Globalisation Flashcards
All 12 cards in this deck
What is globalisation?
Companies operating internationally or on a global scale, with most of the world's economies working together to provide and produce goods and services.
True or false? Imports are the goods and services a country sells to other countries.
False. Imports enter a country; exports are the products sold to other countries.
Give two ways a UK business can compete internationally through better design.
Innovative or unique features competitors do not offer; designs adapted to local tastes (sizing, colours, cultural beliefs).
Give two ways a UK business can offer higher quality products at lower prices than overseas rivals.
Buying cheaper supplies or using cheaper labour abroad; using technology and economies of scale to cut unit costs.
Give two drawbacks of globalisation for a UK business.
More competition from overseas businesses in the UK market; cultural, language and logistical problems that add cost and risk.
What is an exchange rate?
The value of one country's currency compared with another country's currency.
What does the memory aid SPICED stand for in exchange rates?
Strong Pound, Imports Cheap, Exports Dear.
What are the steps to explain the effect of a fall in the value of the pound on a UK exporter?
e.g. the pound falls against the euro
- Exports become cheaper in the foreign currency — fewer euros are needed to buy the product from the UK.
- Customers save money, so demand rises.
- Higher volume of export sales, raising revenue and profit.
What is the effect of a rise in the value of the pound on a UK business that imports raw materials?
Imports become cheaper, so costs fall and profit margins rise.
Give one exchange rate risk a business should weigh up before deciding to trade internationally.
Exchange rates change unpredictably, so import costs can rise or export prices become uncompetitive, cutting profit margins.
Give one benefit to a UK business of selling into a larger, global market.
Access to more customers, giving the potential for increased sales and profit.
True or false? Globalisation gives a UK business access to a wider pool of labour.
True. It can recruit workers from other countries, or locate production where labour is cheaper or more skilled.