Ch 25. Global Business Flashcards
(21 cards)
TNC’s
Firms that produce and market goods in more than one country, e.g. Unilever
A global company
Treats the world as a single, giant production location and marketplace
Characteristics of global companies (4)
- Global market
- Standardised products
- Economies of scale
- Global branding
Reasons for growth of global businesses (6)
- Own market saturation
- Spread risk
- Economies of scale
- Deregulation and opening up of global markets
- Faster transport and telecommunications links
- E-business
Global marketing
Marketing a product globally with broadly the same marketing mix, as though the world were a single market place
2 advantages of global marketing
- Cost savings
- Recognition
Standardised global marketing mix
Using the same basic mix in different countries
Adapted global marketing mix
Adjusting the mix to take account of cultural, geographic, economies and other differences in various countries
Global product
A product that is the same all over the world
Production sharing
Part of the product is made in one country, then shipped to another for further assembly, with the finished product sold in yet another country
Reasons for change to a standardised global product (2)
- Product design may need to be slightly adapted to suit differences in culture and climate
- Brand names adapted to avoid confusion
Factors that affect global pricing (5)
- Standards of living
- Transport costs
- Import and sales taxes
- Levels of consumption
- Laws and culture
Channels of distribution (6)
- Export directly to customers
- Use distribution agents
- Licensing
- Joint venture
- Set up a foreign subsidy
- Use an export trading house
An agent
An independent person or firm who will sell the goods in the target market in return for a commission on every sale
Foreign Licensing arrangement
Is a deal that gives permission to a local firm to manufacture or distribute a global firm’s goods and services, or to use their global brand name
Joint venture
Resources and capital are invested by both companies and profits are shared
An export trading house
A company that buys goods in one country and then, like an international merchant, resells the goods at a profit in another country
Types of global promotion (4)
- Global advertising
- Global public relations
- Internet
- Trade fair
A trade fair
A business exhibition where suppliers in a particular industry display their products to potential customers
Benefits of a business operating globally (4)
- Access to a global market
- Generate huge economies of scale by producing and selling the same standardised product globally
- Global brand recognition
- Expansion and business survival
Risks of a business operating globally (3)
- Customer needs may not be properly met
- Diseconomies of scale
- Increased risk
