Globalisation Flashcards
=What is offshoring? Pros and cons ?
Moving business departments overseas
Pros: International countries may offer cheaper labour, decrease costs 2)
Cons: 1) Bad for business image, trade unions criticise for UK job losses 2) International countries may offer less skilled labour
What is outsourcing? Pros and cons?
Outsourcing is when businesses contract out activities to other businesses
Pros: 1) Benefit from specialised knowledge of business outsourced to 2) Decrease costs as business doesn’t have to pay for permanent staff when they aren’t always needed
Cons: 1) Business doesn’t have control over quality of outsourced work, if it is poor quality can affect reputation and brand image
Why is Economic growth important for individuals and businesses
1) Greater level of output - increased employment opportunities - average income increases - disposable income increases - more demand for products will increase sales and profit of businesses
2) Can increase demand for recognisable western brands (seen as luxury items) - creates opporunities for western countries to expand
3) Foreign businesses will move parts of business into countries with growing economy (reduced cost as cheaper labour , less transportation costs to sell goods there)
What are and what is significant about emerging economies?
An emerging economy is a fast growing economy
1) They have cheap labour costs 2) Growing population sizes means many young people who are entering workforce
What are imports and exports
Imports are products/ services bought from overseas
Exports are products/services bought overseas
Disadvantages of specialisation
Specialised businesses risks losing sales if there is a decrease in demand for their product, and they have no other sources of revenue to make up for these losses
Specialisation can increase the cost of training staff, as staff will need extensive training to gain skills to become specialised in making product
Specialisation will make business funeranle to market demand - if there is a growth in aspect of market their are not involved they will miss out on potential sales
What is specialisation and how does it help?
Specialisation is when a firm focuses on producing just one product
1) Helps give a business a competitive advantage -which is important for firms competing in an international market, as they face more competition - as efficiency of workers up (highly skilled at making specific product) as well as quality and speed- decreases cost per unit (lower price increase demand, or keep high profit per unit), also higher quality product can generate more sales and allow price to be raised, higher profit
Specialisation advantages 2
Means business does not have to compete directly with the same product as other businesses (example) in the same national market - means they can charge a premium price for their product in that market - gains a competitive advantage through differentiation
