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Business a level > Theme 4 > Flashcards

Theme 4 Flashcards

1
Q

Implications for individuals and businesses of growing economies

A
  • Trade opportunities

* Employment patterns

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2
Q

Indicators of growth

A
  • GDP per capita
  • Literacy rate
  • Health development
  • Human Development Index
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3
Q

Health Development Index

A
  • Life expectancy
  • Years of schooling
  • Gross National Income
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4
Q

Economic growth

A

An increase in a country’s productive capacity

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5
Q

Literacy rate

A

Rate of population that can read and write.

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6
Q

Exports

A

Most common route to international expansion

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7
Q

Imports

A

Goods that enter the country and help to develop economy

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8
Q

Specialisation

A

Focusing on a limited scope of products and services

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9
Q

Comparative advantage

A

Specialising in the business’s most efficient production sectors

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10
Q

Types of FDI

A
  • Horizontal

* Vertical

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11
Q

Business forms formed by FDI

A
  • Joint ventures
  • Mergers
  • Takeovers
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12
Q

FDI

A

A business setting up or buying assets in another country

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13
Q

Features of globalisation

A
  • Goods traded globally
  • Multicultural societies
  • Economic interdependence
  • Capital flows freely (Shares)
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14
Q

Factors contributing to globalisation

A
  • Reduction of barriers (WTO)
  • Political changes (Ven, Bol)
  • Migration (Culture, low-cost labour, fill skill gaps)
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15
Q

Globalisation

A

Growing integration of world’s cultures and economies

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16
Q

WTO

A

Organisation that promotes free trade.

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17
Q

WTO activities

A
  • Polices free trade agreements
  • Settles trading disputes
  • Organises negotiations
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18
Q

Protectionism

A

Approach to protect domestic producers

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19
Q

Purpose of protectionism

A
  • Protect local jobs
  • Protect infant industries
  • Prevent dumping
  • Raise revenue (tariffs)
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20
Q

Ways to limit imports

A
  • Tariffs (increase revenue)
  • Import quotas
  • Legislation (regulations)
  • Subsidies to local businesses
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21
Q

Problems with trade barriers

A

Retaliation (mutual barriers)

•USA/China

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22
Q

Dumping

A

Overseas company selling below cost to get rid off local competitors

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23
Q

Embargo

A

Complete ban on international trade

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24
Q

Infant industries

A

New local industries that have yet to establish themselves.

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25
Q

Trade barriers

A

Measures designed to restrict trade.

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26
Q

Trading blocs

A

A group of countries that have signed a regional trade agreement to reduce or eliminate tariffs.

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27
Q

Types of trading blocs

A
  • Preferential trading areas
  • Customs unions
  • Single markets
  • Free trade areas
  • Common markets
  • Economic unions
28
Q

Impacts on businesses of trading blocs

A

+Economies of scale
+Cheaper labour and resources
+Easier acces for MNC’s

  • Tension with non-member countries
  • Affects local businesses
  • Non-equal benefits (Nafta)
29
Q

Conditions that prompt trade

A
  • Push factors
  • Pulm factors
  • Possibility of off-shoring or outsourcing
30
Q

Push factors

A
  • Saturated local market

* Competition

31
Q

Pull factors

A
  • Economies of scale

* Risk spreading

32
Q

Off-shoring

A

Shifting jobs to other countries

33
Q

Purpose of off-Shoring

A
  • Reduces costs

* Allows to hire particular skills more easily

34
Q

Outsourcing

A

Shifting jobs to other organisations

35
Q

Purpose of outsiurcing

A

•Reduces costs

36
Q

Labour productivity

A

Amount of goods produced by one hour of labour

37
Q

Economies of scale

A

Lower costs per unit of output

38
Q

Factors that assess a country as a market

A
  • Level of disposable income
  • Ease of doing business
  • Infrastructure (Communication/Transport)
  • Political stability
  • Exchenge rate
39
Q

Disposable income

A

Amount of money a person has left after paying taxes, insurance, rent, etc.

40
Q

Exchange rate

A

Price of one currency against another

41
Q

Infrastructure

A
  • Basic systems, facilities, services and capital required for an economy to function
  • Roads, communications, power stations…
42
Q

Qualitative reasons to locate production in a foreign country

A
  • Costs of production
  • Skill of labour
  • Infrastructure
  • Trade Blocs
  • Government incentives
  • Ease of doing business
  • Political stability
  • Natural resources
  • Likely return on investment
43
Q

Reshoring

A

Bringing production back home after using foreign production facilities for a period of time

44
Q

Reasons why businesses join together

A
  • Licensing
  • Franchising
  • Risk spreading
  • Enter new markets/ Trade blocs
  • Acquiring brand names or patents
  • Gaining access to intellectual property
  • Securing resources or supplies
  • Mantaining ornincreasing global competitiveness
45
Q

Ways to achieve global competitiveness

A
  • Economies of scale
  • Diversify risk
  • Being closer to international customers
46
Q

Marketing approaches to global localisation

A
  • Ethnocentric approach
  • Polycentric approach
  • Geocentric approach
47
Q

Features of global niche markets

A
  • Clear understanding of needs and wants
  • Emphasis on quality and customer service
  • Expertise in product area
  • Innovation
  • Prioritising profit over market share
48
Q

Global niche market

A

Customers who live in more than one country and have particular needs that are not fully met by global mass markets

49
Q

Pros and cons of global niche markets

A
  • Higher prices
  • Low volume sales
  • Specialist retailers
  • Lack of economies of scale
50
Q

Cultural and social factors in international marketing

A
  • Ethnocentrism
  • Cultural differences
  • Language context
  • Unintended meanings
  • Differing tastes/beliefs
  • Innapropriate branding
51
Q

Impact of MnC’s in foreign countries

A

+Western training methods
+Higher wages than usual
+Above-average work conditions
+Job creation

  • Attracting over qualifies people
  • Local bitterness
  • Bad conditions to westerns
  • Rolling over local small businesses (unemployment)
52
Q

Free trade areas

A

Each member state:
•Free of trade barriers
•Barriers against non-members
•NAFTA

53
Q

Preferential trade areas (PTA)

A
  • Certain products from certain countries receive a reduced tariff rate
  • ASEAN
54
Q

Customs unions

A
  • Free barrier trade between members
  • Common set of barriers against non-members
  • CARICOM
55
Q

Common markets

A

Free movement accross member states:
•Goods
•Labour
•Capital

•ASEAN

56
Q

Single market

A
  • Free of trade barriers between members
  • Common laws and policies
  • Free movement of goods, labour and capital
  • Standarised borders and taxes
  • EU
57
Q

Economic unions

A

Combination between:
•Customs union
•Common markets

  • Closer political, economic and cultural ties
  • Could be also monetary
58
Q

Import quota

A

•To place a limit in the number of imports entering a country.

59
Q

Reason for import quotas

A

Protect domestic producers

60
Q

Ethnocentric marketing approach

A

•No attempt to adapt product to different markets.

  • Apple
  • Sony
  • Swatch
61
Q

Pros and cons of ethnocentric approach

A

+Economies of scale
+No development costs
+More competitiveness
+Lower prices

-Lower adaptation level

62
Q

Polycentric approach

A

•Developing a brand and products specifically for the market in which product is planned to be sold.

  • Car manufacturers
  • Tesco (America)
63
Q

Pros and cons of polycentric approach

A

+Should sell well

-Development costs

64
Q

Geocentric approach

A
  • Same brand, adapted products
  • Think global, act local

•Mcdonalds

65
Q

Marketing mix (4 p’s)

A
  • Product
  • Price
  • Place
  • Promotion
66
Q

Ansoff’s Matrix

A

Marketing tool to help a business choose an appropriate strategy to achieve growth

67
Q

Ansoff’s Matrix divisions

A
  • Market penetration: Existing products in an existing market
  • Market development: Exisiting products in a new market
  • Product development: New product in an existing market
  • Diversification: New products in a new market

Business a level (3 decks)

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