Paper 1 - Gaps in my knowledge Flashcards
What are the benefits of FDI?
- Access to new markets
- Knowledge on local markets
- Local markets may have cheaper/highly skilled labour
What are the benefits of specialisation?
- Economies of scale - lower costs - lower prices
- Highly skilled specialised labour - high quality products
What are the drawbacks of specialisation?
- Having to train labour to become specialised can be costly
- Unable to easily adapt to market changes
Besides saturation and competitiveness, what are examples of push factors?
- Changes in government policies such as increases in the tax rate
- Changes in consumer trends - more desirable in other countries
Besides risk-spreading and economies of scale, what are examples of pull factors?
- More profitable markets
- Greater size market
- Lower production costs
- Lower material costs
- Higher availability of resources
2 benefits and 2 costs of offshoring
- Increasing employment in other countries - rising incomes
- Cheaper labour abroad
- Job losses and lack of investment into the local economy
- Workers overseas can be exploited
2 benefits and 2 costs of outsourcing
- The workers may have more specialist knowledge
- Doesn’t have to employ permanent staff
- No control over the quality
- Poorly done job could dampen reputation
What are the benefits of operating in a global niche market?
- Firms may face minimal competition
- Price inelastic - can charge higher prices
- Risk is spread over global markets compared to just being in one
What are the costs of operating in a global niche market?
-smaller sales volume, lower sales revenue
- Less benefit from economies of scale
What are the 5 reasons for joint ventures?
- Spread risk over different countries
- Entering new markets/trade blocs
- Acquire intellectual property
- Securing resources
- Maintain global competitiveness
What is the difference between dismissal and redundancies?
- Dismissal is when an employee breaches a contract which causes an employer to have to lay them off
- A redundancy is when an employee’s job is no longer needed and so a business may have to pay staff out
What are the costs involved in recruitment?
- Cost of advertising the vacant post
- Training new employees
What is induction training?
- Employees are trained on the policies of the business as well as given in-depth training of their job - this training is done when they first start working
What are benefits of on-the-job training?
- Easy to organise
- Lower costs of training -they can shadow staff
- Training is job specific
What are the cons of on-the-job training?
- No new ideas brought to the business
- Bad practises are passed on
What are the benefits of off-the-job training?
- Trainers are specialists
- New ideas brought to the business
- Less risk of mistakes
What are the cons of off-the-job training?
- Can be more expensive’
- No benefit to the business whilst training
- Training may not be job specific
What is a matrix structure?
- Projects are completed across the business by bringing in different departments from around the business
What are the benefits of a matrix structure?
- Increased motivation for all team members
- Gain ideas from across the whole business
- Improve communication across the organisation
What are the drawbacks of a matrix structure?
- Hard to have to communicate to 2 different managers
- No clear line of accountability for project teams
- Hard to get used to different areas of the business
What is a first movers advantage?
- Doing something first before competitors
How to calculate market share?
- (Sales of a product/sales of the whole market) x 100
What is the difference between direct competition and indirect competition?
- Direct competition - same product to same customers
- Indirect competition - different product to different customers
What are 2 benefits of market mapping to a business?
- Stop gaps in the market
- Find the closest competitors of a business
What are 2 drawbacks of market mapping?
- subjective - based upon people’s opinion
- Only compares between 2 different variables
What are the 2 ways a business could increase the value of its products?
- Increasing the selling price or reducing the cost of inputs
