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buisness > theme 4 buisness > Flashcards

theme 4 buisness Flashcards

1
Q

list countries BRICS

A

Brazil russia india china and south africa

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2
Q

list countries MINT

A

mexico indonesia nigeria and turkey

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3
Q

explain why employment patterns are one of most healthy indicators of healthy economy

A
  • growing economies start to see change in employment patterns
  • shows country can diversify from traditional products.
  • leading to structural change from primary sector to secondary sector
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4
Q

why have many asian economies experienced high levels of growth?

A
  • through their regional trading bloc : ASEAN
  • through dominance of global manufacturing
  • has efficient cluster of suppliar’s and excellent infrastructure = cost effective growth
  • has acess to low cost labour
  • consumers are spending more which increases demand and reinforces local production and distribution
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5
Q

explain why business might prefer PPP to GDP as a measure of growth

A
  • GDP figures indicate value of economic activity, however use exchange rates which are always rapidly changing.
  • therefore must use a variety of exchange rates over period of time for valuable results
  • must take care as they are a value of GDP statics
  • GDP may oversee what people can actually buy in those countries.
  • PPP is better for statistical reasons
  • and gives investor better idea of what buyers in different countries can afford.
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6
Q

what are the key factors that affect external investment?

A

literary rate

health

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7
Q

why do some countries limit imports?

A
  • place trade barriers in way eg. tarrifs
  • benefits and allows domestic producers chance to grow.
  • this benefits their market share growth.
  • also form of protectionism against foreign investors.
  • giving infant businesses chance to grow
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8
Q

what are risks involved in exporting and importing?

A
  • if exchange rates move the wrong way between currency of exporter and that of the importer will have serious financial consequences.
  • conflict with distributors are hard to resolve outside the country.
    leading to disruption in distribution chain
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9
Q

how does specialisation lead to greater efficiency?

A

increases speed and skill at which task can be done

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10
Q

what is meant by comparative advantage?

A

theory that a country should specialise in products and services that it can produce more efficiently than other countries.

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11
Q

explain FDI and the 2 types

A
  • Foreign direct investment is:
  • investing by setting up operations or buying assets in another country
  • horizontal FDI - producing same product in different country
  • vertical FDI - seeking material for own service.
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12
Q

what are 3 features of globalisation?

A
  • goods and services traded throughout the world.
  • many people able to live and work in a country of choice (multi-cultural society)
  • capital flows freely between countries.
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13
Q

what is the free trade agreement (FTA) give an example

A

Eg. NAFTA

  • all members remove all protectionism barriers between them
  • but have different barriers for non-members
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14
Q

what is a preferential trading area (PTA) give an example

A

eg. ASEAN

- allow certain products in PTA to have reduced tariff rates

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15
Q

whats a customs union and give an example

A

eg. CARICOM
- where all members remove all barriers between them
- and have same barriers for non-members

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16
Q

whats a common market and give an example

A

eg. ASEAN
- goods/labour/capital move freely between membered states
- barriers and tariffs also removes or deducted.

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17
Q

what is a single market and give an example

A

eg. EU
- almost all trade barriers between members have been removed.
- have common laws to easily transport goods

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18
Q

give 4 impacts of trading blocs

A
  • opportunities
  • provide counterbalance against globalisation (protecting from competitors)
  • resources easier to source and labour easier to recruit
  • may allow members to specialise in line with countries comparative advantage
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19
Q

what are 4 indicators of growth

A
  • GDP
  • Health
  • Literacy
  • HDI
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20
Q

what is trade liberation

A

process by which international trade is made easier through a relaxation of rules which governs it

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21
Q

what is globalisation

A

the growing integration of the worlds economies

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22
Q

how had political change lead to globalisation?

A

-politics happens on global scale, involving all governments worldwide

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23
Q

what is TNC - transnational company?

A

TNC is a multinational company that works across national boundaries

24
Q

how have TNC’s led to globalisation?

A
  • lowering barriers of trade across national borders.
  • TNC’s use cheap labour in LEDCs to mass produce goods for global markets.
  • spread globalisation through heavy global advertising.
25
Q

how has FDI led to globalisation?

A
  • business outside trading blocs have been able to enter the market, avoiding tariffs.
26
Q

how has migration led to globalisation? and give a trading bloc that allows free movement of people

A
  • strict immigration policies in many countries
  • minimise cultural impacts on economy
  • EU has free movement of people
27
Q

how has a structural change led to globalisation?

A
  • rise of new economic powers has been driven by shift for LDC’s to secondary sector activities from primary activities such as mining and agriculture
28
Q

whats a tariff?

A

a tax placed on imports to increase its price and decrease its demand

29
Q

what is a import quota?

A

a physical limit on the quantity of a good imported or exported. (example of physical control)

30
Q

whats an embargo? and give a reason why might be used

A
  • no imports at all

- used for political reasons

31
Q

what is a trading bloc?

A

a group of countries that sign a regional trade agreement to eliminate all traffics/quotas between them.

32
Q

what are 2 advantages of being in a trading bloc?

A
  • enlarged market

- protection from international competition outside the trading bloc

33
Q

what are 2 disadvantages of being in a trading bloc?

A
  • retaliation, other blocs may be created as a result (trade division)
  • protectionist, wont help trade liberation and the WTO want a reduction on barriers to trade between all countries.
34
Q

what is a push factor

A

threats in a domestic market which force firms to sell abroad

35
Q

give 2 examples of push factors

A
  • saturated market (every potential customer has product, limited opportunity for growth in sales)
  • end of product life cycle at home
  • competition
36
Q

whats a pull factor

A

factors enticing firms into new markets

37
Q

give 2 examples of pull factors

A
  • opportunities to gain economies of scale.
  • risk spreading
  • technological expertise
  • opportunities to exploit competitive advantage in new markets
38
Q

whats off shoring and why do it

A
  • when a business relocates it operations to another country
  • because can take advantage of low labour costs, cost efficiencies and supply chains
39
Q

what are 3 issues with off shoring

A
  • language/cultural complications
  • damage firms reputation if jobs lost in home country
  • costs increase, efficiency lowers
  • exposed to corruption
40
Q

what is out sourcing and why do it

A
  • shifting jobs to another country
  • reduced costs
  • specialised companies improve quality of job
41
Q

what are problems with outsourcing

A
  • reliance on third party gives business venerability

- poor communication can lead to higher expenses

42
Q

what are 3 factors to consider a country as a market?

A
  • steady levels of growth of disposable income
  • ease of doing business
  • infrastructure (roads, internet)
  • political stability
  • exchange rate
43
Q

what are 3 factors to consider a country as a production location?

A
  • cost of production
  • skills and availability of workforce.
  • infrastructure
  • location in trading bloc
  • natural resources
44
Q

how could u establish your likley return on investment

A
  • using SWOT analysis

- PESTLE analysis

45
Q

what is a merger

A

2 or more companies merging to become one company

46
Q

what is a joint venture

A

when 2 companies decide to work together on a specific project

47
Q

why would companies do a joint venture?

A
  • lower risk
  • allows to test waters before fully investing in the new country
  • lower level commitment
48
Q

why would a company do a merger

A
  • useful where companies want to become fully integrated

- knowledge sharing

49
Q

problems with mergers?

A
  • harder to reverse
  • hard on employees
  • higher risk
50
Q

name 2 things that effects of the exchange rate depend on and why

A
  • inflation - depreciation can cause inflation and lead to uncertainty in business
  • recession -
  • PED - if price inelastic then lower price due to weak $ wont affect demand
  • competition
  • raw materials
51
Q

whats differentiation

A

when a business produces a unique product or service

52
Q

problem of differentiation

A

leads to skill shortages

53
Q

whats global marketing strategy

A

when a business does not differentiate its products or marketing between countries.

54
Q

give 2 positive impacts of MNC’S

A
  • creates employment
  • increases skill base
  • increases standard of living as increases taxes paid
  • improves infrastructure
55
Q

give 2 negative impacts of MNC’S

A
  • low paid jobs
  • poor safety record
  • widens poverty gap

buisness (5 decks)

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