2.1 - Growing the Business

Question 1

2.1.3 - What is Globalisation?

Answer 1

The ever-increasing integration of the world’s local, regional and national economies into a single international market.

Question 2

2.1.3 - What are the advantages and disadvantages of globalisation?

Answer 2

PROS:

• Impact on productivity and competition
• Specialisation
• Impact on growth rates, inflation, balance of payments and unemployment
• Economies of scale
• Impact on inflation

CONS:

• Impact on unemployment
• Impact on balance of payments
• Dominance of US corporate culture ‘McDonaldisation‘

Question 3

2.1.3 - What are imports and exports?

Answer 3

• An import is the purchase of a good or service from a foreign business that leads to a flow of money out of the UK.
• The UK buyer will have to change pounds into the seller’s currency to make the transaction.
• An export is the sale of a good or service to a foreign buyer that leads to a flow of money into the UK.
• The foreign buyer will have to change their currency into pounds to complete the purchase.

Question 4

2.1.3 - What is a multinational company?

Answer 4

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

Question 5

2.1.3 - What are tarrifs?

Answer 5

• A tariff is a tax placed on an import to increase its price and decrease its demand (goods that cost too much don’t sell well).
• Tariffs can be imposed by governments to raise revenue and to restrict imports.
• Tariffs help to persuade consumers will switch and buy UK made goods.

Question 6

2.1.3 - Why are tarrifs important for the UK’s economy in terms of exports and imports?

Answer 6

Tarrifs encourage less imports meaning there will be relatively more exports.

As exports are incoming money and exports are outgoing money, a decrease in imports means the UK will make more money

Question 7

2.1.3 - What are the advantages and disadvantages of tarrifs?

Answer 7

PROS:

• UK produced goods do not have to pay the tariff and so are likely to be cheaper allowing UK businesses to gain a price advantage compared to imports
• It can protect new businesses from being swamped by international competition from MNEs
• It can raise important tax revenue for government which can be spent possibly on infrastructure (bridges and roads)

​CONS:

• High import price won’t put many customers off
• Tariff may just increase prices for consumers
• Other countries may impose their tariffs in response to this on their imports, (e.g. when the UK exports to China they make our goods more expensive)

Question 8

2.1.3 - What are Trade Blocs and some common examples?

Answer 8

A trade bloc is a group of countries who make a trade agreement not to place tariffs on imports from each other.

• EU
• NAFTA
• ASEAN

Question 9

2.1.3 - How may businesses compete internationally through the internet, e-commerce, and changing their marketing mix?

Answer 9

• Place: selling online through e-commerce and having international shipping for products means businesses can reach more places internationally. Alternatively they may do this by becoming a multinational company (expensive)
• Promotion: Social media is a better way to promote through the internet as it has an international range at a low cost. Promotion techniques (e.g. targeted advertising) may aslo be used with this
• Price: lowering their prices so that despite any tarrifs that are placed on them they still have competetive pricing
• Product: Making their product more adaptable to foreign countries

Question 10

2.1.3 - What are the advantages and disadvantages of trade blocs?

Answer 10

PROS:

• A larger target market
• Cheaper imports from EU countries
• Economies of scale
• Easier to recruit labour

CONS:

• More competition for UK businesses
• Imports may be more expensive from non-EU members.
• Tariffs on UK exports from non-EU members

Question 11

2.1.4 - What are ethics in terms of business?

Answer 11

The understanding of morals and right and wrong.

In a business context to be ethical is to pay workers a fair wage, to not pollute and to conduct business in way which does not harm or exploit people or the planet.

Question 12

2.1.4 - What is a trade-off?

Answer 12

• A trade-off is a compromise between one thing and another
• There has to be a trade-off or compromise between making a profit and being ethical so everyone is happy

Question 13

2.1.4 - What is a pressure group and what actions do they take?

Answer 13

Pressure groups are organisations set up to try to influence what consumers think about the business and its environment.

• The write letters to MPS
• They write to the press
• They organise marches
• They run campaigns

Question 14

2.1.4 Why is it important for a business to be ethical?

Answer 14

So that they produce an ethical brand image. An unethical brand image can lead to bad publicity which may cause people to boycott their business leading to a deacrease in revenue

Question 15

2.1.4 - How may businesses create sustainable products?

Answer 15

By manufacturing products in ways that don’t harm the environment.

E.g. using renewable energy sources and not wasting raw materials