Influences on businesses Flashcards
International trade
Selling of goods and services across the world
Pros-
Increase brand awareness and exchange rate fluctuations
Cons-
Higher transport costs and language problems in trading
Multinational business
Businesses with their headquarters in one country but which operate in other countries through their offices, factories and shops. A company which just sells goods abroad is not a multinational company
Pros-
Well know around world and removal of trade barriers
Cons-
Language barriers and laws in other countries
Tariff
Tax on an import. It’s usually expressed as a percentage of the imports price
Imports
Goods and services that are bought from producers overseas
Exports
Goods and services which are produced in one country and sold in another one
Exchange rates
Value of one country’s currency against another country’s currency
Impact of a fall in the value of the pound against other currencies:
Import prices increase and increased value of foreign income/investments
Globalisation
Increased interdependency of people around the world as a result of increased trade and cultural exchange. It’s led to an increased worldwide production of goods and services.
Main features:
Increased international trade and free movement of labour and capital across international borders
This creates opporutunities:
Ability to enter new markets and use resources available abroad
However it creates threats:
Increased competition and loss of talented workers
Impact of Globalisation on UK businesses
Benefits:
Greater access to foreign markets and UK can access specialist skills from other countries
Drawbacks:
UK is subject to international laws of trade and UK struggles to compete on cost for manufactured goods
Inward investment
Occurs when governments, businesses and individuals invest capital into another country e.g. building new factories or buying companies
