International Trade + Globalisation

• What is a tariff?

  A tax on an import
• How is a tariff usually expressed?

  As a percentage of the import’s price
• What are imports?

  Goods and services bought from overseas
• What defines a multinational business?

  Headquarters in one country, operates in others
• What are the advantages of multinational businesses?

  • Well known globally, more customers
  • 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 complicates management
  • Language barriers increase costs
  • Different laws in other countries
  • Exchange rate risks
  • Lower morale of home workers
  • Competition from domestic businesses
  • High set-up costs
  • Negative public image
• What are exports?

  Goods and services sold to another country
• What is international trade?

  Selling goods and services across the world
• What are the advantages of international trade?

  • Bigger market and brand awareness
  • Economies of scale
  • Wider range of customers
  • Benefits from exchange rate fluctuations
• What are the disadvantages of international trade?

  • Higher transport costs
  • Other transport problems
  • Language issues in trading
  • Currency conversion costs
  • Different laws and customs
  • Lack of knowledge of foreign markets
  • Payment difficulties
  • Trade barriers
  • Political factors
  • Competition from foreign firms
• What is the definition of exchange rates?

  The value of one currency against another
• What happens when the pound's value falls?

  • Import prices increase
  • Increased foreign income value
  • No effect if stock is purchased locally
  • Exporting businesses may have competitive prices
• What is inward investment?

  Investment capital into another country
• What is globalisation?

  Increased interdependency due to trade
• What are the main features of globalisation?

  • Increased international trade
  • Development of multinational companies
  • Free movement of labour and capital
• What opportunities does globalisation create?

  • Entering new markets
  • Using resources abroad
  • Cheaper production locations
  • Access to new technologies
• What threats does globalisation pose?

  • Increased competition
  • Theft of intellectual property
  • Loss of talented workers
• What are the benefits of globalisation to UK businesses?

  • Greater access to foreign markets
  • Longer product life cycles for R&D
  • Easier import of goods and services
  • Access to specialist skills
• What are the drawbacks of globalisation to UK businesses?

  • Difficulty competing on cost
  • Unemployment from industry losses
  • Subject to international trade laws
• What does SPICED stand for in exchange rates?

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

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

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

  Three new stores