • Developments in transport
  • makes countries closer (shrinks the world)
  • reduced cost of comms
35
Q

How does FDI contribute to globalisation?

A
  • movement of money
  • creates jobs
  • lower costs of production
  • free movement of goods
  • gives a country income generation
  • GDP growth
  • skills transfer
36
Q

How does migration contribute to increasing globalisation?

A
  • TNCs move to less developed countries moving jobs to the migrants rather then the other way round
  • provides low income workers for host nation as well as skilled workers
37
Q

How does a growing labour force contribute to globalisation?

A
  • Migration
  • increases demand
  • higher employment = increased output
  • increased spending
  • rising supply of labor drives wages down
  • keeps costs down
  • boosts number of global businesses
38
Q

How does structural change contribute to globalisation?

A
  • An economic condition occurring when an industry changes the way it operates
  • moving away from the primary sector to manufacturing
  • develops knowledge
  • rise of new economic powers driven by LEDC
  • generates subs
39
Q

What is protectionism?

A

Giving preference to home producers by making it hard and more expensive for overseas companies to export to your country

40
Q

What are the advantages of tariffs?

A
  • domestic produced goods are cheaper
  • domestic businesses gain a competitive advantage due to being cheaper than imported goods
  • ensures better job security
  • protects up and coming businesses
  • aids econ growth by improving gdp
  • raises important tax revenue
  • improves balance of trade
41
Q

What are the disadvantages of tariffs?

A
  • high price won’t put many off
  • unfair competition
  • tariff just increases consumer price
  • restricts volume of trade
  • other countries may respond by imposing tariffs
42
Q

what is a quota?

A

limit on the quantity that can be imported

43
Q

Why are quotas imposed?

A
  • protects jobs
  • bargaining chip
  • less risky
  • protect strategic industries
44
Q

What are the advantages of quotas?

A
  • boosts local investment
  • protects domestic business
  • job opportunity
  • goods become less expensive
45
Q

What are the disadvantages of quotas?

A
  • may last too long (used for infant businesses)
  • difficult to measure degree of protection
  • complex for the country using them
  • may cause a competition reaction which will limit both economies
46
Q

what are other trade barriers?

A
  • subsidies/tax breaks
  • govt legislation
  • product quality requirements
  • technical barriers to trade
47
Q

what are technical barriers to trade?

A

standards that set out specific characteristics such as size, shape , design, function and performance

48
Q

what do subsidies do?

A
  • increases competitiveness for firm
  • makes local goods cheaper on the domestic market
  • artificially raises the price of foreign goods
  • protects domestic businesses
49
Q

what is a trade bloc?

A

type of intergovernmental agreement to reduce regional trade barriers

50
Q

What is the EU?

A

a single market trade bloc with 27 members, 20 of which make up the eurozone

51
Q

what is a common/single market?

A

guarantee of free movement of good, services, capital and labor

52
Q

What is ASEAN?

A

Association of south east Asian nations - it has 10 members, over 600 million people living in the region

53
Q

What is NAFTA?

A

3 members - Canada, Mexico, US
North America free trade agreement
Over 500 million residents

54
Q

Advantages of trading blocs?

A
  • freedom to trade
  • Enlarged market
  • protectionism from international competition outside the bloc
  • freedom of movement of people
55
Q

What are the disadvantages of a trading bloc?

A
  • retaliation
  • protectionist
  • competition increase
  • common factor that together becomes a common problem

MS ELHABASSI BUSINESS (7 decks)

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