Global Business Flashcards
Explain transnational company
A transnational company is a business with a head office in one country and branches or factories in a number of other countries
Head office controls the entire business
e.g Zara, Lidl, Marks & Spencer
Explain global company
A global company is a firm that operates and sells standardised products and services all over the world
They treat the world like one single country and focus on similarities between people globally to try satisfy the common needs and wants everywhere
Make products anywhere - usually cheap labour country
e.g McDonalds, Coca-Cola
Give four reasons for development of transnational companies
To spread their risk
Increase sales
Development of ICT
Overcoming trade barriers
Give five reasons why transnational companies set up in ireland
Low corporation tax (12.5%) EU membership Grants Well-educated workforce English speaking
Name the advantages of transnational companies to ireland
Job creation New technologies Increase competition Taxes Consumers of raw materials
Name the disadvanatges of transnational companies to Ireland
No loyalty
Too influential
Repatriate profits
Decisions are made abroad
Give six reasons for development of global companies
Increase sales Computer Aided Manufacture (CAM) Advances in communication methods The internet Deregulation Computer Aided Design (CAD)
Give five advantages of globalisation to ireland
Job creation New technologies Increase sales Taxes Economies of scale
Give four disadvantages of globalisation to ireland
Increased competition and threat for Irish businesses
Repatriate profits
Using Ireland as a ‘tax haven’
Too influential
Explain global marketing and the standardised marketing mix
Global marketing means selling the same product all over the world using a global marketing mix (4P’s)
Known as a ‘Standardised Marketing Mix’
Gloabal business concentrates on the similarities across world markets
Example: Coca-Cola
Explain the adapted marketing mix
Sometimes elements of the 4P’s must be changed to suit local tastes, cultures etc.
This called and ‘Adapted Marketing Mix’
Requires additional production, advertising and packaging costs
Example: Tesla making right hand drive cars for the Irish market
What is the importance of global marketing
Increased sales
Lower costs
Improved quality
Avoids alienating customers
Explain spreading their risk as a reason for the development of transnational companies
They dont want to become too dependent on one market
if there is a downturn in US economy Dell’s european sales will keep it in profit
Explain increase their sales as a reason for the development of transnational companies
Expand to different countries to increase sale
Sell products to many more customers than solely at home
Explain communcations technology as a reason for the development of transnational companies
Advances in transport makes it easier for businesses to expand overseas
Video conferencing makes transnational businesses easier to run
Explain trade barriers as a reason for the development of transnational companies
Overcoming trade barriers can occur with expansion
Ex: japanese car manufacturers set up factories in the EU to round EU quotas
Explain low corporation tax as a reason for transnational companies to come to Ireland
Only 12.5% - much lower than other countries
Set up here means they pay less tax on profits and have more profit for expansion and dividends
Explain EU member as a reason for transnational companies to come to Ireland
All goods in Ireland can be freely sold in the EU - biggest and richest trading bloc with no barriers to trade
Set up here to gain access to increase sales and profits
Explain Grants as a reason for transnational companies to come to Ireland
Irish government gives money to MNCs to help pay for things they need to set up here
Grants make it cheaper for MNCs to expand
Explain education as a reason for transnational companies to come to Ireland
Ireland has well-educated workforce
Most highly employable graduates in world
Companies attracted because they have plentiful supply of workers with skills needed ex: Intel employees country’s universities excellent compute graduates
Explain English as a reason for transnational companies to come to Ireland
Only english speaking country in Eurozone
Soon to be in EU
International language of business
Easy for them to do business here without communications barrier
Explain jobs as an advantage of transnational companies
MNCs employ over 200000 people in Irish branches
Reduces unemployment
Wages mean employees get higher standard of living and increased spending in economy
Ex: Dell and Intel created thousands of well-paid quality jobs for people in their factories
Explain new technology as an advantage of transnational companies
They train their irish workers in all these new skills
Increasing skill set of labour force and helps to make our economy more modern and technologically advanced
Ex: dell intel, facebook brought latest computer technology helping ireland develop into advanced knowledge based economy
Explain compeition as an advantage of transnational companies
Better quality and lower prices to compete with indigenous firms.
Consumers have more choice lower prices and better quality
ex: lidl and aldi increased competition in the Irish grocery markets
