International Trade And Business Growth Flashcards
What are imports?
Imports are products that are produced abroad but consumed domestically
What are exports?
Products that are produced in Britain but consumed abroad
What is international trade?
A firm either buys goods from an overseas business or sells to an overseas buyer
What is business specialisation?
When a business produces a limited range of products
What are the benefits of business specialisation?
· Firms become more efficient when they can produce more output from the same amount of raw materials, if they can do this then average cost will fall - specialisation can achieve this
· Companies who have chosen to specialise will require less machinery, lower capital costs should reduce unit costs
· When employees are asked to specialise they each have smaller tasks they repeat all day so each employee will become more skilled at their task therefore speeding up production so more output, if output rises without any addition to the firms wage bill then average cost of production falls
What is the drawback of business specialisation?
Repetitive work leads to employees’ boredom so de motivation and lower quality products
What is FDI?
When a company sets up a new business abroad or where a company takes over/merges with another business overseas
What is outward FDI?
A British firm builds or buys a facility abroad
Why would FDI provide more opportunities for businesses?
The domestic market will become saturated making it more difficult for growth therefore FDI will allow more opportunities to expand into new markets
