Paper 1 keywords Flashcards
globalisation
the process in which the world economy becomes increasingly interdependent, the economies are more interlinked
emerging economy
used to describe an economy that is going through rapid industrialisation (manufacturing) and growth, markets are making a transition
gross domestic product (GDP)
the value of all the goods and services produced within an economy over a specified time-period such as a year
GDP per capita
measuring GDP per head of population
purchasing power parity
GDP or GDP per capita adjusted for different costs of living
human development index (HDI)
a composite indicator of developing that that combines GDP with life expectancy and literacy
international trade
the flow of commodities and services on an international scale
fixed capital formation
investment in long term assets such as roads and buildings
imports
products and services produced abroad and consumed domestically
exports
products and services produced domestically and consumed abroad
balance of payments
a record of all the transactions between one country and the rest of the world
balance of payments deficit
when the value of exports is less than the value of imports leading to a build-up of foreign currency debt
balance of payments surplus
when the value of exports is greater than the value of imports for a country
invisible export
the sale of a service to an overseas customer
comparative advantage
the ability of an individual/group to carry out a particular economic activity more efficiently than other activity, exists when there is a relative opportunity cost for certain countries
foreign direct investment
when a business buys non-current assets in another country. It involves establishing operations or acquiring tangible assets, including stakes in other businesses. It is normally by companies rather than governments.
inward FDI
when a country hosts a foreign MNC, and receives investment from outside its economy
outward FDI
when an MNC who has their HQ in your economy, invests in non-current assets in another country
saturated market
a market where growth has ceased and there are no significant opportunities to boost sales other than stealing market share from existing rivals
scientific management
F.W. Taylor suggested that managers should maximise worker productivity by calculating how best to divide up tasks into smaller fragments, then incentivise workers to produce exactly as set out by managers
isolationism
when nations use trade policies designed to put domestic business interests first by imposing trade barriers to hamper imports
free trade
when there are no barriers to trade such as tariffs and non-tariff barriers
liberalisation
when barriers to trade are removed, e.g. by the WTO
regulations
rules created as a result of laws passed by parliament
migration
the movement of people from one town to another in search of a better life
protectionism
it involves any attempt by a country to impose restrictions or trade in goods and services to protect domestic producers from foreign competition, through the use of measures such as tariffs
sunset industry
a declining industry perhaps as the product becomes technologically obsolete or if an industry has become internationally uncompetitive
infant industry
small industries which haven’t had time to grow
import quota
quantitative limits on the level of imports allowed or a limit to the value of imports permitted into a country in a given time period
tariff
an additional tax or duty that raises the price of imported goods and causes a contraction in domestic demand and an expansion in domestic supply
domestic subsidy
a payment by the government to domestic producers in order to help them compete in the international market
regulations
rules created as a result of laws passed by parliament
counter-cyclical
expansionary government policies to counter a downturn in the economic cyle
Keynesian
an economist advocated an increase in government spending in a recession to manage the economic cycle (counter-cyclical policies)
structural unemployment
unemployment caused by the decline of an industry, e.g. coal miners
trade war
an economic battle between two countries based entirely on protectionist measures such as import quotas; which is detrimental to both parties, but neither wants to back down
technical barriers to trade
when a country applies technical regulations, standards- including packaging, marking and labelling standards in order to avoid creating unnecessary obstacles to trade
import licensing
governments grant importers the right to import goods, these can be restricted
trade bloc
usually groups of countries in specific regions that manage and promote trade activities, they aim to have free trade within an external tariff wall
free trade area
where there is free trade between the countries involved but each country can set their own trade restrictions on countries outside of the agreement
customs union
comprises of countries which agree to abolish tariffs and quotas and encourage the free movement of goods and services through adopting a common export tariff
single market
A trade bloc where there is free trade amongst the members, a common external tariff, and freedom of movement of goods/services, capital and people e.g. the EU
appreciation of a currency
when a currency increases in value against another currency
depreciation of a currency
when a currency decreases in value against another currency
pull factors
where businesses are attracted by compelling opportunities to grow by expanding internationally
push factors
where businesses feel they have to expand internationally because of domestic/home market issues
outsourcing
contracting another business to perform a business function on your behalf
offshoring
the act of basing some of a business’ processes or services overseas, so as to take advantage of lower costs
economies of scale
when average costs per unit falls as output increases
competition
rivalry between a business and another business who offers a similar product/service to a similar market
dumping
selling off surplus stock on a foreign market at below cost which puts domestic businesses in the foreign market at a disadvantage
disposable income
the amount a household has left after income taxes have been deducted
infrastructure
the provision of the underpinnings of modern life, e.g. roads, railway
market attractiveness
an analysis of the current and future sales and profit potential of a country or market
polycentric approach
adapting products to culture
bureaucracy
an organisation stifled by paperwork, checking and rechecking of decisions and actions, there are a lot of rules
marketing strategy
a medium-long term plan that is carefully evaluated to achieve a corporate objective, delivered through your marketing mix
mass market
products or services which are targeted at the whole market, e.g. mars bars
niche market
the attempt to create products or services which are targeted towards a specific segment of a market
market size
this is total value/no. of sales in the market
market share
the proportion of total market sales that a firm has
dynamic market
a market that is constantly changing
risk
it is a known possibility of an unfavourable outcome that can be estimated with probabilities
uncertainty
it exists when the outcome of a particular situation is impossible to predict
economies of scale
factors that cause costs per unit to fall when a firm operates at a higher level of production
market research
the process of gathering information about consumers, competitors and distributors within a firm’s market, it is a way of identifying consumers’ buying habits and attitudes to current and future products.
bias
a factor that causes research findings to be unrepresentative of the whole population
product orientation
it is an inward-looking approach focusing on innovation and research and development, they focus on making things they are good at/experienced in making
market orientation
an outward-looking approach focusing on identifying consumer needs and wants and tailoring product development towards it
primary research
finding and collecting information first-hand
secondary research
finding and collecting information which already exists
focus groups
a group of target market demographic respondents that are chosen to take part in a production trial
consumer panels
a group of customers who have been specially selected to give ongoing feedback to the business
qualitative research
research focused on obtaining in-depth detailed information, can identify opinions and why consumers feel the way they do, based on opinions
quantitative research
research that is focused on obtaining numerical data which can be analysed and compared much easier than qualitative
sampling
the process of targeting a group of individuals that have been chosen from a larger group, the results must be representative of the target population
market segmentation
the process of selecting a specific segment of your market and adapting your marketing strategies to this market
market mapping
a grid plotting where each existing brand sits on scales based upon two important features of a market, e.g. price
market positioning
how individual products or brands are seen in relation to their competition by the consumers
competitive advantage
advantages over competitors by offering consumers greater value
added value
the value of the finished good or service over and above the cost of achieving it
product differentiation
the extent to which consumers perceive your brand/product as being different from others
unique selling point
a consumer benefit that no rival can match, perhaps because it is protected by a strong patent
demand
measures the level of interest customers have in buying a product
complementary good
bought in conjunction with each other, such as cars and petrol
substitute good
products or services in competition with each other, the success of one is at the expense of another
inferior goods
goods which sales fall when people are better off, but rise when consumers are struggling financially
luxury goods
goods which sales rise rapidly when people are better off, but may fall rapidly during harder times
normal goods
goods which sales move in-line with changes in consumer incomes
