Flashcards
Theme 4
Cards in this deck (25)
- 1What is an economy?An economy is the state of a country in terms of how many goods/services the country is producing and consuming
- 2What is GDP?GDP is the value of all the goods and services output
- 3What are the measures of economic growth?GDP
Literacy - percentage of people within the working population who can read and write
Health - education and health care
HDI - GDP + Literacy + Health - 4What is an advanced economy?An advanced economy is where there is not much work in primary and secondary sectors, mostly in services (high skilled workforce, education, literacy and life expectancy)
- 5What is specialisation?Specialisation is where a firm/country focus production on one product or market leading to an increase in quality
- 6What are the pro's and cons of Specialisation?+ Can lead to an increase in; productivity, output, efficiency and sales
+ Reduced internal costs
- Become reliant on one industry
- Becomes boring for workers
- If firms become to big leads to breakdown in communication - 7What is the difference between Brownfield FDI and Greenfield FDI?Brownfield FDI is where a foreign firm purchases a business and grows it
Greenfield FDI is where a foreign firm builds new factories or businesses (create jobs) - 8What are the pro's of FDI?+ Brings Jobs
+ New technology available to firms
+ increase exports? - 9What is the difference between Horizontal and Vetical FDI?Horizontal FDI is when a firm duplicates it's home country activities at the same value chain stage in a host country through FDI
Vertical FDI occurs if a company invests in a business that plays the role of a supplier or distributor - 10What is the WTO?The World Trade Organisation exists to reduce barriers to trade and to ensure that countries keep to the agreements they have made
They also deal with complaints between members and organising negotiations if necessary - 11What is Trade Liberalisation?Trade Liberalisation is the process by which international trade is made easier through a relaxation of the rules that govern it
- 12What is the difference between a Tariff and a Quota?A tariff is a tax placed on an import to increase it's value and decrease it's demand
A quota is where imports are restricted so firms can only import until a physical limit for control - 13What are the pro's and cons of Tariffs?+ Ensure job security for domestic workers
+ Protect domestic businesses
+ Improve balance of trade
- Higher prices may not have an impact
- Tariffs may only increase price for consumers
- Restrict volume of trade - 14What are the pro's and cons of Quota's?+ Protection of domestic businesses allows more jobs
+ Domestic goods become less expensive
- Less opportunity for exporting
- Higher price for all consumers - 15What are Subsidies?Subsidies are where governments by supporting businesses to help an industry or business keep the price of a commodity or service low.
- 16What are Regulations and Standards?Regulations are put in place to restrict certain international businesses
Standards are might demotivate international businesses and help increase domestic businesses - 17What's the difference between push and pull factors?Push Factors are factors that push a business out of a country or industry (Saturated Market, Competition)
Pull Factors are factors that attract businesses to leave a country or industry
(EoS, Risk Spreading) - 18What is Off-Shoring?Off-Shoring is the practise of basing some of a countries processes or services services, so take advantage of of lower costs
- 19What is Outsourcing?Outsourcing is where firms obtain (goods/services) by contract from an outside supplier
- 20What's the difference between a merger and a joint venture?A merger is where two companies or more merge to become one
A joint venture is where two independent businesses collaborate on a specific project - 21What are the reasons for a joint venture?Spread Risk over different countries
Enter New Markets
Acquire Brand Names
Secure Resources
Increase Global Competitiveness - 22How can firms gain a competitive advantage through being multinational?Exchange Rates
Low Cost Leadership
Differentiation
Skill Shortages
Stakeholder vs Ethics
Exploitation of Labour
CSR - 23What are the pro's and cons of a business becoming Multinational?+ Creates Jobs
+ Increase Labour Skills
+ Increased Infrastructure
+ Increase Standard of Living
- Profit Leakage
- Low Paid Jobs
- Widens Poverty Gap - 24How can MNC be controlled?Political Influences
Legal Control
Pressure Groups
Stakeholders
Social Media - 25—
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- Flashcards on Theme 4, created by Jordan Andrews on 07/05/2018.
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- Jordan Andrews
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