theme 4 Flashcards
list factors contributing to globalisation
reduction of international trade barriers
increased FDI
Reduced cost of transport and communications
growth of labour force
what is an FDI?
Investing by setting up operations or buying assets in business in another country
state the benefits of FDI
high potential of profits
avoid barriers to entry
acquires direct knowledge of local markets
what is an emerging economy?
economies in developing countries where there is rapid growth
list the acronyms of BRIC and MINT
Brazil, Russia, India, China
Mexico, Indonesia, Nigeria, Turkey
list indicators of growth
GDP
health
human development index: life expectancy, mean years of schooling
what is protectionism?
an approach used by a government to protect domestic abusers
list examples of protectionism
government legislation
tariffs
import quotas
subsidies
list the benefits of trading blocs
FDI
economies of scale
competition
what might encourage a firm to trade in another country (market)
levels and growth of disposable income
exchange rates
ease of doing business
what might encourage a firm to move production to another country?
cost of production
skills and availability of labour
political stability
natural resources
what are the pull factors that prompt trade?
economies of scale
risk spreading
what are the push factors that prompt trade?
saturated markets
competition
how do businesses merge globally?
liscencing: another firm using its brand for a fee
Franchising
what is the difference between offshoring and outsourcing?
offshoring: moving manufacturing/service industries to a location with lower costs
outsourcing: moving an entire business project to a specialist service provider
list the benefits of global mergers
brand loyalty
avoids high risk
limits competition
list the reasons for global mergers
entering new markets and trade blocs
spreading risks over different regions
what are the ethical considerations for markets?
misleading labelling
inappropriate promotional activities
what are the ethical considerations for the environment?
emissions
waste disposal
what are the ethical considerations for stakeholders?
consumers: misleading advertising
product safety
employees: pay and conditions
employee redundancies
list the ways to control MNCs
pressure groups
legal control: taxation policy
political influence
list the benefits of MNCs to countries they operate in
significant employment and training
transfer skills and expertise
adds to host country’s GDP through
what is a MNC?
a business that has operations in more than one country
list the drawbacks of MNCs
domestic businesses may not be able to compete
profits earned may be emitted back to MNCs home country
may use transfer pricing or tax avoidance
