Business Activity and influences on businesses :Unit 9-15 Flashcards
- What are emerging economies?
rapidly growing economies - emerging economies have huge growth potential but also pose significant risks.
- What is globalization?
it is the growing integration of the world’s economies.
- What are the 5 key features of globalization?
- goods and services are traded freely across international borders.
- People are free to live and work in any country they choose.
- There is a high level of interdependence between nations.
- capital can flow freely between different countries.
- Free exchange of technology and intellectual property.
- What is intellectual property?
people’s knowledge or creative ideas that have commercial value and are protectable under different forms of copyright.
- What are the 5 reasons for globalization?
- Development in technology.
- International transport networks have improved in recent years.
- a huge amount of deregulation.
- increase in tourism has also helped globalization to thrive.
- firms want to sell abroad, once domestic markets become saturated.
- What is a monetary system?
system of money in a particular country or the world as a whole, and the way that is is controlled by governments and central banks.
- What is saturate(market)?
to offer so much of a product for sales that there is more than people want to buy,
- What are the 4 actions of a government that does?
- international borders open.
- Put down trade barriers.
- are free to live and work in overseas countries.
- planning and development permission is accepted.
- What are the 4 opportunities of globalization?
- Access to larger markets.
- Lower costs.
- Access to Labor.
- Reduced taxation.
- What are the 3 threats of globalization?
- Competition.
- International takeovers.
- Increased risk of external shocks.
- What is a hostile takeover?
takeover that the company being taken over does not want to or agree to.
- What are the 3 reasons multinationals have developed?
- Marketing.
- Economies of scale.
- Technical and financial superiority.
- What are commodities?
products that are bought and sold.
- What are the 5 benefits to a business of becoming a multinational?
- Larger customer base.
- Lower costs,
- Higher profile.
- Avoiding trade barriers.
- Lower taxes.
- What are the 6 benefits of multinationals to a country/ economy?
- increase in income and employment.
- increase in tax revenue.
- increase in exports.
- transfer of technology.
- improvement in the quality of human capital.
- enterprise development.
- What are the currency reserves?
money in foreign currency held by a country and used to support its own currency and to pay for imports and foreign debts.
- What is human capital?
people and their skills.
- What is enterprise?
the activity of starting and running businesses
- What are the 4 drawbacks to a multinational to a country or economy?
- Environmental damage.
- Exploitation of less developed countries.
- repatriation of profits.
- Lack of accountability.
- What is exploitation?
-a situation in which you mistreat someone by asking them to do things for you, but give them very little in return.
- What is the repatriation of profit?
where a multinational returns the profits from an overseas venture to the country where it is based in.
- What is surplus?
amount of something that is more than what is needed or used.
- what are the two features of international trade?
- obtain goods that cannot be produced domestically.
- obtain goods that can be bought more cheaply from overseas
- What are exports?
goods and services sold overseas.
- What are imports?
goods and services bought from overseas.
- What is visible trade?
trade in physical goods.
- What is invisible trade?
trade in services.
- What is a balance of trade (or visible balance)?
difference between visible exports and visible imports
- What is exchange rate?
value of one currency in term in terms of another.
- What are transactions?
business deals, or actions such as buying or selling something.
- What does a fall in exchange rates have an impact on exports? imports?
exports will increase. imports will decrease.
- What does a rise in exchange rates have an impact on exports? imports?
exports will decrease. imports will increase.
- What is commission?
an extra amount of money that is paid to a person or organisation according to the value of the goods they have sold or the services they have provided.
- What are the 9 public services governments spend on?
- health care.
- defense.
- education.
- a judicial system.
- policing.
- transport networks.
- how is money raised to help fund public sector services?
-taxation
- What is fiscal policy?
using taxation and government expenditure to manage the economy,
- what is taxation?
the levying of tax.
- How do constraints on public spending impact? - The public sector -private sector - the public
- lay off of staff.
- private sector businesses that rely on public sector contracts.
- cuts in pension.
- What are the 4 ways government affects business activity?
- change the law.
- the rate of interest and exchange rates.
- government expenditure and taxation.
- introduce polices that have a direct impact on businesses such as giving subsidies to farmers.
- What are the 3 specific approaches to government regulating business activity?
- infrastructure provision.
- legislation.
- trade policy.
- What are the 3 areas of legislation?
- consumer protection
- competition policy.
- environmental legislation.
- What are social security payments?
money taken by the British government from people’s wages to pay for the system of payments to people who are unemployed or ill.
- What is anti-competitive practices?
(restrictive trade practices) attempts by firms to prevent or restrict competition.
- What are barriers to entry?
- restriction that mean it is difficult for new firms to enter a market.
- What are the 4 anti-competitive practices/ restrictive practices?
- increasing prices to higher levels.
- price fixing avoid price competition.
- restricting consumer choice by market sharing.
- raising barriers to entry.
- How does the government promote competition? (3)
- Encourage the growth of small firms.
- Lower barriers to entry.
- Introduce anti- competive legislation.
- What is protectionism?
use of trade barriers to protect domestic producers.
- What are infant industries?
new industries that are yet to be established.
- What is dumping?
where a business sells goods in another country often below cost.
- What are the 4 uses of trade policy?
-protect jobs .
- protect infant industries.
- prevent dumping.
- raise revenue from tariffs.
- What are the 4 trade barriers?
tariffs.
- Quota.
- Subsidy.
- Administrative barriers.
- What is Quota?
a physical limit on the amount allowed into the country.
- What is subsidies?
the giving of financial support, grants, tax breaks, to help exporters face fierce competition from importers.
- What are Tariffs?
a tax imports.
- What are Administrative barriers?
the use of strict health and safety or environmental regulations.
- What are external factors?
factors that affect the business that are completely beyond their control.
- What are the 4 external factors?
- Social.
- Technological.
- Environmental.
- Polictal/Legislation
- What are the 5 social changes?
- increased consumer awareness.
- changing demand patterns.
- Increased numbers of women at work.
- More part-time workers.
- Urbanization.
- What is urbanization?
process of constructing more and more buildings on rural land.
- What are the 3 impacts of technology on businesses?
- cheaper.
- high productivity.
- improved communication and transport systems.
- What is capital-intensive?
use of relatively more machinery than labour in production
- What are the 4 environmental issues?
- Global Warming.
- Habitat Destruction.
- Resource depletion.
- sustainable development.
- What are the 4 ways for sustainable development?
- Reusable and recycled packaging,
- use of more renewable energy sources.
- explore ways of selling waste as a by product.
- reduce business travel and use online communication.
- What are the 6 measures of success in business?
- Revenue.
- Market share.
- Profit.
- Customer satisfaction.
- Growth
- What are the 5 measures of growth?
- Turnover / revenue.
- The number of employees.
- Market share.
- the amount of capital employed.
- EU definitions of size.
- What is capital employed?
amount of money invested in a business.
- What is overtrading?
taking on more work than a business can afford to fund effectively.
- What is inventory?
stock of goods
- What is business failure?
Business failure refers to a company ceasing operations following its inability to make a profit or to bring in enough revenue to cover its expenses.
- What are the 4 reasons for business failure?
- cash flow problems.
-lack of finance. - Not competitive.
- failure to innovate.
- What are the 8 reasons for cash problems?
- overtrading.
- investing too much in fixed assets.
- allowing too much credit.
- over-borrowing.
- seasonal factors.
- unexpected expenditure.
- external factors.
- poor financial management.
- What are fixed assets?
resources that are used repeatedly for a period of time by a business such as property, tools, vehicles, and machinery.
- What is downturn?
period or process in which business activity, production, etc. is reduced and conditions become worse.
- What is undercapitalized?
- starting a business with in sufficient capital.
- What are the 5 reasons for a business not being competitive?
- new entrants of rivals.
- ineffective cost control.
- ineffective marketing.
- Lack of business skills.
- Poor leadership.
- What are the 5 reasons for ineffective cost control?
- too small to exploit economies of scale.
- they may be wasteful.
- It is possible that a business is paying too much for some of its resources.
- Might not be minimizing labor costs.
- costs might also rise owing to external factors.
- What are the 4 ineffective marketing?
- failure a launch a new product.
- inappropriate pricing strategies.
- might invest too heavily in overpriced or inappropriate marketing campaigns.
- might use appropriate marketing strategies.
- What are 4 possible rivalry coming from new entrants?
- bringing out superior products.
- read market conditions more effectively.
- charge lower prices because their costs are lower
- Use ‘destroyer pricing’ this might happen when a company dump a cheap product in a foreign market.
