UNIT 6 - Chap 29: Business & the international economy

Question 1

What is Globalisation? is the term used to describe increases in world-wide trade and movement of people and and money between countries.​

Answer 1

is the term used to describe increases in world-wide trade and movement of people and and money between countries.​

Question 2

Reasons for an increase in globalization: (4)

Answer 2

Increasing number of free trade agreements. Consumers can purchase goods and services from other countries with few or no import controls such as tariffs.​

The internet has allowed the development of e-commerce where goods can be bought and sold online ​

Improved and cheaper travel links makes it easier to transport products globally ​

Emerging markets such as China have developing manufacturing industries so can export many products ​

Question 3

Opportunities for Businesses ​(due to globalisation) (4)

Answer 3

Can start selling products to customers in other countries​

Can open up branches in other countries to sell products/services ​

Can open their factories in other countries- benefitting from cheaper labour and rental costs​

Can import raw materials from other countries which may be cheaper

Question 4

Threats for Businesses ​(due to globalisation) (2)

Answer 4

Increased competition from international businesses ​

Employees may leave the business and work for other international businesses if their pay is higher

Question 5

What is an import tariff?

Answer 5

An import tariff is a tax placed on imported goods when the arrive into the Country, making them more expensive.​

Question 6

What is an import quota?

Answer 6

An import Quota is a restriction on the quantity of a product that can be imported

Question 7

Why the Government introduces import tariffs and quotas ​(3)

Answer 7

Introducing these are a form of protectionism. They protect domestic businesses from overseas competition that otherwise might close them down. ​

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If they impose a tariff, overseas products will be more expensive for domestic customers meaning customers may buy from domestic firms instead.​

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If they impose a quota, the amount of products imported is limited. Therefor, domestic firms have less competition from overseas firms

Question 8

What is a Multinational businesses?​

Answer 8

Multinational businesses are those with factories or service operations in more than one country​

Question 9

Benefits to a business of becoming a multinational ​(5)

Answer 9

Producing goods in other countries can mean lower wage costs ​

Producing goods nearer to your target market will cut transportation costs ​

Can avoid barriers to trade such as tariffs and taxes. E.g. open factory in the place where you buy your raw materials from to avoid import tarrifs ​

To increase sales by opening up in anther country e.g. Starbucks​

To gain grants form particular countries to set up in that Country e.g. Qatar

Question 10

Impact of Multinationals on stakeholders ​(4)

Answer 10

Employees have opportunities to move and work abroad in the overseas branch/factory​

The business will usually see an increase in profit and so shareholders will se an increase in dividends ​

The government will receive more tax revenue if a firm opens up or relocates to their country ​

Suppliers of raw materials may lose sales if the factory relocates to another coumtry

Question 11

Potential benefits to a country or economy where a MNC is located (4)
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Answer 11

Jobs are created, which reduces the level of unemployment. ​

Taxes are paid by the multinationals, which increases the funds to the government. ​

Increased exports – some of the extra output may be sold abroad, which will increase the exports of the country. ​

Increased consumer choice – there is more product choice for consumers and more competition.

Question 12

Potential drawbacks to a country and/or economy where a MNC is located​ (3)

Answer 12

Reduced sales for local businesses – local firms may be forced out of business. Multinationals are often more efficient and have lower costs than local businesses. ​

Repatriation of profits – profits are often sent back to a multinational’s ‘home’ country and not kept in the country where they are earned. ​

Multinationals often use up scarce and non-renewable primary resources in the host country.

Question 13

Spciee

Answer 13

S trong

P ound

C heaper

I mports

E xports

E xpensive

Question 14

word explanation of spciee

Answer 14

Imports being cheaper is a benefit for a business if they import their raw materials from over seas. decrease variable cost

Exports being expensive means if firms sell their products to overseas customers they are more expensive so decrease demand and decrease sales

Question 15

opposite of spciee

Answer 15

W eak

P ound

I mports

E xpensive

E xports

C heaper