Topic 6 - The Impact of Global Events and Ethics Flashcards
what is globalisation
international integration of business, industry and society through developments in technology, communication and migration
what can globalisation be described as
a trend towards a single global economy and society
a process of increasing international networking, which means isolated communities and economies are increasingly linked and affected by the rest of the world
what is the aim of the International Monetary Fund
to help member governments take advantage of the opportunities and manage the challenges posed by globalisation and economic development
what is the advantage of a large multinational organisation
it may lead to an improvement in the standard and range of products, and consistency of service
what is the negative of a large multinational organisation
undermines the local culture in those countries, do not like the depersonalisation that results from it
why do many financial services providers rely on good relationship management
to keep customers loyal and avoid the impression it does not adapt to local needs
what are the negatives of globalisation
supports offshoring
led to the emergence of multinational companies which dominate markets so that small businesses fall
big companies have bought smaller companies, which has led to redundancies
what are the 3 key effects of globalisation
means that uk face competition from overseas providers - local providers need to work out how to respond - increased competition should mean that consumers enjoy better services and Lower prices
U.K. providers may expand overseas - so must send some of their resources abroad - uk customers may see a decrease in standard of products and customer service
U.K. providers need to understand the cultural, regulatory and other constraints and how successful they will be overseas
what is outsourcing
where one provider pays another to carry out a certain business function
this benefits the provider as it can focus on the core business functions and may bring cost savings as the company doing the outsourced service may be able to achieve economies of scale
what 5 factors have fuelled globalisation
easier, quicker and cheaper international travel
improved faster communication due to ICT
businesses frequently trade across borders
increased migration and multiculturalism
many businesses have expanded internationally creating large multinational organisations
give 4 examples of functions which could be outsourced
payroll
call centre
data processing
basic accounts
what is offshoring
moving some/all of a company’s operational functions to an overseas location
can reduce overall operational costs due to cheaper wages and technology makes it a straightforward process
what are the benefits and drawbacks of offshoring and outsourcing
may lead to lower priced products and services but unpopular if call centre/helpdesk function is moved
also not liked by employees that are made redundant - risks reputation
why is reshoring happening
due to rising wage costs in emerging economies
what is an economy
all the economic activity that takes place between the people living in a certain region or country
this activity consists of producing and consuming of all the goods and services that people need and want
what is a global economy
aggregate (total) of all activity in the national or regional economies of which it is composed
financial providers are affected by local economy, but also the global economy because of what reasons
countries trade a lot internationally, the UK relies on other countries for goods and for abroad demand to create jobs
due to globalisation, providers are in global competition - so strategic decisions need to consider global events
if the euro became weak against the pound what would happen
UK goods would be more expensive to European buyers, even though price had not changed
UK manufacturers would have to cut their prices to try and boost sales
how would a strong and growing economy in the USA result in strengthening the dollars exchange rates
would have higher interest rates and rising stock market - which would be encouraging for investors
traders in the currency market would buy dollars with the expectation that the dollar will increase in value
the resulting increase in demand for dollars leads to strengthening of dollar
what was the reason for the pound rising in value against the euro
the value of the euro had fallen due to serious financial problems in some countries which threatened the existence of the euro
what was the negative result on the UK due to the euro rising
the goods the UK wanted to import became more expensive whilst the goods they exported became cheaper than previously
however this helped keep demand for goods higher - maybe one reason why unemployment had not risen as high as some experts predicted
what is protectionism
policies designed to protect countries own economy and labour force
examples of protectionist policies
this might involve the government giving money to one of its industries to preserve jobs, or imposing import taxes to make own goods seem more competitive
why were protectionist policies used
due to the economic recession mean that many people lost their jobs or had to take a paycut - protectionism was involved as each country prioritised their own population above others
why are protectionist policies not popular
in countries where they are not used, goes against the advantages of free trade, WW2 attributed the end of protectionism and the growth of free trade
what does the World Trade Organisation do
promotes co-operation and trade between its 160 members
it is the only international organisation dealing with the global rules of trade between nations
main function is to ensure that trade flows freely, smoothly and predictably
what does Gross Domestic Product measure
a country’s economic activity in terms of its total output of goods and services usually measured at their market prices
why is rising GDP generally seen as a good thing
reflects a higher standards of living of the people with higher employment and production
what is GDP per capita
the standard of living of the people of the country, total GDP divided by the number of people
what are the negative consequences of too much economic growth
economy may become ‘overheated’ - where businesses are unable to supply sufficient goods and services to meet the growing demand, so they increase their prices
