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Business > Globalisation > Flashcards

Globalisation Flashcards

1
Q

What is globalisation?

A

The process that enables product, financial and investment markets to operate across the globe

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2
Q

What are the characteristics of globalisation?

A

-Greater trade in goods and services between nations and within regions
-An increase in transfers of capital between countries
-Higher levels of labour migration within and between countries

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3
Q

What are the causes of globalisation?

A

-Deregulation of markets
-Political changes
-Removal of barriers of trade
-Lowering transportation costs

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4
Q

What are the benefits of globalisation?

A

-Consumers have greater choice and cheaper goods
-Developing countries increase wealth by producing goods for export
-Businesses can trade internationally

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5
Q

What are the cons of globalisation?

A

-Unskilled workers in western countries have fallen wages
-Overcompeted businesses
-Workers in developing countries have been exploited
-Environmental damage

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6
Q

What are the benefits of multinationals?

A

-Providing employment
-Investment leads to infrastructure development
-New technology
-Increased growth in UK economy

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7
Q

What are the cons of multinationals?

A

-Lead to other businesses going out of business and causing unemployment
-Destroying local culture
-Negative environmental impacts

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8
Q

What is ecnonomic growth?

A

Occurs when a country produces more goods and services in one year than it did the year before
Measured by:
-GDP
-GDP per capita

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9
Q

Why are businesses intrested in the economic growth of a country?

A

-High GDP means high incomes so people are more likely to spend more
-High investment rates if sales revenue is higher
-High economic growth means higher ouput so firms employ more people, increasing the employment rate

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10
Q

What are the benefits of economic growth?

A

-Increased spending by consumers leading to increased sales for a business
-Increased opportunities to expand
-Increased profits and investment in businesses

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11
Q

What are the cons of economic growth?

A

-Increase in competition from expanding businesses and improved goods
-Increase in prices leading to inflation
-Shortage of labour due to increased wages and costs

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12
Q

What are the BRIC countries?

A

Brazil, Russia, India, China
-Classed as emerging superpowers because they share either: large populations, key resources or economic power

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13
Q

What are the MINT countries?

A

Mexico, Indonesia, Nigeria, Turkey
-All have very favourable demographics and have the potential to become superpowers in the future

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14
Q

What does GDP say about a country?

A

The strength of a countries economy which helps to determine the efficent capital deployment

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15
Q

What is the effect of GDP growth on a business?

A

-Negative growth = may need to reduce employment and offer redundancies and must evaluate their business opportunities
-Positive growth = increases confidence, hire new employees, expand, buy new equipment

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16
Q

What are the indicators of growth?

A

-Income levels
-Education
-Health

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17
Q

What is HDI?

A

Human Development Index
-Health
-Education
-Living standards

18
Q

What are the benefits of HDI?

A

-Can compare countries
-Education and health give information about the countries infrastructure and opportunies
-Can measure progress over time
-Can allocate resources more efficently to those who need it most

19
Q

What are the cons of HDI?

A

-Misses many important factors
-Doesn’t consider politics
-Doesn’t consider the environment
-Doesn’t consider distribution of income, may be unequal

20
Q

What is specialisation?

A

The process by which individuals, businesses and economies concentrate on creating and selling those goods and services that they produce most efficently and cost effectively

21
Q

What are the benefits of specialisation?

A

-Creates specialised staff
-Improved quality of product
-Improved efficiency
-Using the same materials, means buying in bulk which generates economies of scale

22
Q

What are the cons of specialisation?

A

-Can’t target niche markets
-Over reliant
-Hard to compete as other companies may become cheaper
-Causes diseconomies of scale if a business is too big

23
Q

What is FDI?

A

Forgein Direct Investment
-investment in a forgein country by a business to obtain control of another business

24
Q

What are the benefits of FDI?

A

-Creates jobs
-Higher wages and improved working conditions
-Can export more goods

25
Q

What are the cons of FDI?

A

-Possible exploitation
-Businesses take profits and pay little tax
-Competition with existing buisnesses

26
Q

What is greenfield?

A

A type of FDI where a company will build its own, brand new facilities from the ground up, involves organic growth
-competition is difficult to overcome
-entry process takes years
-new facilities are more efficent
-have a greater control of the business

27
Q

What is brownfield?

A

A type of FDI when a company purchases or leases an existing business in the forgein country, involving inorganic growth
-reduces start up costs
-gain access to an established market
-one less competitor to deal with
-aquire a companys technology, staff and knowledge

28
Q

What are the ways to enter international markets?

A

-Exporting = manufacturing products at home to be sold abroad
-Franchising = selling a license to use a firms name, products or services in return for an intial payment and royalities
-Licensing = one firm producing and marketing another’s products in a particular country
-Joint venture = 2 companies combining resources to operate in a particular country, shares risks and costs
-Merger/takeover = when two seperate entities combine forces to create a new joint organisation
-Direct investment = setting up production facilities abroad, costly and risky, lower wage costs, availability of raw materials

29
Q

What is protectionism?

A

Supporting domestic industries against forgein competition by the government using policies such as: quotas, tarffis or barriers that increase the prices of imported goods

30
Q

What are the protectionism methods?

A

-Tariff = a tax placed on an import to increase its price and reduce demand
-Quotas = a limit on the quantity of a good imported or exported
-Subsidy = money given to local producers to make their goods cheaper on the domestic market

31
Q

What are the benefits of protectionism?

A

-Protect key strategic industries
-Raise money for government
-Protect domestic jobs
-Reduce the trade defict
-Protect new infant industries

32
Q

What are the cons of protectionism?

A

-High import prices may not reduce demand
-Tariffs can raise consumer prices
-Domestic firms may not become more competitive
-Quotas require monitoring

33
Q

What is a trading bloc?

A

A type of intergovernmental agreement to reduce regional trade barriers

34
Q

What are the types of trading blocs?

A

-Free trade agreements = elimination or reduction of import tariffs and quotas on trade between member countries
-Customs unions = removing trade barriers and establishing a common external tariff on imports and non-member countries
-Common markets = remove trade barriers and allow free movement of factors of production e.g labour
-Monetary Unions = common currency shared by member countries

35
Q

What is the EU?

A

-27 member states
-Started in 1951
-Combined market of 550 million customers
-Free circulation of goods, people and money in the EU
-19 memebers make up the eurozone

36
Q

What is NAFTA?

A

Canada, Mexico, United States
-Free trade zone
-Covers environmental and labour issues as well as trade and investment

37
Q

What is the ASEAN?

A

Association of Southeast Asian Nations
-10 member international body
-More than 500 million people living in the reigon
-Set up in 1967
-Free trade agreement among member states with eased travel in the region

38
Q

What is trade liberalisation?

A

Removal or reduction of restrictions or barriers on the free exchange of goods between nations
-aims to make an economy more open to trade and investment

39
Q

What are the benefits of trading blocs?

A

-Higher quality of goods and services
-Cheaper goods and services
-Promotes co operative relationships between countries
-Promotes a higher standard of living
-Encourages trade which boosts economic growth
-Larger markets

40
Q

What are the cons of trading blocs?

A

-Politicians use it as negotion power
-Large companies have greater power
-Complex and expensive
-Increased competition inside the bloc
-Difficult to expand to areas outside the bloc

Business (12 decks)

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