global marketing Flashcards
What is meant by Capital?
In economic terms referring to any resource regarded as man-made such as building, factories and machinery but in reality usual refers to investment finance.
What is meant by “Enterprise”?
In economic terms referring to any resource regarded as man-made such as building, factories and machinery but in reality usual refers to investment finance.
What is meant by “Labour”?
human resource / workforce available in any economy to produce goods or provide services. The quantity and quality of workforce are a key consideration of any producer of goods & services
What is meant by “land”?
All natural resources such as land, minerals, soils, water, forest
What is meant by “flow of Capital”?
Movement of money between countries for the purpose of investment, trade or production or provision of services - usually regarded as investment into a “production operation”
What is meant by “Globalisation”?
The increasing integration of economies and societies around the world particularly through international trade.
What is meant by International Trade?
the exchange of goods and services across international borders. Inbound trade is described as “IMPORTS”. Outbound trade is described as “EXPORTS”
What is meant by Flows of Labour?
Labour markets are not as free flowing as financial markets because of restrictions on Immigration. Movement of migrants grossing international borders has increased in the last 25 years usually from LDE to HDE usually by educated people with financial means to seek better employment opportunities. Eg. Migrants from South Asia, Africa and Latin America to North America and Europe or the gulf states where the construction boom has provided work opportunities.
Between 2005-2010 5 million workers moved from South Asia to West Asia.
what is marketing
the process of promoting, advertising and selling products or services
what is a global marketeer
A company that views the world as a single market and creates products that are fit for any marketplace eg. coca-cola. It will usually develop one recognisable “brand” and use one marketing strategy to sell the same product in the same way everywhere. This creates “economies of scale”
what are economies for scale
The cost advantages that result from the larger size, output or scale of operation as savings are made by spreading the cost or by rationalising operations eg. Coca-Cola
Coca-cola has one product, with the same set of ingredients, same easily recognisable can / bottle design.
what is NIC
Newly Industrialised Country
Globalisation created 2 distinct categories of workers - what are they?
- Highly skilled, highly paid decision making, research and managerial occupations usually concentrated in developed countries
- unskilled, poorly paid assembly occupations usually situated in developing countries
What are the 4 Asian tiger economies?
Hong Kong
Singapore
South Korea
Taiwan
What factors affect the flow of information?
Information flows are governed by the movement of people through migration and the speed of communication and data transfers. Flow of information has been improved by:
1. improved global telephone networks making calls easier and cheaper
2. mobile telecommunication technology
3. email and internet
4. live media coverage available on a global scale due to satellite technology
how has production differed pre-1954 and post 1954?
Pre-1954 production was local to the country and goods consumed in the country of origin
Post 1954 - production shifted by TNCs to less developed countries to take advantage of lower land and labour costs
what is global shift
The transfer of the manufacturing industry from developed countries to lower wage economies
what is the consequence of global shift?
Deindustrialisation of developed countries and a loss of jobs in the manufacturing sector eg. manufacturing in uk fell by 50% in the 30 years between 1983 and 2013
What factors other than global shift caused decline in manufacturing in developed countries?
outmoded production methods
products at the end of their lifespan
poor management
what factors affect location choice for manufacturing?
- Availability of skilled and educated labour force
- Opportunity to build a new plant with latest and most productive technology
- Government incentives in the form of tax breaks or enterprise zones to entice companies to invest and relocate
- Access to large markets without tariff barriers enabled through trade agreements
what is maquiladora?
A manufacturing operation (plant or factory) located in a free trade zone in Mexico. They import materials for assembly and export the final product without trade barriers that are imposed by NAFTA
where are products primarily consumed?
In developed countries eg Dyson a UK company moved its production to Malaysia but still sells the bulk of its vacuum cleaners in the UK and Europe
is the pattern of consumption changing?
Yes. As emerging NICs develop their populations are becoming more affluent creating fresh new demand for consumer products.
what are predictions for future consumption?
- consumption will drive trade patterns more than production location
- As Asia becomes more competitive goods will go to the East /other Asian countries rather than the West
- Western companies specialising in finance have the potential to benefit from investment in the Asia-Pacific region
How has government support aided globalisation?
One of the economic objectives of most governments is to increase exports from their country. Governments at national level will have trade departments whose function will be to ease and facilitate exports.
For example, the UK government have the UK Trade and Investment (UKTI) department. They offer support and advice on all aspects of trade to encourage businesses, especially first-time exporters, to trade their goods overseas.
Trade Agreements with other countries (bi-lateral or multi-lateral etc) to reduce tariffs on exported goods and introduce quotas and tariffs on imported goods to protect home economy
what are dry ports?
These are “ports” located inland near production centres allowing for all shipment arrangements and customs documentation to be completed locally - saving small companies time and cost
what are the financial factors affecting globalisation?
- Deregulation of financial markets has allowed governments to relax or remove governmental barriers to movement of finance
- Communication technology has made international trade easier and faster
- High speed electronic trading banking systems has made trade between importers and exporters quicker and more secure
what practical advancements in transport have aided globalisation?
- Bigger aircrafts and integrated air networks
- Growth of low-cost airlines and freight companies
- Use of standardised containers - by sea, rail, road and air
- handling and distribution efficiencies
- computerised logistics system
- high speed rail networks
what security issues do trading communities face?
- Supply chain security - securing supply chains is critical for international manufacturing businesses that assemble components from all over the world - this ensures products are authentic, safe and can travel through borders relatively freely
- cyber crime - reliance on the internet has led to breaches of secure information which in turn can lead to online fraud and other online crimes
- terrorism - screening and monitoring movements by security forces as part of counter-terrorism measures
- food imports - ensuring that imported products meet required safety standards
- bio security - preventing the introduction and spread of biochemical substances in order to minimise the risk of transmission of infectious diseases caused by viruses and bacteria to people, animals and plants
what measure have been implemented to deal with security issues?
World Customs Organisation (WCO)
Introduction by EU of a ‘secure operator’ quality label awarded to operators meeting EU minimum standards of security
what is a global value chain?
Multiple organisations producing parts of a good or service across geographical regions, with each link in the chain adding value.
what is a global production network?
the chain of connected suppliers of parts and materials contributing to the manufacturing or assembly of consumer goods eg Renault still builds most of its vehicles in France but the parts are manufactured worldwide for example batteries for electric powered Renault Zoe are supplied by a Korean manufacturer
What does JIT stand for?
just-in-time production where production is “pulled through” by specific customer orders not “pushed through” creating stock piles of stock.
JIT therefore involves:
- producing and delivering finished goods JIT for them to be sold
- supplying part-assembled goods JIT to be assembled into finished goods
- parts JIT to produce sub-assembled goods and
- materials JIT to be made into parts.
This means less waste in production and less need for storage of stock
what are the advantages of trading agreements?
Since the 1950s trade agreements have created free trade between certain member countries. For example European countries are members of the EU (European Union). UK was formerly a member of the EU but not the Eurozone where there is agreement to a common currency the Euro.
On a global scale Trade Agreements :
- improve global peace and security and reduce conflict
- increase global trade and cooperation on trade issues
- help members develop their economies and standard of living
On a regional scale Trade Agreements :
- to compete on a global level with other trading entities;
- have bigger representation in world affairs
- to allow freedom of movement of trade
- to allow people seeking work to move between countries more easily
- to negotiate trade advantages
- the possibility of developing a common currency to prevent currency fluctuations
- to support particular sectors of a national economy such as agriculture within the EU
- to share technological advantages
- to raise standards in healthcare
- to spread democracy / human rights
disadvantages of trading group agreements
- trade diversion - in a customs union, tariffs placed on external goods make them more expensive and member countries are forced to purchase from within the group as the price becomes artificially cheaper
- loss of sovereignty - decisions become centralised at a supra-national level e.g. EU loss of freedom to negotiate separate trade agreements
- legislation - pressure to adopt central legislation e.g. European court of justice in the EU has ultimate legal power on many issues such as human rights
- employment - freedom of movement of labour increases competition for work and can depress workers’ wages in some sectors and may cause unemployment
- finance/currency - some loss of financial control to a central authority, especially in a monetary union e.g. European Central Bank
- dependence - increased interdependence can mean that some members of the group become overly dependent on others
- sharing/over-exploitation of resources - certain sectors of the economy may be damaged by having to share resources
Disadvantages of SDTs for LDCs
- Not all countries listed as LDCs are members of the WTO and the time it takes to obtain membership can be lengthy
- The WTO Doha Round accepted that SDT measures needed to made more effective and operational
- The lack of effectiveness may be due to the LDCs either not being made fully aware of the measures or making use of them fully
- Some measures have not been tailored to the conditions prevailing in most LDCs
- Developed nations are concerned that their markets will be flooded by cheap imports thereby undermining their own industrial base which has happened already with goods from China and Taiwan
- It is difficult to apply the SDTs in a fair or standardised manner and the lack of reciprocity has stopped some developed countries participating
- The many disadvantages have led many LDCs to reach separate individual trading agreements eg Mexico with Canada and the US - which has benefitted more from its membership of NAFTA than from the concessions it was given as an LDC under SDTs.
What factors other than global shift caused decline in manufacturing in developed countries?
outmoded production methods
products at the end of their lifespan
poor management
What factors affect location choice for manufacturing?
- Availability of skilled and educated labour force
- Opportunity to build a new plant with latest and most productive technology
- Government incentives in the form of tax breaks or enterprise zones to entice companies to invest and relocate
- Access to large markets without tariff barriers enabled through trade agreements
Where are products primarily consumed?
In developed countries eg Dyson a UK company moved its production to Malaysia but still sells the bulk of its vacuum cleaners in the UK and Europe
Is that pattern changing?
Yes. As emerging NICs develop their populations are becoming more affluent creating fresh new demand for consumer products.
What are the predictions for future consumption?
- consumption will drive trade patterns more than production location
- As Asia becomes more competitive goods will go to the East /other Asian countries rather than the West
- Western companies specialising in finance have the potential to benefit from investment in the Asia-Pacific region
What factors have aided globalisation?
- Development of technology and communication particularly the internet which has aided 24/7 communication (7 billion mobile phone subscribers and 3 billion internet users)
- English as the universal business language
- Transport - faster transport by air, road, rail & sea
- Growth of TNCs through mergers and expansion eg Sony Microsoft
- Capital investment - increasing capital mobility
- Global marketing - rise in “global brands” creating economies of scale
- Travel - increased business and personal travel making the world a smaller place
- Containerisation - vast quantities can be shipped globally at low cost
- Migration - ideas and information spread via movemet of people
- Trade - role of the WTO more free trade and trading groups like EU/ NAFTA (North American Free Trade Agreement)
Financial Advancements assisting Globalisation
- Deregulation of financial markets has allowed governments to relax or remove governmental barriers to movement of finance
- Communication technology has made international trade easier and faster
- High speed electronic trading banking systems has made trade between importers and exporters quicker and more secure
What practical advancements in transport have made international trade easier?
- Bigger aircrafts and integrated air networks
- Growth of low-cost airlines and freight companies
- Use of standardised containers - by sea, rail, road and air
- handling and distribution efficiencies
- computerised logistics system
- high speed rail networks
What security issues do trading communities face?
- Supply chain security
- crime and anti terrorism
- food and bio security
- fiscal and anti-smuggling
