Unit 3 Flashcards
Globalisation?
Growing integration and interdependence of national economies.
Which factors have facilitated this level of imports?
Globalisation basically
There is a reduction in trade restrictions(tariffs and quotas)
Lower costs of production abroad
Ease of transport
Other factors facilitating globalisation:
- internet and rise of e-commerce
- smart phones(communication)
- easy movement of capital(money)
- multinationals
multinationals meaning:
A company which has operations in more than one country
International trade:
A firm which operates in one country and trades internationally
why do firms want to become multinational?
benefit from economies of scale as production increases
ability to take advantage of the lack of legal constraints
They can enter new markets where there is less completion
Ability to take advantage of lower wages
multinationals: positives
Positives
Provides employment opportunities in LEDC
More skills in local area
Leads to investments in infrastructure
Utilisation of local resources to supply factories
multinationals negatives
- employment often in exchange for low wages
- jobs are low skilled(no long term future)
- working practices can be unsafe
- child labour which can mean children miss out on education
- local businesses can be driven out of the Market
- income goes back to the domestic country where the multinational is based.
social factor
changes in society affecting business demand
Includes demographics of population groups e.g. size, incomes, age, ethnicity
Changing social factors:
- social habits i.e. people eating out more
- changes int he employment pattern( more part-time)
- the changing role of women in the workplace
- changing attitudes to work
- the grey pound i.e. older people are wealthier with property, pensions, savings
Technological factors
Computer hardware/software Internet connectivity Wireless charging(fibre optic/4G/5G) Applications Devices such as tablets
Technological factors pros
- systems are usually faster and more efficient
- communication is easier
- in the long run, costs may be reduced due to efficiencies
- remote working is possible
- reduces need for physical storage
- may offer employees new skills
Technological factors cons:
- high initial cost
- may lead to job losses
- not always reliable
- staff will need to be trained(cost implication)
- businesses will need to spend to keep data secure
- may cause demotivation as workplace resists change
Ethical meaning
concerned with the judgement of whether something is morally right or morally wrong.
Pros of being ethical
attracts new customers(more sales revenue)
Attracts new and better quality employees
better reputation
Encourages existing employees to keep working there
Encourages investment due to higher revenue/profits
Cons of being ethical
Increased costs Danger of building up expectations Less competition on price Could lead to less output(staff cannot work beyond a certain no. Of hours (No overtime)
Environmental concerns with businesses
Air pollution/carbon emissions-industrial processes,planes,cars
River or sea pollution-chemical/oil leaks and plastic
Land pollution- deforestation
Noise pollution- motorways and airports
Congestion- pollution from vehicles and land used to try ease congestion
How to be more sustainable:
Use video call meetings Through recycling schemes Reducing plastic packaging By choosing local suppliers who are sustainable Use renewable energy sources
The economic indicators:
GDP and economic growth Inflation Interest rates Exchange rates Levels of unemployment Balance of payments
High inflation:
- makes UK exports more uncompetitive(prices are higher)
- less multinational investment because it costs more in a country of high inflation. Multinationals would rather invest in an LEDC
- high inflation causes uncertainty around profits( profits are worth less)
Unemployment. You must be:
- out of work
- available for work
- actively seeking work
Interest rates. When high?
- the pound will be more demanded. HOT MONEY- states that foreign investment banks/ people are more likely to covert their currency to the pound in a UK bank when interest rates are high
- strong pound
Weak pound
Weak pound imports dear exports cheap
Improves the balance of payments as UK exports will be more competitive and therefore more demanded
To find the trade surplus/ deficit what do u do?
Exports - imports
Supply side measures:
- Supply side policies are intended to increase output in an economy
- include improving employee skills, cutting corporation tax and reducing welfare benefits
- subsidies to start-ups
Recession/slump
- number of firms in the supermarket sector will suffer. However discounters like Lidl and Aldi will thrive as people intend to buy cheaper essential products in a dull economic period
Fiscal policies
Loose fiscal(increase gov.spending but lower taxes) Tight fiscal (decrease gov.spending but increase taxes)
Monetary policy. What is it?
Used by the Bank of England/MPC
Changes interest rates in order to manipulate demand in the UK
A change in interest rate takes 18 months to take full effect
