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A-Level Business 📈 > 4.1.1 Growing Economies > Flashcards

4.1.1 Growing Economies Flashcards

1
Q

What is economic growth?

How is it usually measured? 

A

An increase in the country productive capacity 

Usually measured using GDP

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2
Q

What is GDP?

A

A measure of the countries economic activity include product and services produced in a year

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3
Q

what are emerging economies?

A

Economies that are in the process of rapid growth and industrialisation

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4
Q

What are the BRIC economies ? Why is it significant?

A

Brazil
Russia
India
China
South Africa

Because of scale and growth rate 📈

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5
Q

What is the largest BRIC economy?

A

China 🇨🇳

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6
Q

what has Brazil entered?

A

A prolonged recession

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7
Q

why did BRIC grow rapidly?

A

Very Large populations

Access to large amount of natural resources

large landmasses

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8
Q

what are the Mint economies ? 

A

Mexico 🇲🇽
Indonesia 🇮🇩
Nigeria 🇳🇬
Turkey 🇹🇷

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9
Q

What do MINT economies have 

A

Very Favourable demographics

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10
Q

Why would MINT economies grow rapidly

A

Expanding population

Young population to large working age population

Cheap labour force

Significant geopolitical positions

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11
Q

What are the implications of economic growth towards a business? (5)

What are customers more likely to have?

A

Potential to increase profits Business enters new markets- gain more customers

Customers are more likely to have income elastic demand in increasing sales

Reduce cost of production benefit from lower labour costs

Increased trade opportunities

increased FDI and investment

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12
Q

What are The impacts of individuals of economic growth?

A

Reduced Unemployment

Increase in average income

Access to quality public services

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13
Q

what are the four key indicators of growth?

A

GDP- total economical output of the country

Literacy - take in account the number of adults that can move right

health - looks like being such as infant mortality rate and access to healthcare

HDI - human development index - combines factor of life expectancy education and income to determine the quality of life

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14
Q

What are the three issues with the development indicators? (3)

A

doesn’t take into account social issues

Data Collection methods can vary from country to country

manipulation of data- countries may lie for Aid

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15
Q

What is PPP?

A

Measurement of price for specific goods in different countries used to compare the absolute purchasing power of countries currencies

Purchasing powers parity

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16
Q

What is the positives of specialisation?

A

Increase productivity increase output

increased sales production - EOS - can lead to increased GDP growth

resources are devoted to an industry

Competitive Advantage

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17
Q

What are the disadvantages of specialisation?

A

Over reliance on one industry

over reliance on one industry they become other countries may become too cheap

May become too big - diseconomies of scale

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18
Q

What is protectionism?

A

The Governments approach to protect domestic products

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19
Q

What is a Tariff ?

A

Tax put on the imported goods to make them more expensive

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20
Q

What are the pros and cons of tariffs?

A

Cons
Increase cost of imported materials - raw material more expensive for businesses

Reduced Competition - domestic firms - may become inefficient

Reduce choice for consumers more expensive consumers may be unable to afford goods

Pros

Protect smaller industries so that they can eventually become competitive globally

An increase in government tax revenue

Reduction in dumping of foreign businesses so they cannot sell below market price

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21
Q

What is the import quota?

A

Physical limit of imports that are allowed in the country

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22
Q

What Are positives and negatives of import quotas?

A

To meet extra demand they may need to employee new workers reduces unemployment and benefits wider economy

The higher price of the product may encourage new businesses to start up in the industry

Countries can can easily change quotas as conditions changed in the market

One countries can be quotas as less confrontational as tariffs

Negatives

Quoters limited supply of product the price product rises

cause tension between trading partners

Efficiency of domestic firms may decrease due to quotas reducing levels of competition

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23
Q

What is globalisation?

A

Describes Growing interdependence of the worlds economies, culture, economy, and population

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24
Q

What has globalisation led businesses to be?

A

to be more integrated and independent
Dynamic

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25
Q

What is globalisation not?

A

it’s not an inevitable.
It can be slowed due to economical crisis

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26
Q

What are the factors that cause globalisation? Eg? How do they increase globalisation ?

A

Trade liberalisation - the process at which trade is made easier due to the rules that govern it being relaxed

Made it easier for businesses to trade globally - less regulatory hurdles increase the opportunity for businesses to make more diverse products for consumers-
countries have become more dependent on products produced and will demand for the variety

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27
Q

What is FDI?

A

Foreign direct investment investing by setting up operations in another country

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28
Q

Why do businesses want to use FDI?

A

Managers want to keep a tight control over operations and need to be close to consumers

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29
Q

What are the six things protectionism protects?

A

Jobs - allows domestic businesses to keep on producing needs for employment

Infant industries - to grow and be established to exploit economies of scale - gov hard time identifying

Prevent dumping - when foreign goods are inputted into the country below domestic market prices

Preventing entry of harmful goods

improving balance of payments - prevents payments deficit 💸-when the costs of imports exceed the income on exports

  • helps government keep control
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30
Q

What are the two other things that help with protectionism?

A

Government legislation - administrative barriers can be faced

Subsidies- financial support given to domestic producers to help compete with overseas firms -

help lower prices for consumers
- reduces the costs of production have a competitive advantage against expensive foreign businesses

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31
Q

What are trading blocs?

A

When group of countries form an agreement to reduce or eliminate protectionist measures between each other

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32
Q

What are the four main large trading blocs?

What are a few countries are in it?

A

The EU - Austria 🇦🇹 , Belgium 🇧🇪 , Denmark 🇩🇰

ASEAN - Southeast Asia

NAFTA - Canada 🇨🇦 , Mexico 🇲🇽 USA 🇺🇸

the CPTPP - , Austria, 🇦🇹 Mexico, 🇲🇽 New Zealand 🇳🇿

33
Q

What are the six forms of trade blocs?

A

Preferential trading areas -
allow certain types of products with a reduced tariff rate - PTA - may become a free trading area overtime

Free trade areas - FTA -when all members remove trade barriers such as imports and quota -to protect them may use - rule of origin - help find the amount of goods being brought in - NAFTA

Custom unions - agree on a common set of barriers towards non-members

Common market - tariffs are removed and non-barriers are eliminated integrated together to work on economic political issues (ASEAN)

Single market-get rid of is common law to make movements of goods within a country easier

Economic union - involves custom union and common market

34
Q

How was The expansion of trading blocks triggered?

A

Cultural ties of familiarity with nearby markets reinforced regional trade and preferences-

led to the regional trade agreements (RTA)which have grown and created trading blocs

35
Q

What are the rules of the EU?

What did they have?

A

Countries within the union have no trade restrictions between themselves

Countries within the union have common external barriers (e.g. tariffs) to countries outside of the union

36
Q

What are the rules of NAFTA?

What happened in 2018?

A

The aim was to promote free trade between these countries

In 2018, the terms of the agreement were renegotiated and it was renamed.

37
Q

What did the US do within NAFTA?
Who benefited?
What could happen to products then?

A

Many USA businesses relocated their manufacturing to Mexico as goods could be produced there much more -
cost effectively due to the lower wages paid to Mexican workers 🇲🇽

The products could then be imported back into the USA without and tariffs being incurred

Mexico benefitted from this agreement as it helped to create many new industries and jobs within the country

However, most of the benefits occurred in the north of the country close to the USA border

38
Q

What were the rules of ASEAN?

What did this do for Southeast Asian countries?

A

A free trade area aims to achieve free flow of goods in the region (eliminating trade barriers) - less integrated free trade than the EU

Free trade areas lower business costs, increase market size and help businesses to generate economies of scale

39
Q

What were the rules of the CPTPP?

A

All countries are committed to reducing the tariffs of imported goods from each country

40
Q

What is the impact of three blocs dependent on?

A

whether the business trades in or out of the trading bloc

41
Q

What business is outside of trading blocs face?

What will this decrease 📉?

A

higher costs from protectionist measures
eg. tariffs and trying to meet legal requirements inside the trading bloc

This will make them less competitive when trying to sell goods to member countries within the bloc - more expensive

Being outside the bloc is likely to decrease their sales volume to countries within the bloc

42
Q

What are the four benefits of belonging to a trade bloc?

A

Access to market - business can sell more to customers with the free movement of goods

External tariff walls - been in a custom trading block protects you from competition from the outside - imported goods by a group of countries that have formed a trade agreement

Infrastructural support - gain additional support from the government -to enable them to maintain their competitiveness against businesses in countries inside the trading bloc

Free movement of labour - allowing businesses to source workers from a wider pool 🏊

high supply of labour may push labour cost slower - competition ⬆️

43
Q

What are the four drawbacks from being within a trade bloc?

A

Increased competition
- for businesses within the trade bloc an issue for small businesses as they have fewer resources available with which to compete

Businesses with monopoly power can increase their monopoly - eliminating competitors in other countries within the bloc

Common rules and regulations-
in order to operate as one market - common rules and regulations have to be put in place

Retaliation -
due to tariffs external businesses having to put on them it may lead to tariffs being put onto trade blocks

Inefficiency -

less competition from businesses in countries outside of the bloc
- reduce the incentive of businesses to be more efficient

44
Q

What can trading blocs lead to?

A

trade diversion -
trade is taken away from efficient producers who operate outside of the trade bloc and replaced by trade within the bloc

45
Q

What is a subsidy?

A

Financial support given as grants for domestic producers

46
Q

What are the four factors when considering to join a trade bloc?

A

Where they produce - have better access to suppliers cheaper less protectionism

where to sell -closer to consumers

how to enter the market
- new investments merges or trade book

business strategy -
negotiate trade barrier away

47
Q

What are the positives and negatives of trade liberalisation? (4)

A

Positives

Increased international trade
- increase their market size
- This leads to increased output and countries can benefit from economies of scale

reduce costs as imported raw materials - components can be sourced more cheaply

Negatives

Infant industries cannot compete against international firms

dumping as businesses abroad may sell excess products at unfairly low prices

48
Q

What are the six factors that contribute to an increase in globalisation?

A

Political change

reduction in costs for transport + communication

Increase significance of transactional companies

Increase in investment flows

Migration between economies

growth in global labour force

Structural change

49
Q

How has political change led to an increase in globalisation?

A

Changes in the government of a country can influence the country’s attitude to trade

50
Q

What is a transactional company?

A

A business that operates more than one country

51
Q

What will transactional companies do?
How has this improved globalisation?

A

They will have their headquarters in one country but have other branches in other countries

52
Q

How has a reduction in costs and transportation led to an increase in globalisation?

A

Economies of scale due to innovation in containerisation on large ships has reduced business costs

Technological advancements due to the internet/mobile technology have improved made it easier for buyers and sellers to connect with one another

53
Q

What does an increasing number of transaction companies operating do to globalisation?

A

Put pressure on countries to operate using free trade

54
Q

Why is the increase of FDI for important for globalisation?

What does it allow a business to do?

A

job and wealth creation within an economy

It allows businesses to establish themselves in countries where they may face trade barriers

55
Q

What is migration?
How has this lead increase in globalisation?

A

Movement of one person going another location and another

transportation and deregulation have allowed workers to have more flexibility when looking for work

56
Q

How has an increase in the global labour force globalisation?

What do people have more of and what is falling?

What has his lead to an increase of?

A

People have more jobs meaning they have more income to buy more products in increasing the global demand for goods

Increase in labour force for reduces wages reducing cost of businesses

Like to increase an entrepreneurship

57
Q

What is structural change? How does it increase Globalisation?

A

When a country changes the sector of industry they operating in

Offshoring - is common practice and speeds up the process of globalisation

58
Q

What are the five factors considering where we choose a location of a market?

A
  1. Level of growth and disposable income
  2. Ease of doing business
  3. Infrastructure
  4. Political stability
  5. Exchange rate
59
Q

How does the level of growth and disposable income consider whether the location of our market?

A

We can indicate through GDP national minimum wage and employment wage product purchasing piracy inflation

If you have high levels of disposable income more inclined to buy more.

60
Q

How does the ease of doing business affect the factors considering the location of the market?

A

See how easy it is within the Location to buy
opening business
day to day
How easy it is buying property

If this is low - lead delays of generating sales

61
Q

How does the infrastructure affect the factors considering where to locate for a market?

A

Infrastructure is when you have a good access and access to utilities transportation links electricity

Easier to if you’ve got good communication to supplies

Will reduce costs and increase sales

62
Q

Why is political stability a factor considering when we’re gonna locate within a market?

What does it minimise?

A

Political events will have significant impacts on your country - may receive economical sanctions
ethical
reputational impacts as well

Minimise this uncertainty

63
Q

Why do we need to exchange rates to choosing a location for the market?

A

Because there is more demand for a currency - to minimise the risks we can diversify agree on a fixed currency

Strong economy- can import raw materials cheaper

64
Q

What are the two factors that prompt trade?

A

Push and pull factors

65
Q

What are push factors?

A

factors that push a business to expand outside of their domestic country

66
Q

Why may push factors prompt trade?

A

Maybe bad conditions in domestic market

67
Q

What are the two push factors?

A

Saturated market -
Demand for goods and services have reached its peak - hard for businesses to expand and grow
Props business to explore outside domestic market

intense competition- exporting goods into other external markets allows them to have additional revenue streams - increase market velocity

68
Q

What are pull factors?

A

Encouraging businesses to operate in markets abroad - due to new growth opportunities

69
Q

What are the two pull factors?

A

Economies of scale - occurs when businesses expand overseas

Can raw purchase these with lower cost

risk spreading- businesses can diversify their customer base and reduce their exposure to risks associated with operating in a single market

economic, political and other types of risks that could impact their operations and profitability

70
Q

What is offshoring?

A

When you move part of your production process or all of it to another country

71
Q

What are the benefits of offshoring

A

Low labour costs
raw materials
access to better material

72
Q

What are the three positives and negative of offshoring?

A

Lower labour-
help businesses keep costs down and increase profitability

Access to specialised suppliers- quality service, raw materials or components

Economies of scale

Negatives

employee relations may suffer due to relocation as domestic workers lose jobs

Increased costs in short term, such as relocation costs, acquiring new premises and training new staff

Possibly poor customer service due to language and cultural differences between the

73
Q

What is outsourcing?

A

when a business hires an external organisation to complete certain tasks or business functions

74
Q

Why do businesses use outsourcing?

A

Allows business to focus on core competencies

Easier to comply with rules and regulations in other countries as they are often less demanding

75
Q

What is the main differences between offshoring outsourcing?

A

Offshoreing is done by the business outsourcing is done by external organisation

76
Q

What are the three positives of outsourcing?

A

Businesses can take advantage of specialist skills - more efficiently

Cost effectiveness

higher labour productivity in other countries

77
Q

What are the negatives of outsourcing?

A

Negative reputation

Poor communication can lead to inefficiency

78
Q

How else can we extend the product life cycle?

A

Sell a multiple markets- lengthens product life cycle

A-Level Business 📈 (64 decks)

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