(PAPER 1) 4.1.2 global business Flashcards
import definition
products and services produced abroad and consumed domestically
export definition
products and services produced domestically and consumed abroad
a reason why firms export
to reach more markets and therefore customers
drawbacks to a business of exporting
costly- transport and possibly tariffs
benefit of importing goods
more choice for consumers and businesses
specialisation definition
a production strategy where a business chooses to focus on a limited range of goods and services
why would a country specialise in trade according to its competitive advantage
efficiency benefits leading to a lower cost per unit
benefits and drawbacks of specialisation
+ increase in quality- more satisfied customers
+ lower costs- ability to reinvest into the business with the profits they make
- can be repetitive
- risky to focus on a limited range
- employees may feel bored- less motivated and productive
FDI (foreign direct investment) definition
when a business purchases non-current assets in another country
methods of FDI
- branches, offices, stores
2. merges and takeovers
benefits of FDI for a business
- access to new markets
- lower costs- tariffs and transport
- access to natural resources
Benefits of FDI for the country
- provides job opportunities
2. increases standards of living
reasons why a country may not want FDI
- more competition for domestic businesses
2. negative externalities
