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Business---------------------------- > 4.1 Globalisation > Flashcards

4.1 Globalisation Flashcards

1
Q

How is Economics Growth Defined?

A

An increase in a country’s productive capacity.

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2
Q

How is Emerging Economics Defined?

A

The economies of developing countries where there is rapid growth, but also significant risk.

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3
Q

How is Human Development index (HDI) defined?

A

A collection of statistics that measures each country’s social and economic development

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4
Q

How is Literacy rate defined?

A

The Percentage of adults (over 15) that can read and write

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5
Q

Why do Investors like Emerging Markets?

A
  • they are likely to grow more quickly than more mature markets.
    -Therefore a business should be able to increase profits and dividends.
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6
Q

What Does the Initialism BRICS stand for?

A

-Brazil
-Russia
-India
-China
- South Africa

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7
Q

What does the Initialism MINT stand for?

A
  • Mexico
  • Indonesia
  • Nigeria
  • Turkey
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8
Q

How is GDP defined?

A

A common measure of national income, output or employment.

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9
Q

How does Economic growth create trade opportunities and what is the implications for both individuals and businesses?

A
  • growing economy = growing consumption
  • disposable income rises therefore increase in demand for goods and services.
  • These goods/ services can be produced domestically or imported from abroad, creating many opportunities for trade.
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10
Q

What are some indicators of growth?

A

-GDP per Capita
-Data from a countries GDP
- literacy
- Health
-Human Development Index

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11
Q

l

A

l

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12
Q

How is literacy used as an indicator of a countries growth?

A
  • the quality of employees. both as workers and potential consumers
  • a company looking to invest wants the most productive employees they can find at the lowest costs.
    -a company exporting to a country will want to consider the consumers they want to sell to, understanding their potential consumers they will know how to market its goods and services to them
  • this can be found out by the literacy rate provided by the UN which is the percentage of adults that can read and write.
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13
Q

How is Health an indicator of a countries growth?

A
  • An assessment of the health of a population may include –> life expectancy at birth, infant and maternal mortality, pollution exposure and access to clean water.
  • The World Health Organisation collects and evaluates statistics relating to a broad range of indicators that can be used to assess population health
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14
Q

How is HDI an useful to a business?

A

-A business may want to use the HDI to investigate a potential market or location for investment.

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15
Q

How is Comparative advantage defined?

A

The theory that a country should specialise in products and services that it can produce more efficiently than other countries.

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16
Q

How is competitive advantage defined?

A

The idea that a business should specialise in any area (products, services, management, research, etc) where it can perform better than its competitors.

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17
Q

How is Division of Labour defined?

A

Different workers specialising in different productive activities

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18
Q

How is Exports defined?

A

Goods or services that a firm produces in the homer market, but sells in a foreign market.

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19
Q

How is Foreign Direct Investment defined?

A

Investing by setting up operations or buying assets in businesses in another country.

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20
Q

How is Imports defined?

A

Goods and services that are bought into one country from another.

21
Q

How is Specialisation defined?

A

A production strategy where a business focuses on a limited scope of products or services. This results in greater efficiency, allowing for goods and services to be produced at a lower cost per unit.

22
Q

How are Tariffs defined?

A

Taxes that are imposed on imports.

23
Q

What is the link between business specialisation and division of labour?

A
  • Specialisation increases the speed and skill at which a task can be done thereby improving efficiency.
24
Q

What is Competitive Advantages?????

A
  • Michael Porter extended the comparative advantage theory that businesses can gain a competitive advantage in international trade just like countries do
  • the idea that a business should specialise in any area (products, services, management, research, etc) where it can perform better than its competitors.
  • specialisation in production on a limited scope of products could lead to a lower cost per unit thus can reduce prices or increase profit margins.
25
Q

Why might a business invest directly in other countries?

A
  • to seek out new growth they expand into new markets.
  • a firm may decide to do this because the business:
    • has a high potential for making a profit
    • control over its subsidiaries
    • direct knowledge of the local
      market
    • to avoid barriers to the market
26
Q

What is Horizontal FDI?

A
  • are those in the same industry, such as the Spanish bank Sabadell takeover of British bank TSB
27
Q

What is Vertical FDI?

A

-when seeking to acquire materials or support for its own products or services, put another way the firm is moving into another part of the value chain, such as when a firm is moving into another such as when a firm opens a call centre in another country to deliver customer or staffing support
- this should help lower its costs, allowing growth in revenue or profit

28
Q

How is Globalisation defined?

A

The growing integration of the world’s economies.

29
Q

How is Transnational or multinational companies defined?

A

Companies that own or control production or service facilities outside the country in which they are based.

30
Q

How is the World Trade Organisation (WTO) defined?

A

An international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers. It polices free trade agreements, settles trade disputes between governments and organises trade negotiations.

31
Q

What are some key features of Globalisation?????

A
  • Goods and services are traded throughout the world.
  • Many people are able to live and work abroad, leading to multicultural societies.
  • There is a high level of interdependence between countries. This means that events in one economy are likely to affect other economies e.g. the Financial Crisis of 2008
  • Capital flows freely between countries.
  • There is an interchange of technology and intellectual property across borders, increasingly patents granted in the US are recognised in other countries.
  • Globalisation is not complete, some countries have strict immigration rules, e.g. US and Australia, and some high trade barriers including tariffs and quotas.
32
Q

What are some Factors contributing to Globalisation?

A
  • Reduction of international trade barriers/trade liberalisation
  • Political change
  • Reduced cost of transport and communication
  • Increased significance of global (transnational) companies
  • Increased investment flows
  • Migration
  • Growth of the global labour force
  • Structural change
33
Q

How is Dumping defined?

A

Where an overseas firm sells large quantities of a product below cost in the domestic market.

34
Q

How is Embargo defined?

A

A complete ban on international trade – usually for political reasons.

35
Q

How is Import Quota defined?

A

A physical limit on the quantity of imports allowed into a country.

36
Q

How is Protectionism defined?

A

An approach of shielding a country’s domestic industries from foreign competition by taxing imports.used by a government to protect domestic producers.

37
Q

How is Subsidy defined?

A

Financial support given to a domestic producer to help compete with overseas firms.

38
Q

How is Tariffs or custom duties defined?

A

A tax on imports to make them more expensive.

39
Q

How is Trade barriers defined?

A

Measures designed to restrict trade - can cause retaliation

40
Q

How is a Free Trade Area (FTA) defined?

A

A region where member states remove all trade barriers between themselves, but each member state nevertheless keeps different barriers against non-member states.

41
Q

How is Preferential Trading Area (PTA) defined?

A

A type of trading bloc where certain types of products from participating countries receive a reduced tariff rate.

42
Q

How is Trading Bloc defined?

A

A group of countries that has signed a regional trade agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves.

43
Q

What is NAFTA?

A
  • North America Free Trade Agreement (US, Canada and Mexico)
44
Q

What are the Factors to consider in Trading Blocs?

A

1 - Where to Produce –> A company may be able to locate in a neighbouring country where the costs of land, labour or capital are most favourable to it, and then ship goods and services to other members.
2- Where to Sell –> Companies may view trading bloc as one big market for their goods and services. This can present opportunities, but also threats. e.g. NAFTA drove many Mexico retailers out of buisnesses
3 - How to enter Market –> The market entry strategy may be adapted according to the opportunities presented by the free trade areas or common market, and can range from new investments through to join venture and mergers.
4 - Business Strategy –> A business may not have been able to export to a neighbouring country because of the existence of trade barriers. Once these barriers are negotiated away as part of a trade agreement, they may be able to do do.

45
Q

how is economic growth measured

A

gdp

46
Q

why are employment patterns an important indicator of the health of an economy

A

high unemployment indictes a low economy growth

47
Q

what are the brics countries

A

brazil
russia
india
china
south africa

48
Q

what are the mint countries

A

mexico
indonesia
nigeria
turkey

Business---------------------------- (22 decks)

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