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BUSINESS PAPER 1 > globalisation > Flashcards

globalisation Flashcards

1
Q

globalisation

A

the trend towards closer ties between economies and businesses within the global economy

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2
Q

isolationism

A

refers to a nation whose trade policies are designed to put the interests of domestic businesses first by imposing trade barriers to hamper imports

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3
Q

trade liberalisations involves removing trade barriers, such as…

A
  • tariffs (tax imposed on imports that raises price of products)
  • quotas (limits on the quantity of a good that can be imported in a year)
  • regulations (rules put in place to make it harder for imports to enter a country)
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4
Q

what does liberalisation follow

A

a new trade agreement between two countries, on the basis that both remove trade barriers between one another

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5
Q

opportunities of trade liberalisation

A

companies that rely on imported materials and components will enjoy lower costs, enabling them to reduce prices and compete more competitively
liberalisation can lead to increased export opportunities with removal of barriers in other direction

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6
Q

threats of trade liberalisation

A

allowing imports into domestic market increases competition for domestic firms, without it those who could only survive due to barriers will lose protection and face closure

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7
Q

how does political change lead to increased globalisation

A

new people in power come with new laws for the better or worst - for e.g Britain’s decision to leave the EU may lead to a decrease in globalisation

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8
Q

how does reduced cost of transport/communication lead to increased globalisation

A

moving goods around the world can largely affect a businesses profit margins. There have been reductions in travel costs due to:
-oil prices remained or fallen
-tech developments (more efficient engines, reducing fuel consumption)
-technology also allowed construction of bigger trains, boats and planes allowing for EOS
communication made easy due to introduction of the internet

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9
Q

how does MNCe lead to increased globalisation

A

global giants that sell in hundreds of markets seek growth by entering new one, these companies will be transferring resources and products from one country to another, boosting international trade

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10
Q

how does migration lead to increased globalisation

A

many people who migrate to different countries do so for economic reasons, for example determined, looking for work to live better and tend to be well educated.

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11
Q

how does growth of a global labour force lead to increased globalisation

A

lots of businesses use offshore production in order to reduce labour costs

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12
Q

how does structural change lead to increased globalisation

A

when economies move from agriculture specialisation to more manufacturing and services as economic activity shifts, they see structural change. These countries have been able to find export markets that have enabled the acceleration of development.

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13
Q

why is trade necessary?

A

the global economy is more productive as a whole, with each country specialising in things they do best

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14
Q

what are imports

A

products and services produced abroad and consumed domestically

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15
Q

what are exports

A

products and services that are produced domestically and consumed overseas

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16
Q

what examples of imports are there in the uk?

A
  • foreign brands that add to the choice available to UK consumers
  • goods or services that Britain can no longer mass produces
  • materials and components for manufacturers (cheaper, maybe better quality)
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17
Q

what can exporting offer to a business

A

the chance to increase sales, achieve growth enabling them to enjoy EOS

18
Q

how can businesses avoid reliance on the domestic market

A

by exporting products - if the firms home economy enters recession, the exports will continue to make sales as that economy it is sold in could be in a boom period, and the damage of less sales causes less damage

19
Q

what is business specialisation and what strategy does it fall in on porters matrix

A

choosing to produce only one product, or products of a single market. this is porters focused differentiation strategy

20
Q

how can specialisation boost efficiency

A

producing one type of product means fewer machines, fewer trained staff and therefore, lower costs.

21
Q

why did F.W Taylor believe that specialisation enhanced efficiency

A

“practice makes perfect”, an employee that repeats a task over and over will get quicker and quicker over time, boosting efficiency.

22
Q

why can efficiency, created by specialisation, allow for a competitive advantage

A

lower unit costs, which opens up opportunities:

  • lower selling price to boost competitiveness
  • leave selling price to be the same and have higher profit margins
23
Q

foreign direct investment (FDI)

A

occurs when a business purchases non-current assets in another country

24
Q

when does outward FDI occur (2 times)

A
  • when a British business buys assets abroad (e.g building production facilities or retail outlets)
  • when foreign companies buy British assets, as money flows into Britain
25
Q

benefits of FDI

A
  • avoiding problems involved in exporting
  • avoiding transport costs
  • avoiding trade barriers
  • access to natural resources
  • lower operating costs
26
Q

a trading bloc

A

a group of countries that sign up to free trade between them, protected by a tariff wall against imports from outside

27
Q

what are trading blocs working toward

A
  • free trade
  • harmonisation (laws)
  • free movement of labour
28
Q

what are the attraction of trading blocs

A
  • harmonisation (one product can be made that meet legal requirements in all member countries)
  • competing in larger hole market incentives the boosting of efficiency for firms in member states.
  • countries working together, standing up to dumping by non-member countries
29
Q

who is in the EU - European Union

A

Germany, France and 28 others - the uk was

30
Q

ASEAN - association of south- east asian nations

A

Indonesia, Thailand, Vietnam (10 all together)

31
Q

MERCOSUR (south American common market)

A

Brazil, Argentina, uruguay (6 in total)

32
Q

NAFTA - north american free trade association

A

USA, Canada, Mexico

33
Q

EAC - east Africa community

A

Kenya, Tanzania (5 in total)

34
Q

order trading blocs of highest GDP to lowest

A 
NAFTA 
EU
MERCOSUR
ASEAN
EAC
35
Q

what neighbouring giants are ASEAN members in competition with

A

Japan, China and South Korea

36
Q

why is NAFTA at an advantage

A

Mexico can produce at a low cost, which then has direct to the largest domestic market: USA

37
Q

what caused mass negations when Britain decided to leave the EU

A

The fact Britain became a single market, losing easy access to the EU which has 27 member countries, a total of 445 million consumers

38
Q

what type of firms benefit mostly from being part of a trading bloc

A

manufacturing firms

39
Q

advantages of trading blocs

A
  • free movement of goods between members gives the potential to create a large single market
  • external tariff walls insulate the business from competition in another part of the world
  • as trade grows between neighbours, it becomes economic for governments to provide infrastructure support
  • the advantages become much greater if there is free movement of labour and free movement of goods
40
Q

drawbacks of trading blocs

A
  • competition increase due to freer trade
  • to create a single market, new rules and regulations may be agreed (including minimum wages)
  • within a geographically proximate bloc, there may be common factors that together become common problems (e.g low commodity prices)

BUSINESS PAPER 1 (8 decks)

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