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Business > Theme 4 Global Business > Flashcards

Theme 4 Global Business Flashcards

1
Q

What is Globalisation?

A

Increase in how interconnected the world is

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2
Q

What does Global Trade impact?

A

Firms and consumers in one country can affect the economies of other countries

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3
Q

LEDCs stand for?

A

Less Economically Developed Countries

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4
Q

MEDCs stand for?

A

More Economically Developed Countries

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5
Q

What does GDP stand for?

A

Gross Domestic Product

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6
Q

What is GDP?

A

Total market value of good and services produced within a nation over a period of time

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7
Q

What does GDP indicate?

A

Size of Nations Economy

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8
Q

How is GDP expressed?

A

per capita

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9
Q

What is literacy rate?

A

The percentage of the population that can read and write

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10
Q

WHO stand for?

A

World Health Organisation

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11
Q

HDI stand for?

A

Human Development Index

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12
Q

What are the four factors indicating economic growth?

A

GDP
Literacy Rate
Health
The Human Development Index (HDI)

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13
Q

What is an emerging economy?

A

Fast growing but not yet fully developed

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14
Q

What is BRICS and MINT?

A

Countries with emerging economies

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15
Q

What countries are in BRICS?

A

Brazil
Russia
India
China
South Africa

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16
Q

What countries are in MINT?

A

Mexico
Indonesia
Nigeria
Turkey

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17
Q

What is international trade?

A

Importing and Exporting

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18
Q

What are imports?

A

Products brought from overseas

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19
Q

Advantages of imports?

A

Increase variety of goods and services in a country
May be cheaper then domestic goods and services

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20
Q

What are exports?

A

Products sold overseas

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21
Q

Advantage of exports?

A

Increase market size

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22
Q

What is competitive advantage?

A

Something that allows a business to generator more sales then its rivals

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23
Q

What is Specialisation?

A

When a firm focuses on producing one product (or a very narrow range of products)

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24
Q

Advantages of Specialisation?

A

Improves efficiency
Workers become highly skilled
Speed product made is increased
Quality of product increases

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25
Q

Disadvantages of Specialisation?

A

Risk losing sales if there is a decrease in demand
Increase cost of training staff

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26
Q

FDI stand for?

A

Foreign Direct Investment

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27
Q

What is FDI?

A

Is when a firm in one country invests in a business in another country

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28
Q

What does it mean when FDI is horizontal?

A

Firm invests in a foreign business that is at the same stage of the production process as the business in their country

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29
Q

What does it mean when FDI is vertical?

A

Where firm invests in a foreign business that is in a different place in the supply chain to its original business

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30
Q

Examples of FDI?

A

Merger
Take over
Open office or branch overseas

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31
Q

Advantages to FDI?

A

Access to new markets
Access to skilled local labour
Overcome international trade barriers
First hand knowledge (legal system)

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32
Q

What are trade barriers?

A

Things that make trade between different countries more difficult or expensive

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33
Q

Examples of trade barriers?

A

Procedures
Regulations
Tariffs
Quotas

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34
Q

What is trade liberlisation?

A

Removal of trade barriers

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35
Q

WTO stand for?

A

World Trade Organisation

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36
Q

What does WTO do?

A

Negotiate trade agreements and promotes trade liberlisation

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37
Q

Advantages of trade liberlisation?

A

Raw material imports will be cheaper
Exporting goods becomes cheaper/easier
Increased competition

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38
Q

Disadvantage of trade liberlisation?

A

Force domestic businesses out
Removal of natural culture

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39
Q

Different type of industries in the economy?

A

Primary
Secondary
Tertiary
Quaternary

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40
Q

Primary industries?

A

Concerned with obtaining raw materials

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41
Q

Secondary industries?

A

Manufacture goods from raw materials

42
Q

Tertiary industries?

43
Q

Quaternary industries?

A

Knowledge based (IT or scientific research)

44
Q

MNCs stand for?

A

Multinational Corporations

45
Q

TNCs stand for?

A

Transnational Companies

46
Q

Causes of increased Globalisation?

A

Transport and Communication cheaper
More people able to work
People are more likely to migrate
Political change

47
Q

What is Protectionism?

A

Government protects domestic businesses and jobs from foreign competition

48
Q

Types of Protectionism?

A

Tariff and Quotas
Government Legislation
Domestic Subsidies

49
Q

Definition of tariffs?

A

A tax that has to be paid when certain products are imported into a country

50
Q

Definition of quotas?

A

Government limits volume of particular products that can be imported into a country

51
Q

What are domestic subsidies?

A

Sums of money provided by the government to domestic firms in a certain industry

52
Q

What are Trade Blocs?

A

Agreement between different countries to reduce barriers of trade

53
Q

Types of Trading Blocs?

A

NAFTA
ASEAN
EU

54
Q

What does NAFTA stand for?

A

North American Free Trade Agreement

55
Q

What does ASEAN stand for?

A

Association of Southeast Asian Nations

56
Q

Advantages of Trading Blocs?

A

Removal of Trade Barriers
Greater Competition
Fewer Regulations
Expanding market

57
Q

Disadvantages of Trading Blocs?

A

Domestic businesses at risk
Increase Unemployment

58
Q

What is a push factor?

A

Motivates a firm to look at business opportunities in other countries

59
Q

What is a saturated market?

A

All consumer demand has been or is being met

60
Q

What is a pull factor?

A

Something which makes it attractive for a business to trade abroad

61
Q

Examples of pull factors?

A

Lower production cost
New markets
Lower material cost

62
Q

Offshoring meaning?

A

Means moving parts of a business to cheaper countries

63
Q

Reshoring meaning?

A

When a business moves departments back to its country of origin

64
Q

Outsourcing meaning?

A

When businesses contract out some activities to other businesses rather then doing them in-house

65
Q

Advantages of outsourcing?

A

Specialised knowledge and reduce costs

66
Q

Disadvantage of outsourcing?

A

No control over quality produced

67
Q

What will a business look at before entering a countries market?

A

Exchange Rates
Infrastructure
Political Stability
Ease of doing business

68
Q

Five factors business will consider when locating production in another country?

A

Costs of Production
Skilled Labour
Infrastructure
Trading Blocs
Ease of doing business
Natural Resources
Political stability

69
Q

What is a joint venture?

A

A legal agreement between two or more firms to work together on a joint project

70
Q

What is a global merger?

A

When two or more firms in different countries agree to become a single business

71
Q

Definition of cost competitiveness?

A

When a business has relatively low cost compared to competitors, allows it to charge lower prices

72
Q

Advantages of cost competitiveness?

A

Attract customers
Increase firms market share
Force competitors out

73
Q

Definition of Differentiation?

A

Product has unique features that are not possessed by competitors

74
Q

What is appreciation of the currency?

A

Currency rises in value

75
Q

What happens when currency appreciates?

A

Exports will become expensive and will make business less competitive with that currency
Imports will become cheaper

76
Q

What is depreciation of the currency?

A

Currency falls in value

77
Q

What happens when currency depreciation?

A

Exports become cheaper and and will make business more competitive
Imports will be more expensive

78
Q

Definition of Ethnocentric approach?

A

Similar market strategy in each country

79
Q

Advantages of Ethnocentric approach?

A

Economies of scale
Less time and money
Maintain global brand

80
Q

Disadvantage of Ethnocentric approach?

A

Different countries have different preferences meaning product may not sell well

81
Q

Definition of Polycentric approach?

A

Uses different marketing strategies in each country

82
Q

Advantages of Polycentric approach?

A

Adapt to different countries wants and needs
Ensures sales

83
Q

Disadvantages of Polycentric approach?

A

Less likely to get economies of scale
Expensive market research
Expensive to make new product

84
Q

Definition of Geocentric approach?

A

A mix between the other approaches

85
Q

Ansoff matrix?

A

Market Penetration
Market Development
Product Development
Diversification

86
Q

Definition of cultural diversity?

A

Presence of different cultural groups in society

87
Q

Global Niche Markets advantages?

A

Minimal competition
Customer loyalty
Price inelastic
Maximise product

88
Q

Global Niche Market disadvantages?

A

Low sales volume
Fall in demand in one country

89
Q

What is a MNC?

A

A business that has branches and departments in more than one country

90
Q

MNC positive effect on local economies?

A

Create jobs
Improve infrastructure
Employment means better standard of living

91
Q

MNC negative effect on local economies?

A

Exploit workers or employ children
Cause pollution and waste

92
Q

How can an MNC avoid paying tax?

A

Tax avoidance schemes

93
Q

MNC positive effect on national economy?

A

Large FDI flow
Introduce new technology
Train staff
Economies of scale

94
Q

Definition of FDI flows?

A

Flow of money into and out of the country from FDI

95
Q

MNC negative effect on national economy?

A

Force domestic firms out
Loss of national culture
More money leaving the country

96
Q

Definition of ethics?

A

Rules and principles that state which behaviours are acceptable for society, individuals or groups

97
Q

What can influence MNC behaviour?

A

Government
Pressure groups
Social media

98
Q

How can the government control MNC?

A

Legislation
Regulations
Tariffs and Quotas

99
Q

What are pressure groups?

A

A group of people that want to change government policies or the behaviour of businesses

100
Q

What can pressure groups use to spread awareness?

A

Social media

Business (4 decks)

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