globalisation Flashcards
what is globalisation
how interconnected the world is
resulted in businesses operating in several countries across the world
GDP
gross domestic product
idicates size of nations economy
total makret value of goods and services within a market over a period of time
expressed per capita-meaning GDP divided by number of people in country
measures economic performance of a country
other indicators of growth
literacy rate-literacy rate people over 15 year old
health-
human development index-average incomes
economic growth
when economy growing, increase in demand for products
increase in employment opportunities
increase in peoples disposable income
people move out of poverty
what is an emerging economy
economy which is growing but not yet fully developed
examples of emerging economies
MINT
BRICS
international trade
importing and exporting
imports-products brough from overseas
money goes back to foregin business who brought it from
money flowing out of an economy
exports-products sold from overseas
money given by person who brought it too
money flows out of an economy
specialsiation
way to gain a competitive advantage
where busiensss narrow down range of products focuing on one or narrow range
adv-increases producivity and efficiency due to workers becoming skilled at making those specific products
speed they are produced and quality they are produced at increase
reduces cost per unit, allows price to be reduced, profit margin to be increased
dis of specialisation
changes in consumer trends, effect more as less to fall back on
extensive training to become specialsed at narrow range of products
foregin direct investment
where one business invests into another business
need some type of managerical control
adv-increases access to makrets
first knowledge of nations legal system
advnatge of skilled local labour
trade liberslaition
removal of restrictures or barriers of trade
adv of trade libersliation
increases consumers choice
exports cheaper
raw materials are cheaper
dis of trade liberlisation
may force out smaller firms or doemtic firms out of business as not comeptiev enough
plotical change
government might change political system to one which supports trade liberilsation
strutural changes to economic developemnt
primary industries-obtaining raw materials
secondary-manafacturer goods
teritary-finanical and health services
quarternary-it knowledge based services
more people in the world are able to work
world population increasing, people living and working longer, more women at work
more people at work, people have more freedom to set up business operations wherever they want
protesctionism
where government helps protect domectic frims from foregin competiton
way of remember ways sof protectionsim
Social
Learning
Therory
subsides-fixed sum of money paid by government to help domestic firms
adv-can reduce their costs making them have lower pcires then inmports
dis-people having to pay more tax
legisaltion-laws placed by government to stop international trading
trade embaragos-banning trade altogtehr
trade sanctions-restricting trade
tarrifs and quotas
tarrifs-tax paid on particlar imported goods making peoople less liekly to import more
quotas-placing limits on amount of imported goods that can come into country
adv-helps domestic frims as face less compeition
dis-restricts consumer choice nad means customers may have to pay more for products
dis-lack of competition may remove incentive for domestic firms to imporve efficiency and quality
trading blocs
signed legal agreements betweeen several coutnerires to restict or remove trade barriers
adv of trading blocs
being cheapest supplier in bloc
avaliabilty of skilled workers
access to new markets
dis of trading blocs
change regualtions to ones that fit trading bloc
smaller firms in trading bloc may be pushed out
buying products which are not within trading bloc may become more expensive
expensive to import products from counteries not within the bloc
push factors
negative effects in the domestic market
saturated makrets-wherer all demand is met, theres not much chance to grow
moving may create chance for new access to markets
moving to unsaturated overseas market may mean increase in sales
competition-may be highly compeitve where currently located
may be less demadn for prodcut in place aborad
pull factors
postive factors about overseas markets
spread of risk-if demand goes down in one country, have less of an impact as oculd be high in another country
economies of scale-reduce their unit costs
why would moving abroad increase a products life cycle
product may be in decline stage in one country but growth stage in another
offshoring
branching out deparments into other counteirs
adv-imports andd exports cheaper
access of new skilled workforce
reduces costs
reshoring
moving departments back
may be due to consumers noticing that busienss is exploting its workers
adv-easier to manage
importing and exporting is quicker as within same country
what are the non financial benefits to a country
improve working conditions and pay, increasing standards of living
imporves infrastructure, imporving community
dis of moving to another country
job losses and unemployment in orginal country
outsourcing
contracting out business acitivities to other businesses
adv-reduced costs as not having to pay for full time workers
adv-might be able to accept contracts that they may have turned down
dis-cant monitor so chance that they produce something of low quality, negatively impacting repuation of business
assessing a country as a market
how much disposable income country has-HIGH disposbale income so more people willing to spend rather then save
cultures and languasges simialr-therefore avoids any cultural and lanaguage barriers
laws-large amounts of regualtions coculd make trading more complicated
infrastrastructure-good infrasturcture if not may ahev to then spend moree money on imporving it
poitical stability-whetehr its politcally stable or not
if not, then peopels employment may be consistneyl changign and dont know how much money people will have
exchnage rates
remember-pile DC
assessiing a country as a production location
PIC
political stability-is it politically stable
infrastructure-want imports and exports to be easily trasnported back adn forth
costs of production-often mean moving to country where pay forgin workers much lwoer wages
then would with UK employees
useful for businesses who dont need skilled workforce
land and office space also tends to be cheaper
globa merger
two businesses from different counteries merge togeterh to create one business
joint ventures
where 2 businesses remain as seperate entitiys but work on a joint project togetrh
where two or more businesses work togeteh on a joint project
they tehn share profits and equitys
adv of being merger or joint venture
Spreading of risk-could have high risk of making costly kistakes moving into a busines it has little knowldge off
other business can help it by bringing good knowledge of local makret, consumer trasks etc
fall in demadn in one country will have less of an effect as could sgitll remain high in another country
Access to different markets-increases amount of consumers selling too
Securing resources and supplies-might ahve god relationship with a particualr supplier tgat the other firm might want, therefore beneficial to business
can obtain intellectual property-e.g copyrigths and patents which help protect business from being copied by others
beat competion-can join or mergw with competion meaning removes coemptior out of market
can achive eEOS, creating comepittive advanatbe to business
acroyn: SAS
what ways can businesses imporve their compeitive advnatge in global competiton
generic stragies
cost leadership/competitiness-being cheapest
achieve EOS
difefrentiation-have USP
what are the 3 types of global marketing stratgeies
ethnocentric
polycentric
genocentric
ethnocentric approach
keeping mareting strategy simailr everywhere
adv-global more liekly to become loyal
adv-same products everywhere, acheive EOS
adv-less time and money spent on makret research
make it easier for firms to deal with suppliers and distibutors as well known
dis-risk of culture clashes
any negativity in one country can impact global brand
polycentric approach
changing marketign stragey in each country to suit needs and wants of international makrets
adv-guaranteed sales as you know its suited to target audience
adv-no risk of culture clashes
dis-expensive as need lots of makret research
and time consuming
fewer chances to reach EOS
geocentric approach
mixture of both
having global focus of ethnocentric approach but also identifying local factors under polycentric approach
adv-eos, global makes easier to supply and distbiibute as well known
dis-expensive to adapt
product of global niche markets
level of expertise
increase quality
price
can charge higher prices as specialsied
promotion
adv of global niche markets
face minimal competition, higher customer loyalty
products tend to be price ineasltic so can charge more premium prices
risks can be spread across many markets
dis of global niche markets
low salves volume in cpmparison to mass markets
risk is high, fall in supply in one country can mean firms struggle to survive
culture clashes
use makret research to assess social norms in a country
can adpat marketing mix to different cultures
should also consider anguages wgen makreting abroad
making sure languages are right and are not misundersootf or inappropriate or offensive to consumers
may need langauge translators which can be expensive
what are MNCS
businesses which operate in several counteries
adv of MNCS on local economy
creates jobs
increases standard of living, reduces unemployment
improve infrastructure
dis of MNCS on local economy
may explot their workers as see LEDS as a chance to pay lower wages due to less strict laws
increase pollution in country
transfer pricing
where a busienss purposely charges higher prices to the counteirs they operate in with a lower tax rate
adn then lower prices to counteries they operate in with higher tax rate
this way they are gainign more profit, and gaining less tax to pay
adv of MNCS on national economy
bring in it skills so once person leaves busienss, skills can then be transferred to other businesses
increase amount of entreprenurs as people can work out that they are capable of setting up their own business
imporvents FDI flows-increases amount of money flowing into and out of business
icnreases balance of payments
imporves balance sheet
dis of MNCS on national econom y
may force domestic firms out of business
what are ethics
rules and principles that state which bheaviours are acceptbale for society, individuals and groups
idea that mncs may take advnate of less strict rules in LEDS and decide to explout wrokers, lower working conditions and poorer pag
spening less on safty equipment
poor sanitation
what are the 3 ways of controlling MNCS
government legisaltion-laws set by goverment to contorl MNCS
pressure groups-gorups of people who want to change behaviours of businesses
adv-raise awareness of issues quickly, prtcilaurly using soical media
dis-may not have ability to stop excessive behaviour, making them hve bad reputation and weaknening their influence against MNCS
social media
adv-quickly shares info about unethical practices
shared to wide amount of epeole
dis-not good in long term, people just scroll and move past it, may forget it within a few seconds
GPS
