Global Business Flashcards
What are consumers
People who buy products from companies
How do you measure the economy
By adding up the value of anything that is produced or everything that is consumed. In 2000 it was £800 billion
What is the public sector
The part of the economy that’s owned or run by the government or local councils including the police, social services and sport centres
What is the private sector
The section of the economy that is made up of businesses or organisations that are owned by individuals or shareholders. Their aim is to make a profit
What is a shareholder
A shareholder owns part of a company but leaves it to managers to run the company
What is a profit
The money that you gain when you sell something
What is a good
Something you buy
What is a service
When you pay for someone to do something for you
What is a shareholder
Some one who owns part of a company and get a share of the profits
What is a multinational company
A company that conducts its business in many different countries
How do multinational companies help the poor countries with they work
Company such as Unilever have community programs where they provide clean water, hygiene and education
What is Supply and demand
If there is a lesser demand for a product then less will be supplied.
What is competition
Shops and businesses compete against each other to try and make the consumer buy the goods. They may have special offers to persuade the consumer
Why does competition make prices go down
If something is too expensive in Sainsburys you can go to another shop to try and find it cheaper. This means that Sainsbury’s have to be careful not to make their food too expensive so they don’t lose their customers
What are imports and exports
Imports or goods and services we buy from other countries. Exports are goods and services we sell to other countries
What is division of labour
Employees or businesses concentrating on the tasks that they do well, so different types of people do different jobs and it is faster
What is interdependency
This is where businesses rely on each other to survive
How do businesses support individuals
Employees receive income
Employees receive training
Skills can be transferred to another part of the company
How do businesses support communities
Employ you spend their wages and local shops, pubs and restaurants
Businesses pay tax to the local council
Employees pay tax from their earnings
The tax is used to help the local communities
They use equipment from other companies including water, electricity and computers. This helps other businesses
What happens when businesses don’t do well
People lose their jobs due to redundancy
Businesses that rely on them had to close down too
Local shopkeepers sell less goods, as local people had less money to spend
What is retraining
Learning new skills that can be used in a different job
What is inflation
The general rise in prices
How does inflation happen
Businesses want to provide more goods so they find more equipment and buildings and employ more people
People demand more goods and services
Businesses continue to expand there is only a limited amount of equipment, land and employees available
Businesses must pay higher wages attract staff. Rent for a property goes up because of increased competition for space
As people have more money to buy things, they are more prepared to pay more
Who is affected by inflation
Borrowers will gain as the value of the debt will fall
UK business will lose out if countries have a lower rate of inflation, as high inflation will make our prices more expensive to buy
How can inflation be controlled
Change interest rates ( the extra amount you have to pay when you get a loan). This will make borrowing more expensive so people will buy less
Make sure there is enough staff. This will keep wages lower so people have less to spend. The governments can provide training courses
Keep the business costs down. This will stop businesses having to raise prices
Why do people borrow money
This get enough money to… To get by each month To buy goods such as houses, cars and clothes To help support their family For fun
How can you borrow money
You must from someone who is prepared to lend it, e.g. a bank
You must pay interest on the loan.
It’s only safe to borrow money if you can afford to pay it back
People on low income is may have trouble getting a loan
Why is the rate of interest the bank pays to savers generally less than the rate of interest charges borrowers
It’s how banks make their money. They charge people more to borrow money from them
What is the poverty line
This is where your income is considered to be below a level at which someone can afford to live. 25% of the population live under the poverty line. The poorest 20% earn 6.6% of all earnings. The top 20% earn 43% of all earnings.
Do the government help people who live in under the poverty line
Yes. The government uses some of the money received from taxes to provide benefits, free health and education and a subsidised housing. People who earn more pay more taxes. Poorer people receive more help. This is called redistributing income.
Do all countries in the world have the same wealth
No. The world can be split up into richer and poorer countries
What are MEDCs
More economically developed countries such as the UK, USA, Japan and France
What are LEDCs
Less economically developed countries such as Ethiopia, Niger and Peru
How do LEDCs get money to help them survive
They borrow money from richer countries. They get into debt. 41 poor countries owe £150 billion. Every day the poorest countries in Africa pay £20 billion to the rich countries
How do LEDCs pay back the debt
They are forced to divert money away from education, healthcare and other services
How did international debt start
In the 1970s the rich countries lent money to the poor countries. This money was sometimes lent to corrupt, undemocratic governments who wasted the money was spent on weaponry. The money was it used to help people living in poverty. Countries like Niger can’t get out of the debt. The goods they sell such as bananas, oil and coffee are being sold for cheaper prices so Niger has to keep borrowing borrowing money to survive
What is an economy
It’s made up of good organisations that provide goods and services and all the individuals and organisations that buys them
Is it right that rich countries sell farm products cheaply to LEDCs
Yes
Makes produce affordable for poor people
Prevents hunger
Helps poor people and their country
No
Farmers might be discouraged from growing their own food and helping themselves
Local farmers won’t be able to compete with the low prices and will get poorer
Not sustainable and won’t help in the long term
How can richer countries help
They can cancel the debt. There have been lots of campaigns to do this. Jubilated 2000 managed to cancel some debts. This helps children in Uganda, as the government can now afford to send children to school. For poverty to end all debts needs to be cancelled.
What is globalisation
The increasing interdependence of the world. Many of the goods we buy are from all over the world. Many large companies do business all over the world.
Who is involved in globalisation
Consumers, employees, large companies and nations. There are winners and losers
What is free trade
A method of trading between countries where there are no subsidies on exports or taxes on imports
Why are the prices of goods made in India and China cheaper than in European union countries and America
Wages and raw material costs are cheaper
Hours worked may not to be limited
There is less concern for health and safety
Costs of production are lower
How are consumers powerful
If people don’t like the price or quality they will buy from someone else. This means companies try to produce goods as cheaply as possible
How are producers powerful
Large businesses can:
Force down the price they pay for resources because suppliers are frightened of losing their biggest customer
Keep wages down as workers have few alternative jobs to go to
Fix prices higher if there is no competition
Fail to look after the environment if there are no laws to protect it
Products such as trainers are often made in countries where labour is cheap, to maximise profits
What is global branding
Where large businesses like McDonald’s, Coca-Cola, Pepsi, Nike and Gap trade in countries all over the world
What is the problem with global branding
It’s can erode traditional culture of communities. Large companies go to the LEDCs and employ people for cheap labour. They don’t pay them that much money. Some argue, however that the companies are helping the LEDCs by giving more employment
What is the world trade organisation (WTO)
It is an organisation responsible for making rules about trade. Most countries want a free trade system, where price is determined by the amount people want to buy and sell
Companies aims to make a maximum profit at the cheapest price. How can trade be made fairer
Many people believe that trade should be managed so that poor countries can benefit more. This is called fair trade
What does fair trade do
Ensure people get a fair wage, good working conditions and are allowed to form trade unions to protect their rights
Allow the poor countries to be able to trade without having to pay a trade tariff
There have been many campaigns for fair trade, example with the Clean Clothes Campaign (CCC), which draws attention to the working conditions of workers around the world
How do supporters of free trade get their voices heard
Different pressures that protest in different ways. For example:
Get the attention of governments (lobbying)
Complaining to the World Trade Organisation
Reporting goods have been made by companies that don’t follow fair trade
Seek publicity through the media. Internet sites are commonly used
Holding demonstrations when the IMF and WTO meet to discuss trade. These demonstrations have in the past have become violent
What does that anti-globalisation movement say
The IMF and WTO are causing poverty. They don’t protects the LEDCS and that big businesses take advantage of them by not paying them a fair price
Globalisation is causing global warming
Rich countries should cancel the debt that LEDCs owe, as it stops them from having money for clean water, health and education.
They are representing the poor countries that don’t have a voice of their own
What does the international trade organisation say
Globalisation and freetrade is bringing money to poor countries
Pressure groups are undemocratic. They haven’t been elected and don’t have the rights to represent poor countries
By disturbing meetings, the pressure groups are preventing global efforts to tackle poverty
