Section 1 Flashcards
Free trade
No restrictions or trade barriers exist that might prevent or limit trade between countries
Tariffs
Taxes imposed on imported goods to make them more expensive than they would otherwise be
Quotas
Limits on the physical quantity or value of certain goods that may be imported
Voluntary export limits
An exporting country agrees to limit the quantity of certain goods sold to one country
Protectionism
Using barriers to free trade to protect a country’s own domestic industry
Globalization
The increasing freedom of movement of goods, capital and people around the world
Multinational business
Business organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries
Privatization
Selling state owned and controlled business organisations to investors in the private sector
External growth
Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry
Merger
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business
Take over
When a company buys more than 50% of the shares of another company and becomes the controlling owner of it
Synergy
A whole is greater than the sum of parts, a larger business will be more successful than two separate businesses
Monopoly
A situation in which there is only one supplier, but this is very rare, for government policy purposes this is usually redefined as a business controlling at least 25% of the market
Social audit
A report on the impact a business has on society, this can cover pollution levels, health and safety records, sources of supplies, Customer satisfaction and contribution to the community
Information technology
The use of electronic technology to gather, store, process and communicate information
Innovation
Creating more effective processes, products or ways of doing things in a business
Computer aided design
Using computers and IT when designing products
Computer aided manufacturing
The use of computers and computer controlled machinery to speed up the production process and make it more flexible
Environmental audits
Assess the impact of a business activities on the environment
Pressure groups
Organisations created by people with a common interest or aim who put pressure on businesses and governments to change policies so that an objective can be reached
Economic growth
An increase in a country’s productive potential measured by an increase in its real GDP
Gross domestic product (GDP)
The total value of goods and services produced in a country in one year. Real GDP has been adjusted for inflation
Business investment
Expenditure by a business on capital equipment, new technology and research and development
Business cycle
The regular swings in economic activity, measured by real GDP, that occur in most economies, varying from boom conditions to recession when total national output declines
~> Boom ~ Business/consumers confidence strengthens ~ demand increases ~ job creation + higher wages ~> Recession ~ falling demand ~ decrease in unemployment ~ making loss/closing down ~> Slump ~ increased costs (high wages + inflation) ~ low profitability ~ fall in demand ~> Growth ~ increase in demand ~ unemployment decreases
