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Business Theme 4 > Global Business > Flashcards

Global Business Flashcards

1
Q

EMERGING ECONOMY

A

An economy in the process of rapid growth and industrialisation

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2
Q

GDP

A

The measure of the size and health of a country’s economy over a period of time, measuring the total value of goods and services produced

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3
Q

What is meant by the acronym BRIC?

A

BRAZIL
RUSSIA
INDIA
CHINA

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4
Q

What is meant by the acronym MINT?

A

MEXICO
INDONESIA
NIGERIA
TURKEY

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5
Q

Two implications of economic growth for individuals and businesses:

A

Lower unemployment, more business confidence, trade opportunities for business

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6
Q

Four indicators of growth:

A

GDP per capita, Health, Human Development Index (HDI) (life expectancy, education and income of population), literacy

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7
Q

EXPORTS

A

Goods or services produced by one country are then sold to another country e.g. goods made in UK THEN sold abroad

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8
Q

IMPORTS

A

Goods and services that are purchased by one country from another country e.g. UK buys European car parts

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9
Q

Foreign direct investment

A

Investment from one country into another that involves establishing operations or acquiring tangible assets, including stakes in other businesses

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10
Q

Greenfield FDI

A

Build a complete new factory/ business. Creates new jobs. E.g. Google set up new establishments in India

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11
Q

Brownfield FDI

A

Buy an existing business and grow it. New tech and business sinnovation

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12
Q

The link between business specialisation and competitive advantage:

A

Specialisation results in greater efficiency, which allows for goods and services to be produced at a lower cost, which then allows for a business to lower its prices or increase its profits

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13
Q

TRADE LIBERALISATION

A

Trade liberalisation involves a country lowering import tariffs and relaxing import quotas and other forms of protectionism.

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14
Q

Benefits of trade liberalisation

A

Increased trade opportunities, Increased economic growth (make an economy more open to trade and investment), lower prices for consumers, EoS

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15
Q

drawbacks of trade liberalisation

A

Increased job outsourcing, Environmental costs, inferior quality, increased dependence on other natons

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16
Q

GLOBALISATION

A

The growing integration of the world’s economies into one single market.

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17
Q

Benefits of globalisation

A

Technology and skills transfer, More competition leading to lower prices for consumers

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18
Q

Globalisation drawbacks

A

Degradation of environment, Vulnerability to external economic shocks – e.g. global financial crisis, exploits cheaper labour markets

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19
Q

Factors contributing to increased globalisation:

A

Increased significance of global (transnational) companies, Reduced cost of transportation and communication, Political change

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20
Q

What’s the difference between:

TARIFFS AND IMPORT QUOTAS

A

A tariff is a tax or duty that raises the price of imported goods and causes a reduction in domestic demand and in increase in domestic supply; whereas import quotas are volume limits on the levels of imports allowed into a specific country

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21
Q

Two other forms of trade barrier

A

Subsidy, Government legislation

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22
Q

benefits of trade barriers

A

Protects domestic producers and infant companies, Increased consumption of locally produced goods and services, if a country is self-sufficient they avoid the risk of becoming reliant on other countries that could be prone to shortages like bad weather ruining crops

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23
Q

Drawbacks of trade barriers

A

Higher costs on imported products, Might limit the range of goods and services available

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24
Q

Three examples of trading blocs:

A

European Union
NAFTA (now known as US-Mexico-Canada Agreement)
ASEAN

25
Q

What is meant by the term, trading bloc:

A

A group of countries in specific regions that manage and promote trade activities between them.

26
Q

The impact on businesses of trading blocs:

A

Increased trade opportunities as barriers are lifted between markets;
Can allow for economies of scale as market becomes bigger;
Increased competition can lead to price pressures, need to differentiate and to improve efficiency;

27
Q

Advantages of trading bloc

A

Increased ms so eos, increased demand, lower cost so CA, less red tape so more efficient, freedom of movement so more talent to employ

28
Q

Disadvantages of trading blocs

A

Encourages reliance as trade is limited, encourages monopoly and predatory pricing, neo-colonialism (bigger countries dictate smaller countries, retaliation

29
Q

Examples of push factors in relation to conditions that prompt trade:

A

High levels of domestic competition,

Saturated market with limited growth opportunities

30
Q

Examples of pull factors in relation to conditions that prompt trade:

A

Spread risk globally, Achieve economies of scale as production output increases

31
Q

Difference between outsourcing and offshoring

A

Off-shoring is the relocation of a business function, usually manufacturing, to a location overseas; whereas outsourcing is where a business function is contracted out to a third party, and can be either local, national or international.

32
Q

How the product life cycle can be used to prompt trade

A

Products can be at different stages of the life cycle in individual markets; a product in the growth stage in another country represents an opportunity for a business to trade internationally

33
Q

four factors a business might consider when assessing a country as a market:

A

Levels and growth rate of disposable income
Exchange rate
Ease of doing business
Infrastructure

34
Q

nine factors a business might consider when assessing a country as a production location:

A 
Ease of doing business,
      Political stability,
      Cost of production,
      Infrastructure,
      Skills and availability of labour force,
      Location in trade bloc,
      Government incentives,
      Natural resources,
      Likely return on investment
35
Q

List five reasons for global mergers or joint ventures:

A

Spread risk over different countries/markets, Entering new markets/trade blocs, Acquiring national/international brand names/patents, Securing resources/supplies, Maintaining/increasing global competitiveness

36
Q

How an appreciation of the exchange rate can impact on a business:

A

SPICED AND WPIDEC

37
Q

Two ways a business can achieve a global competitive advantage:

A

Cost competitiveness/leadership

Differentiation

38
Q

How skills shortages can impact on international competitiveness:

A

Increase in labour costs

Decrease in labour productivity

39
Q

Globalisation

A

A product or service that is developed and sold globally, but is also adapted to meet the needs and wants of customers in a local market

40
Q

DOMESTIC / ETHNOCENTRIC

A

Assumes that what marketing strategy works in the home market will work in all markets

41
Q

Mix/ geocentric

A

Main aim of marketing is a global brand but recognizes needs of individual markets

42
Q

INTERNATIONAL / POLYCENTRIC

A

Recognises that every market requires a different marketing mix, with products designed to meet local needs

43
Q

Is it best to be ethnocentric, geocentric or polycentric

A

Polycentric

44
Q

How can the marketing mix be applied and adapted to global markets?

A

Cultural and logistical differences might demand different forms of promotion, different distribution channels, more appropriate pricing strategies and products with different features depending on the local needs

45
Q

How can Ansoff’s matrix be applied and adapted to global markets?

A

All of Ansoff’s proposed growth strategies can be applied: market penetration refers to growing the existing market more, increasing market share; market development looks at new countries as markets which will require adapted strategies; product development is evident in adapting products specifically for local needs; and diversification requires a totally new marketing strategy as it involves completely unfamiliar territory for the firm.

46
Q

GLOBAL NICHE MARKET

A

Small, specialized parts of the global market – where customers in many countries have specific needs and wants that are not satisfied by mass market products or services

47
Q

Recognition that groups of people across the globe have different interests and values

A

CULTURAL DIVERSITY (IN RELATION TO GLOBAL NICHE MARKETS)

48
Q

Two features of a global niche market:

A

Clear, specific needs of customers
1
Higher profits from charging a higher price

49
Q

How can the marketing mix be adapted to suit global niche markets?

A

Product: emphasis on quality as point of difference
Price: higher, more premium-priced products to reflect meeting of specific needs/wants Promotion: strong brand, more targeted promotional activity, tailored to individual markets
Place: more selective in choice of distribution, with exclusivity an option (reduced access to appear more premium)

50
Q

Cultural / social factors a business needs to consider in relation to global marketing:

A

language
History and traditions
weather

51
Q

A business that has operations in more than one country

A

MULTINATIONAL COMPANY (MNC)

52
Q

Possible impacts a MNC may have on the local economy:

A

Local labour: wages, working conditions and job creation, Local businesses – more consumption, more competition/ Impact on local environment and community

53
Q

Possible impacts a MNC may have on the national economy:

A

FDI flows, Balance of payments (imports v exports), Skills transfer and technology

54
Q

Two potential stakeholder conflicts resulting from the operation of a MNC in a less-developed country:

A

Resource depletion allowing greater profits but polluting environment,
Job creation versus transfer pricing and tax avoidance

55
Q

How pay and working conditions may differ in relation to the operation of a MNC in a less-developed country:

A

LEDCs might have different legislative constraints on pay and conditions which might make it more attractive for MNCs to exploit in order to maximize profits; this leads to ethical issues as MNCs look to do the right thing whilst maximizing wealth for shareholders

56
Q

Two environmental considerations a MNC may need to consider when operating in another country:

A

Emissions, waste disposal

57
Q

Two supply chain considerations a MNC may need to consider when operating in another country:

A

Explotation of labour, child labour

58
Q

Two marketing considerations a MNC may need to consider when operating in another country:

A

Misleading product labelling
2
Inappropriate promotional activities

59
Q

Four factors that may need to be considered in relation to controlling MNCs:

A

Political influence,
Legal control,
Pressure groups,
Social media

Business Theme 4 (1 decks)

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