Global business (A Level) flashcards

Topic 4: Global business

Developed, developing and emerging economies

Developed: high income per head, services-led, strong infrastructure. Developing: low income per head, more agriculture, weaker infrastructure. Emerging: fast growth, industrialising, opening up to trade.

GDP, GDP per capita and HDI

GDP: value of output in a period. GDP per capita = GDP ÷ population (45bn dollars ÷ 9m people = 5,000 dollars). HDI combines income with health and education measures.

Causes of globalisation

Trade liberalisation and the WTO; political change; falling transport and communication costs; MNCs; investment flows (FDI); migration; growth of the labour force; structural change.

Tariff vs import quota

Tariff: a tax on imports; raises the import price and brings the government revenue. Quota: a limit on the quantity imported; restricts supply and raises price but gives no tax revenue.

Trading blocs: examples and impact

EU single market, ASEAN, NAFTA. Members gain easier access and scale; outsiders face barriers, so they may invest inside the bloc.

Push vs pull factors for going global

Push: a saturated home market; strong competition at home. Pull: increased sales and profitability; risk spreading; economies of scale.

Off-shoring vs outsourcing

Off-shoring: moving the firm's own production abroad. Outsourcing: handing the work to another firm.

Exchange rate appreciation vs depreciation

Appreciation (stronger currency) makes exports dearer abroad and imports cheaper. Depreciation does the reverse. Example: a 300-dollar bike costs 1,200 zelds at 4 per dollar and 1,500 at 5, up 25%.

Reasons for global mergers and joint ventures

Spread risk and gain scale; enter markets or trading blocs; acquire brands or patents; secure supplies; reduce competition; use local knowledge; meet legal requirements; share costs and risks.

Ethnocentric, polycentric and geocentric marketing

Ethnocentric: home-market methods applied abroad. Polycentric: a different approach tailored to each country. Geocentric: a blend of standard and local approaches.

Glocalisation

A global brand adapted to local tastes and cultures, for example changing product, packaging or promotion for each market.

Cultural and social factors in global marketing

Cultural differences, tastes, language and unintended meanings, and inappropriate branding or promotion.

Impact of MNCs on a host economy

Local: jobs, wages, conditions, local businesses, community and environment. National: growth, FDI, balance of payments, technology and skills transfer, consumers, business culture, tax revenues.

Ways of controlling MNCs

Political influence, legal control, consumer pressure, pressure groups, social media, and self-regulation.