6.3 Globalisation Flashcards
Define globalisation.
The process by which business activity around the world has become increasingly interconnected.
What is international branding?
Creating an image or values for a product that are communicated in countries around the world.
What is capital?
Money or assets such as machines, buildings and vehicles.
What is free trade?
The absence of restrictions on trade between countries.
What is meant by ‘trade’?
The import and export of goods and services.
What is a tariff?
A tax on a good or service that is imported.
What is a quota?
A limit in terms of weight, number or value on the amount of a good or service that can be imported into a country.
What is meant by regulations?
Rules about the goods and services that can be sold in a country e.g. safety rules.
What is a mutinational company?
A business that operates in different counties around the world.
Globalisation involves……?
Buying and selling goods and services made in different countries.
The movement of workers from country to country.
The movement of capital or finance from country to country.
Globalisation has increased due to improvements in…?
Transport.
Telecommunications and the internet.
Free trade arrangements.
What is free trade?
Free trade exists when there are no barriers to trade. The are no quotas or tariffs when selling goods from one country to another.
What are the advantages of being a multinational company?
Increasing sales
Spreading risk
Lower costs
Tax avoidance
How does being a multinational spread risk?
If one market (country) loses sales perhaps due to a recession, the company may be able to increase sales in a country with economic growth.
How do multinationals benefit the host countries (the new countries they expand into)?
Create demand for host country business (perhaps buying supplies and components).
Pay taxes which help public services.
Lower prices and costs.
How may multinationals not benefit the host countries (the new countries they expand into)?
Business closures (local businesses cannot compete). Outflows of money (profits moved back to the multinational's home country).
List three benefits to UK businesses of locating in another country.
Lower labour costs. Lower costs of property and land. Expertise. Skilled workers. Demand.
List three disadvantages to UK businesses of locating in another country.
Difficult to control quality.
Communications more difficult due to time zone and language differences.
Higher transport costs and possible delays.
Costs may rise abroad.
What is branding?
Branding is concerned with the ‘truths’ about a product - its image, reputation and values.
What factors do businesses need to consider when creating or promoting their brand internationally?
Language Names (meanings or already taken) Level and distribution of income Legal factors Culture and religion
What is an exchange rate?
The price of one country’s currency in terms of another.
What does SPICED stand for?
Strong Pound Imports Cheaper Exports Dearer
Doe an importer prefer a strong or weak pound?
Strong - imports become cheaper
Does an exporter prefer a strong or weak pound?
Weak - exports become dearer for the customer?
