Theme 4 Summary

What is GDP?

Value of products produced in an economy

What is GDP a measurement of?

Economic growth

What happens to incomes when GDP increases?

Increase

What is a growing economy?

Economy with increasing economic power

Does a developing economy have slow or fast GDP per capita?

Fast

Does a developed economy have slow or fast GDP per capita?

Slow

Does a developing country have good or bad infrastructure?

Bad

Does a developing country usually have high poverty?

Yes

What are BRIC economies?

Wish to increase economic influence

Who are the BRIC economies?

• Brazil

• Russia

• India

• China

What are MINT economies?

Countries that show potential for economic growth

Who are the MINT economies?

• Mexico

• Indonesia

• Nigeria

• Turkey

How do you measure whether an economy is growing?

• Health

• Literacy

• GDP per capita

What is the formula to work out GDP per capita?

total GDP/population

What is an advantage of growing economies?

Trade opportunities for Western business

What does HDI measure?

• Health

• Literacy

• Standard of living

What is an export?

Things leaving country

What is an import?

Things entering the country

How do you work out PPP?

GDP/mid year population

What is the top HDI country?

Switzerland

What is the bottom HDI country?

Somalia

What is FDI?

Cross border investment

What does FDI lead to?

Economic growth

What does high FDI cause?

• Growth

• Resources

• New markets/partners

• Job opportunities

What are the factors that contribute to increased globalisation?

• Political change

• Increased infrastructure

• Increased FDI

• Migration

• Trade liberalisation

What is protectionism?

Trade barriers

What are tariffs?

Taxes on imports

What are quotas?

Limit on the amount of imports

What is an advantage of protectionism?

Better for infant industries

What is a disadvantage of protectionism?

Trade wars

What is a push factor?

Something that makes a market less attractive

What is a pull factor?

Something that makes a market attractive

What are the main push factors?

• Saturated market

• Competition

What are the main pull factors?

• Risk spreading

• Economies of scale

What is offshoring?

Moving production to a different country

What are factors to consider when assessing a country as a market?

• Disposable income

• Legislation

• Infrastructure

• Political stability

• Exchange rate

What are the extra factors to consider when assessing a country as a production location?

• Cost

• Labour

• Resources

• Return

What are the reasons for global mergers/joint ventures?

• Spreading risk

• Entering new markets

What is ethnocentricity?

Promotion based on beliefs of home nation

What is polycentricity?

Promotion based on beliefs of each country the business is located in

What is geocentricity?

Glocalisation

What is an advantage of ethnocentricity?

Economies of scale

What is a disadvantage of ethnocentricity?

Ignorant

What is an advantage of polycentricity?

Local expertise which helps with marketing strategies

What is a disadvantage of polycentricity?

Time consuming

What are cultural factors businesses have to consider?

• Cultural differences

• Tastes

• Language

• Unintended meanings

What is an advantage of being in a global niche market?

Can attract world’s wealthiest consumers

What are advantages of MNCs?

• Technology and skills transfer

• Consumers benefit from access to global brands

• Business culture better

• Job opportunities

• Wages and working conditions increase

• Helps local businesses through infrastructure

What are disadvantages of MNCs?

• Bring in own managers so only creates low skilled job opportunities

• May just wish to exploit

• Loss of talented workers

• Wage inflation

What is greenwashing?

Using certain ethical practices to distract from unethical practices

What is sportswashing?

Using sporting events as a scapegoat

What is lobbying?

Attempting to influence government decisions

How can you control MNCs?

• Legislation

• Subsidies

• Protectionism

• Trade events

What are the types of legal control?

• Employee

• Consumer

• Environmental

What is an advantage of trading inside a trading bloc?

Reduced tariffs

What is a disadvantage of trading blocs?

Costly to trade outside the bloc