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Business A-level > 4.1 + 4.2 > Flashcards

4.1 + 4.2 Flashcards

1
Q

Globalisation definition

A

The process that enables markets to operate internationally. It requires the free movement of products, resources and finance so that businesses can produce and sell in a world market.

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2
Q

PESTLE

A

P-political (government supporting innovation)
E-economic (investment overseas)
S-social (lifestyle,fashion + outlet)
T-technological (improvement in resources)
L-legal (regulations + standards)
E-environmental/ethical (global warming)

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3
Q

BRICS + MINT (are ……)

A

Emerging countries

Brazil
Russia
India
China
South Africa

Mexico
Indonesia
Nigeria
Turkey

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4
Q

Emerging economy definition

A

Economies of developing countries where there is rapid growth but low income per head and operating risks

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5
Q

Features of emerging economies (4)

A

-Rapid industrialisation
-Faster long-term economic growth
-Many inhabitants are still in poverty (low income per head)
-Businesses struggle to access global market

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6
Q

Business threats of emerging economies (3)

A

-Large pools of skilled but low cost labour
-Undervalued currencies making exports cheaper
-Inadequate protection of brand

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7
Q

Business opportunities of emerging economies (3)

A

-Growing numbers of educated consumers = increase in consumer spending
-culture shifts
-potential for joint ventures

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8
Q

GDP meaning

A

gross domestic product= a measure of the size of an economy

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9
Q

expansion meaning

A

the process of increasing the size/target market of the business in order to increase revenue

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10
Q

what are the 6 main indicators of growth

A

-GDP
-GDP per capita
-PPP (purchasing power parity)
-literacy rate
-health (life expectancy + mortality)
-HDI (human development index)

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11
Q

GDP per capita definition

A

a broad measurement of average living standards or economic well-being

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12
Q

PPP definition

A

purchasing power parity = an economic theory of exchange rate determination, measuring prices at different locations

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13
Q

literacy rate definition

A

the proportion of the adult population that has the ability to speak read and write

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14
Q

health meaning

A

the state of being free from illness or injury

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15
Q

life expectancy meaning

A

the average period a person may expect to live

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16
Q

mortality definition

A

the state of being subject to death

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17
Q

HDI meaning

A

human development index, a country’s summary of achievements in social and economical dimensions
-health
-knowledge
-standard of living

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18
Q

implications of economic growth - globalisation (6)

A

-expansion in trade of goods/services between countries
-increase in transfers of financial capital across nations
-development of global brands
-shifts in production + consumption
-increased labour migration
-shifts in economic + political strength

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19
Q

implications of economic growth - result of emerging economies (6)

A

-urbanisation process continues to develop quicker
-industrialisation
-population growth
-per capita income growth (middle/working class)
-improve in workforce productivity
-technological innovation

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20
Q

implications of economic growth - employment patterns (3)

A

-rise in number of people seeking jobs
-productivity rises and income expands
-structural change in employment from primary, to secondary + tertiary

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21
Q

GDP per capita formula

A

= GDP/population

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22
Q

HDI limitations (1)

A

-takes no account of income distribution

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23
Q

international trade meaning

A

= the exchange of goods/services across international borders

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24
Q

import meaning

A

= goods that are made in one country and brought into another

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25
Q

export meaning

A

=goods that are made in a domestic country and sold abroad

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26
Q

stakeholder meaning

A

= an individual, group or organisation that has interest in the activities of a business

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27
Q

specialisation meaning

A

= when a business/entity focuses on one product or a limited scope of products so as to become more efficient.

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28
Q

competitive advantage meaning

A

=the ability of a firm to produce goods/services that are unique and have some form of superiority about them

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29
Q

comparative advantage meaning

A

= the ability of a country to produce goods/services at a lower opportunity cost than other firms

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30
Q

give one example of a specialised country

A

india
-specialises in IT

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31
Q

benefits to specialisation (2)

A

-increased productivity + output = reduced average costs + economies of scale
-increased productivity will lead to GDP growth + sale increase will boost economic growth

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32
Q

specialisation drawbacks (3)

A
  • a country may become over reliant on one industry
  • other countries may become cheaper in the same industry
    -may suffer from diseconomies of scale due to lack of coordination/communication
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33
Q

diseconomies of scale meaning

A

when a company or business grows so large that the costs per unit increase

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34
Q

FDI meaning

A

foreign direct investment = an investment a firm or business makes to another in a different country

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35
Q

why do businesses prefer FDI over exporting ? (5)

A

-managers want to keep control over countries operations
-to protect intellectual property
-to be close to its customers
-reduce transportation costs
-trade barriers/political opposition

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36
Q

inward FDI meaning

A

=receiving investment from overseas

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37
Q

outward FDI meaning

A

=investing overseas

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38
Q

horizontal FDI

A

=producing the same product or services as is done in the home country

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39
Q

vertical FDI

A

=where a firm seeking to acquire materials or support for its own products of services

40
Q

different forms of FDI (3)

A

-joint ventures
-strategic alliances
-mergers + acquisitions

41
Q

how does vertical FDI allow businesses to grow ? (2)

A

-builds a new business in another country
-new jobs

42
Q

how does horizontal FDI allow businesses to grow ? (1)

A

-buying an existing business + facilities

43
Q

how does FDI benefit the host country ? (3)

A

-brings high paying new jobs
-brings new tech + creates new markets
-increases exports

44
Q

what is migration ?

A

the movement of a person or people from one region to another

45
Q

factors contributing to increased globalisation (8)

A

-trade liberalisation
-political change
-reduced cost of transportation + communication
-increased investment (FDI)
-migration
-structural change
-growth of labour force

46
Q

trade liberalisation meaning

A

=the process by which international trade is made easier through a relaxation of the rules which govern it

47
Q

benefits of trade liberalisation (6)

A

-more competitive markets
-creates business opportunities
-lowers prices and broadens range of the quality of goods/services
-diversifies risks + channels resources
-facilitates competition/investment
-increases productivity

48
Q

political change benefits (3)

A

-now happens on a global scale
-less protectionist policies
-open trade between nations

49
Q

benefits of transnational companies (3)

A

-cheap labour
-mass produce goods for a global market
-productive + high profits

50
Q

benefits of increased investment (FDI) (1)

A

-increased GDP

51
Q

drawbacks of increased investment (FDI) (2)

A

-can have a damaging effect on competition
-possible loss for domestic rivals

52
Q

benefits of growth of labour force (2)

A

-helps drive global demand
-boosts number of businesses globally

53
Q

joint venture definition

A

a commercial arrangement between two or more participants who agree to co-operate to achieve a particular objective.

54
Q

protectionism meaning

A

involves protecting a country’s domestic industries, companies and jobs from foreign competition.

55
Q

3 main methods of protectionism

A

-tariff
-import quota
-government legislation + subsidies

56
Q

tariff definition

A

=tax imposed on a product when entering a country

57
Q

quota meaning

A

= restriction of the actual quantity of good imported.

58
Q

domestic subsidy meaning

A

reduction of costs for domestic firms, making them more internationally competitive

59
Q

non-tariff barrier meaning

A

law and other restrictions on the type of goods imported into a country

60
Q

push factor definition

A

factors/threats that force a business to expand overseas

61
Q

pull factor definition

A

factors/opportunities that encourage a business to expand overseas

62
Q

push factors (5)

A

-saturated domestic market
-low growth opportunities
-end of product life cycle at home
-need to diversify
-need to reduce risk

63
Q

pull factors (6)

A

-attraction to new overseas markets in emerging industries
-opportunity to gain EOS
-new markets
-exploit competitive advantages
-ways to extend product life cycle
-risk spreading

64
Q

why do businesses want to target international markets ?(5)

A

-reduce dependence on domestic market
-access faster growing markets + demand
-achieve economies of scale
-better customers located overseas
-build brand value, particularly global brands

65
Q

2 main conditions that prompt trade

A

-push factors
-pull factors

66
Q

outsourcing definition

A

=where a business function is contracted out to a third party

67
Q

outsourcing benefits (5)

A

-improved focus on core business activities
-increased efficiency
-controlled costs
-increased reach (more access to facilities)
-greater competitive advantage

68
Q

drawbacks of outsourcing (5)

A

-possible slower service
-breach of confidentiality
-lack of flexibility
-management difficulties
-instability (over reliance)

69
Q

offshoring definition

A

= when a business relocates overseas

70
Q

offshoring benefits (5)

A

-business growth
-access to staff
-greater availability
-reduced risk
-control

71
Q

drawbacks of offshoring (7)

A

-communication issues
-cultural differences
-social barriers
-time zone differences
-security
-loss of intellectual property
-external factors

72
Q

what factors do businesses need to consider when making assessment of a country as a market

A

PILEE
-political stability
-infrastructure
-levels of disposable income + growth
-exchange rates
-ease of doing business

73
Q

political stability meaning

A

=how secure a government is and how strong the political framework supports the country

74
Q

infrastructure meaning

A

= the physical systems that a country or business require to operate properly

75
Q

levels of disposable income + growth meaning

A

= the total income an individual has available to spend after paying taxes/bills

76
Q

ease of doing business meaning

A

=how accessible markets are for a business

77
Q

what factors would a business need to consider when moving production (8)

A

-skills + availability
-natural resources
-governement incentives
-market conditions
-production costs
-risks
-location is in a trading bloc
-likely return on investment

78
Q

reasons for mergers/joint ventures (5)

A

-risk spreading
-entering new markets
-acquiring national/international patents/brand names
-securing resources/supplies
-maintaining/increasing global competitiveness

79
Q

what does SPICED stand for

A

strong
pound
imports
cheaper
exports
dear

80
Q

appreciation meaning

A

= when the pound is stronger against another currency

81
Q

depreciation meaning

A

= when a pound is weaker against another currency

82
Q

low cost leadership meaning

A

= producing the same equality products as its competitors at a lower price

83
Q

how may a business gain low cost leadership ? (3)

A

-good resource management
-efficient production methods
-waste minimisation

84
Q

differentiation meaning

A

= producing unique product or giving a unique service

85
Q

causes for increase in exchange rates (4)

A
  • increasing demand for exports
    -lower demand for imports
    -increase in interest rates
    -FDI into currency
86
Q

factors affecting the significance of exchange rates depends on… (4)

A
  • how much the business exports to other economies
    -whether domestic businesses face strong competition
    -how much a business relies on importing goods
    -the PED
87
Q

who wins from lower exchange rates ? (2)

A

-businesses exporting into international markets
-businesses earning substantial profits overseas currencies

88
Q

who loses from lower exchange rates ? (2)

A

-businesses importing goods + services
-overseas businesses trying to compete in the industry

89
Q

skill shortages meaning

A

= when there is a lack of workers with the right qualifications in the industry

90
Q

what are skill shortages caused by (3)

A

-imbalance in the global economy
-many skilled jobs being replaced with machinery
-lack of qualification

91
Q

negative impacts of skilled workers (3)

A

-higher labour costs
-increased training requirements
-harder to recruit

92
Q

who is mostly responsible for skilled worker shortages ?

A

the government

93
Q

what can be done to overcome skilled shortages - government (4)

A

-invest in vocational education
-provide firms + industries to offer more/better industries
-encourage inwards migration
-provide tax for firms to invest in training education

94
Q

what can be done to overcome skilled shortages - businesses (4)

A

-raise wages + renumeration
-offer better training
-collaborate with other firms
-offshore activities with skill shortages
-outsource to specialist providers

95
Q

benefits of internationalisation

A
  • can give businesses access to larger market of customers, which can increase sales rev. + profit
    -can reduce business risk incase demand in home market declines rapidly following a change in tastes + fashions
96
Q
A

Business A-level (20 decks)

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