Edexcel A level business theme 4

BRICS

Brazil, Russia, India, China & South Africa

Indicators of growth

Statistics that show the extent to which a country is increasing in size

Equation of GDP

National income/population

Business specialisation

When businesses concentrate on producing specific goods

Foreign direct investment

Investment made by a business from one country into the production of a business from another country

Globalisation

The increased integration and interdependence of international economies

Trade liberalisation

The process of removing barriers to trade to encourage free movement of goods

Trade barriers

Any government actions that limit the free movement of goods between countries

Protectionism

Policies imposed to restrict free movement of goods

Tariffs

Taxes placed on imported goods

Quotas

A physical limit on the volume of imports entering a country

Embargoes

A total ban on imported products

Subsidies

Government payments to domestic firms to reduce costs

Trading blocs

Economic units formed when the government of a group of countries agree to trade freely

Custom unions

Members agree to the removal of trade barriers and a common approach to trade barriers to countries outside the BLOC

Common markets

Members agree to the removal of trade barriers as well the freedom of movement of factors of production

Free trade areas

Members agree to either reduce or eliminate barriers for a select number of goods

Single European market

A customs union that has a free trade area

Push factors

Factors that force a business to leave a market

Pull factors

Factors that attract a business to a global market

Off shoring

When a business relocates production to another country

Outsourcing

When a business uses the services of another organisation

Infrastructure

The physical systems that a country or business requires to operate effectively

Global merger

When two or more businesses join together beyond the boundaries of their countries

Joint ventures

When two businesses agree to act collectively to set up a new business with all parties contributing

Global marketing strategy

The adaptation of a marketing strategy to target all markets on a worldwide scale

Glocalisation

A global marketing strategy which adapts to meet requirements of local market

Ethnocentric

Approach to global marketing that treats all of the firm’s markets as being very similar, with little or no adaptations to local tastes in overseas markets. Keeps a similar marketing strategy in all markets

Polycentric

A marketing approach where the promotion of a product is based on the beliefs of the the nation which the business is operating

Geocentric

An approach where promotion is based on a global point of view

Multinational corporation

A business that has facilities and assets in more than one country

Balance of payments

A record of a country's trade/transactions with the rest of the world

Transfer pricing

The price charged by one company to another within the same MNC

Human development index

A measure of economic growth through the achievement of people

2 pros of economic growth

Trade opportunities

Increased supply

Increased profits

Wealthier individuals

2 factors affecting imports and exports

Exchange rates

PED

The state of the economy

Increase in GDP

2 factors in favour of protectionism

Protect domestic business

Avoid externalities

Avoid overproduction

2 Push factors

Saturated markets

Competition

2 Pull factors

Economies of scale

Spreading risk

Single European Market

A customs union that has a free trade area and common external tariffs

European Union

An economic partnership between 28 countries formed in 1958

Trading blocs

Economic units formed when the governments of a group of countries agree to trade together freely

2 advantages of Single European Market

Trade creation

Access to markets

2 disadvantages of single European Market

Monopolies

Trade diversion

Cost