theme 4 key terms

This set of flashcards covers key terms relevant to A Level Business studies focusing on economics, trade, and globalization.

Globalisation

The economic integration of different countries

Economic growth

The increase in a country's output of goods and services over time, typically measured by GDP.

GDP

The total monetary value of all goods and services produced in a country within a specific time period, often used to gauge the economic health of a nation.

GDP per capita

is the total GDP divided by the population of a country, providing a per-person measure of economic output.

Human development index

A composite statistic of life expectancy, education, and per capita income indicators, used to rank countries and assess their social and economic development.

Imports

Goods and services brought into a country from abroad for sale, influencing domestic supply and demand.

Exports

Goods and services sold by a country to other countries, contributing to its economic output.

Specialisation

The process by which countries/businesses focus on a specific set of tasks or industries to increase efficiency and production.

Foreign direct investment

Investment made by a company or individual in one country in business interests in another country, typically involving the establishment of business operations or acquiring assets.

Inward FDI

Investment by foreign entities into a country, often leading to the establishment of businesses or expansion of existing operations.

Outward FDI

Investment made by domestic companies in overseas business operations or assets, seeking growth and market expansion.

Trade liberalisation

The process of reducing trade barriers such as tariffs and quotas to encourage free trade between nations and improve economic efficiency.

Protectionism

When a government seeks to protect domestic industries from foreign competition

A tariff

A tax placed on imported goods from other countries as it shifts demand from foreign businesses to domestic businesses

Import quota

A limit on the quantity of a specific good that can be imported into a country, intended to protect domestic producers by restricting foreign competition.

Government legislation

When certain imports are restricted to protect customers and businesses, imports may need to meet strict regulations to be allowed into the country

Domestic subsides

Payments given to domestic businesses to help lower the cost of production.

Trading bloc

A group of countries that sign up to free trade between them, but they are protected by a tariff wall against imports from countries outside the bloc

Push factors

Factors that push a business to expand outside of it’s own country

Pull factors

Factors that encourage a business to operate within a market abroad

Saturated market

Occurs when the demand for goods and services has reached a peak, so it becomes challenging for businesses to grow and expand within the market

Offshoring

When a company moves part of the production process to another country

Outsourcing

When a company hired an external organisation to complete certain tasks or business functions

Product life cycle

Described the stages a product goes through in it’s useful life including Development, Introduction, Growth, Maturity (or Saturation), and Decline

Extension strategy

a marketing tactic to keep a product in the maturity phase of its life cycle, preventing sales decline by revitalizing customer interest

Production location

the geographical site where a business chooses to manufacture goods or provide services

Return on investment

Return on Investment (ROI) measures an investment's profitability by comparing the gain from the investment against its cost

Global merger

When two companies from different countries permanently join to form a new, larger entity

Joint venture

A joint venture is a separate business entity created by two or more parties, involving shared ownership, returns and risks

Disposable income

The amount of income individuals have left after paying direct taxes and other deductions

Patent

The legal right given by the government to a business to make, use or sell an invention.

Exchange rates

The price of one currency in terms of another

Appreciation

A currency appreciates (strengthens) when its value increases relative to another currency; you can buy more foreign currency with the same amount of your own.

Depreciation

A currency depreciates (weakens) when its value decreases relative to another currency; you can buy less foreign currency with the same amount of your own.

Global competitiveness

The ability of a business to perform better than it’s rivals across markets in different countries

Cost competitiveness

When a business becomes one of the lowest cost producers in its industry

Differentiation

When a business makes the characteristics of its products/services different to that of competitors

Multi national company

A business registered in one country but has manufacturing operations/outlets in different countries

Balance of payments

A statement showing all of the financial transactions between a country and the rest of the world

Transfer pricing

Shifting profits from one country to another with lower tax rates as a form of tax avoidance

Pressure groups

Organisations that operate to influence a company and public policy on a specific cause

Glocalisation

A strategy where businesses aim to reach customers globally whilst also taking into consideration the needs of the local market

Ethnocentric approach

Where no changes are made to products or marketing for overseas products, due to the belief that the company’s home country culture and marketing practices are superior to other countries.

Polycentric approach

A business that treats each country as a unique marker, and develops a customised marketing mix for each market.

Geocentric approach

A global marketing strategy that integrates both global and local elements, viewing the entire world as a potential market while adapting to specific local needs.

Marketing mix

The combination of product, price, place, and promotion strategies that a business uses to market its goods or services. It helps in tailoring offerings to meet consumer needs effectively.

Ansoff’s matrix

A strategic planning tool used to identify and analyze growth opportunities by considering product and market combinations. It outlines four growth strategies: market penetration, market development, product development, and diversification.

Market penetration

A strategy aimed at increasing sales of existing products within existing markets.

Market development

The strategy of entering new markets with existing products.

Product development

The process of creating new products or modifying existing ones to existing markets

Diversification

A growth strategy that involves introducing new products to new markets.

Cultural diversity

The presence of a variety of cultural or ethnic groups within a society. It includes differences in language, religion, lifestyle, and social practices.

Global niche markets

A global niche market is a small segment of the global market, characterised by unique and specific needs and preferences.

Global mass market

A global mass market is the largest part of a global market, where there are many similar products and the wants and needs of customers are less specific.