1e-Business & the internation Flashcards
(38 cards)
Q: What is globalisation?
A: Globalisation is the economic integration of countries through trade, finance, technology, and movement of people.
Q: What are imports and exports?
A:
Imports – Goods/services bought from other countries (e.g., UK imports cars worth £3.25 billion).
Exports – Goods/services sold to other countries (e.g., China’s biggest export in 2022 was smartphones worth $21.4 billion).
What are the reasons for globalisation?
1-Technology
2-Improved transport
3-Deregulation
4-Government support
5-Market Saturation
6-Familiarity with Global Brands
What are the reasons for globalisation?
Technology
Technology
Faster communication, online sales, and data transfer.
What are the reasons for globalisation?
Improved transport
Improved Transport
Easier international business travel & distribution.
What are the reasons for globalisation?
Deregulation
Deregulation
Fewer trade barriers and simpler financial systems.
What are the reasons for globalisation?
Gov support
Government Support
Policies encouraging free trade and investments.
What are the reasons for globalisation?
Market saturation
Market Saturation
Businesses expand internationally when domestic markets become full.
What are the reasons for globalisation?
Familiarity with Global Brands
Familiarity with Global Brands
Tourism and media increase consumer awareness of global brands.
How does globalisation benefit businesses?
A:
1-Larger Markets
2-Economies of Scale
3-Access to Labour
4-Favourable Tax Rates
How does globalisation benefit businesses?
Large markets
Larger Markets
More customers worldwide, increasing revenue.
How does globalisation benefit businesses?
Economies of scale
Economies of Scale
Higher sales reduce costs and increase competitiveness.
How does globalisation benefit businesses?
Access to labour
Access to Labour
Overcomes domestic labour shortages, finds skilled workers globally.
How does globalisation benefit businesses?
Favourable Tax Rates
Favourable Tax Rates
Companies locate headquarters in low-tax countries (e.g., Ireland).
How does globalisation benefit businesses?
Case study: Huawei
Case Study Example:
Huawei sells electronics in 170+ countries, earning CN¥73.05 billion in 2023.
Unilever operates in 190 countries, benefiting from economies of scale.
What risks does globalisation create for businesses?
1-Increased Competition
2-Need for a Niche
3-Takeover Risks
4-External Shocks
Exam Tip: When asked about globalisation’s impact, check whether the question refers to businesses, workers, or consumers.
What risks does globalisation create for businesses?
Increased competition
Increased Competition
Foreign businesses may have lower costs and economies of scale.
What risks does globalisation create for businesses?
Need for a Niche
Need for a Niche
Businesses must differentiate to survive.
What risks does globalisation create for businesses?
Takeover risks
Takeover Risks
Local PLCs can be acquired by larger global firms (e.g., Cadbury’s takeover by Kraft in 2009).
What risks does globalisation create for businesses?
External Shocks
External Shocks
Global crises impact interconnected businesses (e.g., 2021 Suez Canal blockage delayed supply chains worldwide).
What is a multinational corporation (MNC)?
A: An MNC is a business that operates in multiple countries, like Starbucks (80+ countries, 32,000+ stores).
Why do MNCs expand globally?
Lower costs – Cheaper labour & raw materials (e.g., Nike manufactures in China & Vietnam).
Large customer base – Global presence increases sales.
Brand recognition – Helps dominate markets.
Bypass trade barriers – Setting up in trade bloc countries avoids tariffs.
Tax Benefits – Some MNCs locate in low-tax countries like Ireland or Cyprus.
What are the drawbacks of being an MNC?
1-Complex Tax Laws
2-Reputation Issues
3-Political Instability
What are the drawbacks of being an MNC?
Complex tax laws
Complex Tax Laws
Different tax rules increase costs.
