6.3 Globalisation

Question 1

Define globalisation.

Answer 1

The process by which business activity around the world has become increasingly interconnected.

Question 2

What is international branding?

Answer 2

Creating an image or values for a product that are communicated in countries around the world.

Question 3

What is capital?

Answer 3

Money or assets such as machines, buildings and vehicles.

Question 4

What is free trade?

Answer 4

The absence of restrictions on trade between countries.

Question 5

What is meant by ‘trade’?

Answer 5

The import and export of goods and services.

Question 6

What is a tariff?

Answer 6

A tax on a good or service that is imported.

Question 7

What is a quota?

Answer 7

A limit in terms of weight, number or value on the amount of a good or service that can be imported into a country.

Question 8

What is meant by regulations?

Answer 8

Rules about the goods and services that can be sold in a country e.g. safety rules.

Question 9

What is a mutinational company?

Answer 9

A business that operates in different counties around the world.

Question 10

Globalisation involves……?

Answer 10

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.

Question 11

Globalisation has increased due to improvements in…?

Answer 11

Transport.
Telecommunications and the internet.
Free trade arrangements.

Question 12

What is free trade?

Answer 12

Free trade exists when there are no barriers to trade. The are no quotas or tariffs when selling goods from one country to another.

Question 13

What are the advantages of being a multinational company?

Answer 13

Increasing sales
Spreading risk
Lower costs
Tax avoidance

Question 14

How does being a multinational spread risk?

Answer 14

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.

Question 15

How do multinationals benefit the host countries (the new countries they expand into)?

Answer 15

Create demand for host country business (perhaps buying supplies and components).
Pay taxes which help public services.
Lower prices and costs.

Question 16

How may multinationals not benefit the host countries (the new countries they expand into)?

Answer 16

Business closures (local businesses cannot compete).
Outflows of money (profits moved back to the multinational's home country).

Question 17

List three benefits to UK businesses of locating in another country.

Answer 17

Lower labour costs.
Lower costs of property and land.
Expertise.
Skilled workers.
Demand.

Question 18

List three disadvantages to UK businesses of locating in another country.

Answer 18

Difficult to control quality.
Communications more difficult due to time zone and language differences.
Higher transport costs and possible delays.
Costs may rise abroad.

Question 19

What is branding?

Answer 19

Branding is concerned with the ‘truths’ about a product - its image, reputation and values.

Question 20

What factors do businesses need to consider when creating or promoting their brand internationally?

Answer 20

Language
Names (meanings or already taken)
Level and distribution of income
Legal factors
Culture and religion

Question 21

What is an exchange rate?

Answer 21

The price of one country’s currency in terms of another.

Question 22

What does SPICED stand for?

Answer 22

Strong
Pound
Imports
Cheaper
Exports
Dearer

Question 23

Doe an importer prefer a strong or weak pound?

Answer 23

Strong - imports become cheaper

Question 24

Does an exporter prefer a strong or weak pound?

Answer 24

Weak - exports become dearer for the customer?