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Business studies > Unit 26 > Flashcards

Unit 26 Flashcards

1
Q

Q1. What is a multinational economy?

A

A1. An organization with operations in more than one country.

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2
Q

Q2. What is globalization?

A

A2. The process by which countries are connected to each other with the trade of goods and services.

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3
Q

Q3. What does it mean to be market-oriented?

A

A3. Products are developed based on consumer demand.

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4
Q

Q4. What does it mean to be product-oriented?

A

A4. A firm that produces products and tries to find buyers.

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5
Q

Q5. What is primary research?

A

A5. The collection of first-hand data by the organization.

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6
Q

Q6. What is secondary research?

A

A6. The collection of data from second-hand resources.

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7
Q

Q8. What is qualitative research?

A

A8. The collection of data on buying behaviors and opinions.

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8
Q

Q7. What is quantitative research?

A

A7. The collection of numerical data that can be analyzed.

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9
Q

Q9. What is a sample?

A

A9. A representative sample of the target market selected to take part in market research.

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10
Q

Q.10 What are the helping factors in globalization?

A

A.10 Globalization has been aided by information communication technology, migration and a number of other factors as they have broken down geographical and communication barriers. Free trade arrangements are also of major assistance.

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11
Q

Q.11 What are the characteristics of globalization happening?

A

A.11
(1) Global recognition of brands.
(2) Growth in international trade.
(3) Dependency on global economy.
(4) Greater movement of products and services.
(5) Companies operating in more than one country.

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12
Q

Q.12 What is the importance implementing import tariffs and quotas?

A

A.12 With the wide range of cheaper and better products international businesses may introduce to the host country, the local business may have difficulty finding customers, which may cause local businesses to shut down and cause a lack of employment.

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13
Q

Q.14 What is the use of quota.

A

A.14 The physical limit placed on export and import due to quotas reduces the amount of goods in the market, decreasing competition.

However, customers may be disappointed if there aren’t enough products in the country.

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14
Q

Q.13 What are the effects of tariffs placed by the government?

A

A.13 Tariffs causes international businesses to pay extra for imported items, this means the costs of business increases. This leads to a loss of demand for international businesses, assisting local businesses.

Tariffs may also be put on products being exported to ensure the country itself has enough of the products.

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15
Q

Q.15 What are the factors to consider for globalization?

A

A.15
(1) Economic factors.
(2) Social and political factors.
(3) Infrastructure.
(4) Operational factors.

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16
Q

Q.16 What is involved in this factor of globalization: Economic.

A

A.16
(1) Restrictions on foreign investments.
(2) Tax incentives and currency stability

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17
Q

Q.17 What is involved in this factor of globalization: Social and political.

A

A.17
(1) Security and safety in host country.
(2) Productivity of workforce.
(3) Skilled employees and wage rates.
(4) Political stability and legal framework.

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18
Q

Q.18 What is involved in this factor of globalization: infrastructure.

A

A.18
(1) Roads, transportation, communication.
(2) Reliable power supply.

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19
Q

Q.19 What is involved in this factor of globalization: operational.

A

A.19
(1) Close to different facilities to reduce transportation costs.
(2) Cost of factory lease and different facilities needs to be considered.
(3) Reliable supply of raw materials.

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20
Q

Q.20 How can the threats of globalization be mitigated?

A

A.20 Joint ventures and strategic alliances.

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21
Q

Q.22 How does a host countries benefit from multination economy because of increase in variety of choice?

A

A.22 Different types and variety of goods from foreign businesses.

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22
Q

Q.21 What are the benefits for multinational economies for host countries?

A

A.21
(1) Increase and variety and choice of goods.
(2) Improves infrastructure.
(3) Tax.
(4) Increases employment.
(5) Improves country’s reputation.
(6) Knowledge sharing.
(7) Improves in the balance of payments.

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23
Q

Q.23 How does a host countries benefit from multination economy because of increase in country’s reputation?

A

A.23 The country is more respected when foreign businesses decide to invest.

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24
Q

Q.24 How does a host countries benefit from multination economy because of increase in employment?

A

A.24 Can help the country if there is a problem with unemployment.

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25
Q

Q.26 How does a host countries benefit from multination economy because of infrastructure?

A

A.26 MNCs invest in transportation a different aspects of the country’s infrastructure.

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26
Q

Q.2 How does a host countries benefit from multination economy because of tax?

A

A.25 he state can tax business on income and fund local initiatives.

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27
Q

Q.27 How does a host countries benefit from multination economy because of knowledge sharing?

A

A.27 New technologies being used by MNCs can give experience to employees, giving them better work experience.

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28
Q

Q.28 How does a host countries benefit from multination economy because of improvement in the balance of payments?

A

A.28 MNC may export their products and may reduce import by producing more products.

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29
Q

Q.29 What are the drawbacks of a multinational economy?

A

A.29
(1) Influence on government.
(2) Increased competition.
(3) Environmental damage.
(4) Exploitation of labor.
(5) Social impact.
(6) Less social responsibility.

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30
Q

Q.30 Why is this a drawback for a multinational economy: Influence on government.

A

A.30 Some laws and regulations may be bad for the progress and profitability of the business, the business will try to impact these laws.

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31
Q

Q.31 Why is this a drawback for a multinational economy: Increased competiton.

A

A.31 Better products and lower costs may make the market more competitive for local businesses.

32
Q

Q.32 Why is this a drawback for a multinational economy: Environmental damage.

A

A.32 The intention of producing goods as quickly and cheaply as possible may lead to damage to the environment.

33
Q

Q.34 Why is this a drawback for a multinational economy: Social impact.

A

A.34 Foreign products and services may lead traditions and customs to disappear.

34
Q

Q.33 Why is this a drawback for a multinational economy: Exploitation of labor.

A

A.33 If the country has a low rate of employment, businesses may hire employees for lower wages.

35
Q

Q.35 Why is this a drawback for a multinational economy: Less social responsibility.

A

A.35 MNCs are driven by profit and may not ensure that local laws and regulations are being followed.

36
Q

Q.36 What are the opportunities of globalization?

A

A.36
(1) Businesses can access more markets and create more sales.
(2) Offers wider and cheaper choice of products.
(3) Labor may be cheaper in host nations.
(4) Businesses are more motivated to improve because of competition.
(5) Promotes peace and understanding between people.
(6) Increased cooperation between countries.
(7) Economic growth.

37
Q

Q.37 What are the threats of globalization?

A

(1) Local businesses may suffer.
(2) Increase in competition for local and international businesses.
(3) Increase in unemployment.
(4) May damage the environment.
(5) May lead to loss of culture.
(6) Changes in exchange rates may affect profit.
(7) Marketing and distribution costs for the business may increase.

38
Q

Q.38 What are the benefits of becoming multinational

A

A.38
(1) Access to bigger markets.
(2) Economies of scale.
(3) Lower labor costs.
(4) Easier access to raw materials.
(5) Lower production costs.
(6) Spreading risk.
(7) Premium pricing.

39
Q

Q.39 Explain benefit of being multinational: easier access to raw materials.

A

A.39 Setting up operations close to where raw materials are collected from can reduce transportation prices.

40
Q

Q.40 Explain benefit of being multinational: lower cost of labor.

A

A.40 If there are is more supply of labor in host country, costs will be reduced.

41
Q

Q.41 Explain benefit of being multinational: economies of scale.

A

A.41 By selling in different countries, businesses can benefit from economies of scale, which would make it more competitive.

42
Q

Q.42 Explain benefit of being multinational: Access to bigger markets.

A

A.42 Joint ventures and merges in host country will allow increase in revenue.

43
Q

Q.43 Explain benefit of being multinational: Lower production costs.

A

A.43 Energy costs and rental prices may be lower in host countries.

44
Q

Q.44 Explain benefit of being multinational: Spreading of risk

A

A.44 The risk is spread between different markets.

45
Q

Q.45 Explain benefit of being multinational: Premium pricing.

A

A.45 Higher prices for globally known products.

46
Q

Q.46 What environmental factors in host countries that cause threats to MNCs?

A

A.46
(1) Shortage of labor.
(2) Expensive labor.
(3) Lack of information about market.
(4) Hostile business environment.
(5) Little brand awareness.
(6) Local opposition from pressure groups.
(7) Strict regulations.
(8) Currency fluctuations.
(9) Political instability.
(10) Cultural differences.

47
Q

Q.47 How does this environmental factor cause a threat to MNCs: Shortage of labor.

A

A.47 Specialist employees and managers from other countries may need to be called.

48
Q

Q.48 How does this environmental factor cause a threat to MNCs: Lack of information about market.

A

A.48 The business may not know about the demand of the market.

49
Q

Q.49 How does this environmental factor cause a threat to MNCs: cultural differences.

A

A.49 he organization needs to ensure that they are sensitive towards the cultural aspects of the host country.

50
Q

Q.50 How does this environmental factor cause a threat to MNCs: strict regulations.

A

A.50 Different quality standards will make it difficult for MNCs to operate.

51
Q

Q.51 How does this environmental factor cause a threat to MNCs: hostile business environment.

A

A.51 The business may be in a market where customers are loyal to another business or rival businesses may use different tactics to hold position in market.

52
Q

Q.52 Explain Depreciation and appreciation of currency exchange rates.

A

A.52 The currency has more value if the international trade of the country is more successful. The price of a currency is higher if there is more demand.

53
Q

Q.53 How does this environmental factor cause a threat to MNCs: expensive labor costs.

A

A.53 Raise overall costs of business.

54
Q

Q.54 How does this environmental factor cause a threat to MNCs: local opposition and threats from pressure groups.

A

A.54 Reduces profitability and does not allow proper reach in the market.

55
Q

Q.55 How does this environmental factor cause a threat to MNCs: little brand awarenss.

A

A.55 Spending a lot of money to advertise and promote the product in the local market for sales.

56
Q

Q.56 Which parties are affected by currency depreciation and appreciation?

A

A.56
(1) Importers.
(2) Exporters.
(3) Government.

57
Q

Q.57 How does this environmental factor cause a threat to MNCs: currency fluctuations.

A

A.57 The value of the cash and assets held by the business may change depending on the value of the money of the nation.

58
Q

Q.58 How does this environmental factor cause a threat to MNCs: political instability.

A

A.58 Can make government decisions slower, causing delays in the host country.

59
Q

Q.59 What is the impact of depreciation on importers?

A

A.59
(1) More expensive imports.
(2) Businesses based on imports will face trouble.

60
Q

Q.60 What is the impact of depreciation on exporters?

A

A.60
(1) Increases demand for exports.
(2) Businesses which rely on exports will profit more.

61
Q

Q.61 What is the impact of appreciation on importers?

A

A.61
(1) Imports will be cheaper.
(2) Businesses selling imported goods will profit.

62
Q

Q.62 What is the impact of appreciation on exporters?

A

A.62
(1) Exports being expensive will lead to less demand.
(2) Businesses which rely on export may suffer.

63
Q

Q.63 What is the impact of currency depreciation on a country?

A

A.63
(1) More exports lead to a balance of payments.
(2) If raw materials and unfinished materials are imported, it may cause inflation.

64
Q

Q.64 What is the impact of currency appreciation on a country?

A

A.64
(1) More imports lead to a balance of payments.
(2) Local businesses compete with cheaper, imported goods. This reduces selling price.
(3) Fall in exports leads to fall in GDP.

65
Q

Define trade bloc

A

2 or more countries under a free trade agreement.

66
Q

Define home country

A

The domestic country where a multinational country first starts operations.

67
Q

Define host country

A

The foreign country where a multinational organization starts operations.

68
Q

Define tariff

A

Tax applied to the value of imported and exported goods.

69
Q

Define quota

A

Physical limit on quantity of goods that can be imported and exported.

70
Q

Define exchange rates

A

The rate at which different countries exchange currency.

71
Q

Define depreciation

A

The value of a currency going down with respect to another currency.

72
Q

Define appreciation

A

The value of a currency going up with respect to another currency.

73
Q

How does a host country benefit from multinational economies due to balance of payments.

A

MNC may export their products and may reduce import by producing more products.

74
Q

How does a host country benefit from multinational economies due to increase in variety and choices of goods.

A

different types and variety of goods from foreign businesses.

75
Q

How does a host country benefit from multinational economies due to taxes.

A

The state can tax business on income and fund local initiatives.

76
Q

Explain the impact of local opposition and threats from pressure groups from a host country on a business.

A

Reduces profitability and does not allow proper reach in the market.

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