Term 1 Flashcards
What is an example of a shortage?
- Covid
- Post brexit
Which way does a demand curve shift due to an increase in demand?
Out (right)
What is meant by an increase in demand?
The increase in quantity demanded at a given price
What factors may cause an increase in demand?
Increase in proportion of income
Which way does the demand curve shift when demand decreases?
In (left)
what way does the supply line shift when supply decreases?
Goes down (to the left)
Which way does the supply curve move when supply increases?
Increases (right)
An example of if cost increases, supply falls?
Electricity (supply falls, curve moves to the left)
An example of cost falls, supply increases?
Petrol (supply increases, curves move to the right)
Impacts on supply? Good and bad
Any type of tax = a decrease in supply
Any type of subsidies (giving Money) = an increase in supply
What is the definition of globalisation?
A process by which countries and economies have to become interconnected or the world coming together to trade in each others markets.
What are advantages to globalisation?
- Economies of scale
- Reduction in monopolies
- Reduce poverty
- Risk mitigation
What are advantages to organic growth?
- Low risk
- Know your market better
- More controlled, (business control)
- Maintain their own values.
What are disadvantages to organic growth?
- Long term between investment and return on investment
- Growth may be limited and dependent on sales forecasts
What is a local business? And benefits / disadvantages
Customer service offer (closer to customers)
B - change quickly to customer needs
D - cannot benefit from eos
D- suseptable to competitors (a new competitor may lower their demand)
What is a international business? and their benefits / disadvantages
They distribute worldwide but they are based in one country (import and export)
B - manufacturing plants (benefit from eos)
D / B - distribution = vehicles and warehouses ( cost however can distribute further)
B - greater profit potential
What is a multinational business?
Where they have manufacturing operation in more than 2 countries and trade worldwide.
What are reasons for growth in multinationals?
- emerging economies
-economies of scale
-protectionism (taxing imports to protect domestic markets)
-external growth through takeovers and mergers
What are advantages to multinationals?
- increase gdp (add to country through spending, imports and exports)
- increases job market (decreases unemployment)
- increases in competition due to customer choice
What are disadvantages to multinationals?
- can go against cultural values, beliefs and morals.
What factors affect the size of a business?
- market size
- nature of a product
- ability to access resources for expansion
What are reasons for growth in a business?
- economies of scale
- risk mitigation
Which factors have facilitated globalisation?
- internet
- e-commerce
- rise of multinationals
- communication technologies
What are opportunities of globalisation?
- New markets possibly with high disposable income
- Opportunity to move production into countries with lower labour costs
- Investment opportunity in infrastructure and production (new factories and technology)
What are threats of globalisation?
- Lower labour costs may damage reputation
- Reduced domestic economies as businesses in developing countries begin to produce by themselves
- Lack of knowledge / culture differences may threaten global growth
What is a brand?
Distinctive product offering created by the use of a logo, symbol etc (McDonald’s logo & Nikes tick)
What is a global brand?
Brand that is recognised throughout the world
What are challenges of globalisation?
- increases competition
- costs of expansion
-physical distance
-adaption to cultural and customer behaviour
Why do people trade internationally?
- variety
- specialise
- to grow
- reduces costs
- avoid conflict
What is variety?
Trade enables countries to obtain products they cannot make themselves or could only
What is growth?
access to millions of new customers creates potential for businesses therefore the economy to grow
What is specialisation?
Main advantage of international trade that the company to specialise in e.g. Germans and cars
