Globalisation (AQA GCSE Business): Flashcards
Exam code: 8132
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Define globalisation.
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Cards in this collection (25)
Define globalisation.
Globalisation is the business and economic integration of different countries.
How have developments in technology driven globalisation?
Technology allows faster communication, transfer of data and online sales around the world.
Market ________ in their home country means businesses may only achieve growth by finding new target markets overseas.
Market saturation in their home country means businesses may only achieve growth by finding new target markets overseas.
Define imports.
Imports are goods and services bought by people and businesses in one country from another country.
True or False?
Overall, the UK buys more goods and services from abroad than it sells abroad.
True.
On the whole, the UK imports more goods and services than it exports.
Define multinational company (MNC).
A multinational company (MNC) is a business that is registered in one country but has research, manufacturing or sales operations in different countries.
Define joint venture.
A joint venture is an agreement between two or more businesses to combine their resources and expertise to achieve a particular goal.
Why does a joint venture reduce the risk of entering an overseas market?
A joint venture usually involves a domestic partner that is familiar with the business environment.
True or False?
UK businesses usually compete with overseas rivals by offering the lowest prices.
False.
UK businesses can rarely compete on price because of their relatively high wage and operations costs. They tend to compete on design, quality, heritage and branding or niche products.
How can globalisation help a UK business achieve economies of scale?
Selling to larger global markets increases output, which can reduce business costs. This can increase profits and improve competitiveness.
How can globalisation help a business overcome staff shortages?
A business can employ workers from other countries, including high-quality specialists from anywhere in the world.
Why does globalisation increase competition for domestic firms?
International rivals often have lower costs, such as cheaper labour or materials, so they can charge lower prices. They can also spend more on research, marketing and distribution.
True or False?
Globalisation makes it harder for foreign businesses to take over UK public limited companies.
False.
Capital flows easily across borders, so domestic public limited companies risk being taken over by foreign rivals.
How can global distribution networks create risks for businesses?
Natural disasters, accidents or terrorism can interrupt global distribution networks, causing delays to deliveries.
Define exchange rate.
An exchange rate is the price of one currency in terms of another, e.g. £1 = €1.18.
Which businesses are most affected by changes in exchange rates?
Exchange rates matter most to businesses that import raw materials and components and to businesses that export their products.
Define appreciation.
Appreciation occurs when the value of a currency rises, e.g. £1 = €1.18 goes to £1 = €1.25.
What causes a currency to rise in value?
A currency rises in value when global demand for the currency rises.
Define depreciation.
Depreciation occurs when the value of a currency falls, e.g. £1 = €1.18 goes to £1 = €1.05.
How much a business is affected by exchange rate changes depends on the ____ it imports or exports and the countries it trades with.
How much a business is affected by exchange rate changes depends on the volume it imports or exports and the countries it trades with.
True or False?
A rise in the value of the pound usually benefits UK exporters.
False.
A stronger pound makes UK exports more expensive compared with overseas rivals' products, so export sales are likely to fall.
How does a stronger pound affect a UK business that imports raw materials?
Its costs are likely to fall as raw materials from overseas become cheaper. It can pass these savings on to customers or achieve higher profit margins.
How might a UK exporter respond to a stronger pound?
The exporter may lower its prices and accept lower profit margins to stay competitive.
True or False?
A fall in the value of the pound is likely to increase sales for UK exporters.
True.
A weaker pound makes UK products cheaper compared with overseas competitors' products, so export sales are likely to rise.
How might a UK importer respond to a weaker pound?
Its costs are likely to rise, so it may seek domestic suppliers to reduce costs and maintain profit levels.
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