Miss Blackwell Half Term 2 Flashcards
Organic growth
Internal growth/growth within a business
Examples of organic growth
- Launch new products
- Open new stores
- Become franchise
Globalisation (2 definitions)
Increased integration and interdependence of national economies
The world coming together to trade in each others markets
8 factors facilitating a high level of imports
- Reduction in trade restrictions
- Cost of production abroad
- Ease of transportation
- E commerce
- Communication
- Easy movement of capital
- Increase movement of people
- Rise in no. of multinationals
Multinational definition
A business that has activities and operations in more than one country
Operates in/has branches in more than one country
Advantages of being a multinational
- Economies of scale
- Take advantage of legal constraints
- Ability to enter new markets with less competition
- Low wages
Disadvantages of being a multinational
- Transport costs
- Communication issues
- Reputation damage (unethical)
Advantages of multinationals to LEDC’s
- Employment
- Gain skills
- Invest in infrastructure
- Utilisation of local resources
Multiplier effect in economy
Negatives of multinationals to LEDC’s
- Low wages
- Low skill job (short term)
- Unsafe working practices
- Child Labour
- Drive our local businesses
- Income goes back to domestic market
Strategy definition
Plan of action
Global strategy
Building a competitive global advantage in order to operate on a global scale
Eg choosing locations
Brand definition
A distinctive product created by use of logo, symbol, name, design, packaging or a combination of these
In order to differentiate from and compete with competitors
Global brand
A brand recognised throughout much of the world
Opportunities of globalisation
- Cheap labour costs/lack of legal constraints/regulations
- Cheap resources
- Lower costs eg factories
- Creates new markets with high disposable income (long term, multiplier effect)
- More customers
- Economies of scale
- Tax avoidance
Threats of globalisation
- Reduces other countries reliance on us
- Lose jobs in domestic country
- Damage reputation (exploitation)
- Carbon footprint
- less control on operations (communication)
- May have to pay financial compensation due to exploitation
- Cultural differences to compensate for
Reasons why some businesses are more affected by globalisation than others
- Business who produce
- Businesses offering a tangible or digital product (rather than service)
- With global appeal
- Without a USP (too much competition)
- Small businesses find it hard to expand due to lack of finance
What is the European single market
Group of EU countries that seek to guarantee free movement of goods, services, capital and labour
What are the 4 freedoms
Goods
Services
Labour
Capital
How do UK businesses benefit from EU
- Employ anyone from EU
- No trade barriers
- Provide services in other countries (EU)
- Movement of capital
What is free trade
No trade barriers
What are trade barriers
Tariffs and quotas
What are tariffs
A tax paid on imports
What are quotas
A limit on quantity of a product imported in a given time
