Business & Globalisation Flashcards

All 21 cards in this deck

What is globalisation?

The increasing integration of economies worldwide, so businesses trade, buy and sell across national borders.

Define the term multinational.

A business that produces goods or services in more than one country. Only selling (exporting) abroad is not enough.

What are imports?

Goods and services bought in by a country from overseas businesses.

How can increased imports affect a UK business?

It faces more competition from overseas businesses, which may force it to lower prices or cut costs to stay competitive.

Give one benefit to a business of being able to export.

It can sell to more markets, building global brand awareness and generating higher revenue.

Give one reason a business might relocate production overseas.

Any one of: lower production costs; to be closer to customers in a growing market; to avoid tariffs on exports.

Define the term tariff.

A tax placed on imported goods and services.

How does a tariff imposed by a country a business exports to affect its sales revenue?

The product becomes more expensive abroad, so demand falls and export revenue falls.

What is a trade bloc?

A group of countries that trade freely between themselves.

Name two barriers to international trade.

Tariffs and trade blocs.

Give one benefit to a business of using e-commerce to compete internationally.

It gives a far wider range of customers access to its products worldwide, without a huge amount of investment.

Give one drawback of relying on e-commerce to sell internationally.

Some customers prefer to inspect or try products in person before buying, so may not buy online.

Give one way a business might adapt its product to compete in an overseas market.

Any one of: different styles or sizing; colours to suit cultural beliefs; dietary requirements such as halal or kosher; left- or right-hand drive vehicles.

Give two factors that make a business change its price in different countries.

Any two of: tariffs, trade blocs, income levels, disposable income, tax, exchange rates, level of demand.

Give one reason a business must adapt its promotion for an overseas market.

Cultural and social differences and language mean adverts must be translated and messages changed to suit local customers.

Give one reason a business must adapt 'place' when selling in another country.

Any one of: internet access varies; local purchasing preferences differ; existing distribution links differ.

What are exports?

Goods and services produced in one country and sold to customers in another country.

Why can a trade bloc be a barrier to trade for a business based outside it?

Member countries trade with each other on favourable terms, often with no tariffs, while goods from outside the bloc may face tariffs, so the outside business's products are dearer than members' products.

How can buying from overseas benefit a UK business?

It may be able to buy raw materials or finished products more cheaply than in the UK, lowering its costs.

Give one drawback to a business of selling to overseas markets.

Any one of: it may not understand foreign customers, laws or culture, leading to costly mistakes; it may face tariffs; adapting and transporting products adds costs.

How can a multinational opening in a country affect local businesses?

Local businesses face a large, powerful competitor and may lose sales, although some may gain by supplying the multinational.