globalisation and international trade

• What is a tariff?


  A tax on an import, usually expressed as a percentage of the import’s price.
• What are imports?


  Goods and services that are bought from producers overseas.
• What defines a multinational business?


  Businesses with headquarters in one country that operate in other countries.
• What are the advantages of multinational businesses?


  • Well known globally, leading to more customers and greater profits.
  • Easier competition in foreign markets.
  • Economies of scale.
  • Lower production costs.
  • Advantageous exchange rate movements.
  • Tax advantages and grants.
  • Removal of trade barriers.
• What are the disadvantages of multinational businesses?


  • Size can lead to management difficulties and communication problems.
  • Language barriers increase costs.
  • Different laws in other countries can complicate operations.
  • Exchange rate movements can negatively impact revenue.
  • Lower morale of home workers due to job exports.
  • Competition from domestic businesses.
  • High set-up costs.
  • Negative public image.
• What are exports?


  Goods and services produced in one country and sold in another.
• What is international trade?


  The selling of goods and services across the world.
• What are the advantages of international trade?


  • Bigger market and increased brand awareness.
  • Economies of scale through bulk buying.
  • Wider range of customers and market segments.
  • Potential benefits from exchange rate fluctuations.
• What are the disadvantages of international trade?


  • Higher transport costs due to longer distances.
  • Other transport problems like availability and weather.
  • Language problems leading to translation costs.
  • Currency conversion and exchange rate fluctuations.
  • Costs of complying with different laws.
  • Lack of knowledge about foreign markets.
  • Problems with payment resolution over distance.
  • Trade barriers like embargoes and quotas.
  • Political factors affecting trade.
  • Competition from established foreign firms.
• What is the definition of exchange rates?


  The value of one country’s currency against another country’s currency.
• What is the impact of a fall in the value of the pound?


  • Import prices increase, leading to higher costs.
  • Increased value of foreign income and investments.
  • No effect if purchasing stock in Britain.
  • Exporting businesses may have more competitive prices.
• What is inward investment?


  Investment of capital into another country, such as building factories.
• What is globalisation?


  The increased interdependency of people around the world due to trade and cultural exchange.
• What are the main features of globalisation?


  • Increased international trade.
  • Development of multinational companies.
  • Free movement of labour and capital across borders.
• What are the benefits of globalisation to UK businesses?


  • Greater access to foreign markets.
  • Longer product life cycles due to wider markets.
  • Easier import of goods and services.
  • Access to specialist skills from abroad.
• What are the drawbacks of globalisation to UK businesses?


  • Difficulty competing on cost for manufactured goods.
  • Unemployment due to loss of industries.
  • Subject to international laws of trade.
• What does SPICED stand for in relation to exchange rates?


  • Strong Pound, Imports Cheaper, Exports Dearer.
• What does WIDEC stand for in relation to exchange rates?

  • Weak Pound, Imports Dearer, Exports Cheaper.
• How many Starbucks stores were worldwide in 2003?


  6,200 stores worldwide.
• How many new Starbucks stores open daily?


  Three new stores open daily.