Theme 4

• What are the different types of economy

  • Developed
  • Developing
  • Emerging
• What is an emerging economy

  This refers to an economy in the process of rapid growth with increasing GDP, growing incomes, large populations etc.
• what are the indicators of growth

  • GDP
  • Health
  • HUman development index
  • literacy
• What are the benefits of rapid growth

  • Creates jobs
  • incomes rise
  • increased revenue/profit
  • increase in demand
• what is globalisation

  the process by which a business develops an international presence
• what is international trade

  this is when businesses either buy goods or services from abroad or sell their products to overseas buyers.
• What is exporting

  this is when products are produced domestically but consumed by people overseas
• What is importing

  This is when products are produced abroad but consumed domestically.
• what is specialisation

  This is when a business produces one or a limited range of products or are only interested in operating in one market.
• What is foreign direct investment (FDI)

  This is an investment from one country into another.

  It can be either inward or outward
• What is inward FDI

  This is when a foreign company invests into a UK business
• What is outward FDI

  This is when a UK business invests in a foreign company
• What are trading blocs

  This is an agreement between countries to reduce or eliminate the barriers to trade
• What are factors that lead to increased globalisation

  • Structural change
  • Migration
  • Growth of trading blocs
  • political change
  • Reduced cost of transport
  • Increase in global companies
  • Increased FDI
  • Growth of global labour force
• What is trade liberalisation

  This is the process of removing the barriers to trade
• What is protectionism

  This is giving preference to domestic producers
• What are protectionist policies

  • Quotas
  • Tariffs
  • Government legislation
  • Domestic subsidies
• What is international competitiveness

  A businesses ability to compete at home and abroad against foreign firms
• The impact of a changing exchange rate depends on:

  • PED for business products
  • reliance on foreign suppliers
  • Intensity of competition
  • % of sales that come from export markets
• Strategies to achieve cost leadership

  • Outsourcing
  • Offshoring
  • Increase productivity
• What is outsourcing

  This is subcontracting out work so someone else can do it for cheaper
• What is offshoring

  Moving work so it can be done overseas where it is often done cheaper
• What is increasing productivity

  producing more within the same period of time
• What are skill shortages

  This is when there is not enough people available with the skills that you require
• What are the factors to consider in international expansion

  • Disposable incomes / employment levels
  • Ease of doing business
  • Infrastructure
  • competition
  • Political stability
  • Economic issues
  • Cultural differences
• What are the factors that affect the selection of a product location

  • Cost
  • Access to natural resources
  • Trading blocs
  • Skills / availability of workforce
  • political stability
  • government incentives
  • ease of doing business
• What is a global merger

  Thi is an agreement between two foreign countries to join together to form a new business permanently
• What is a joint venture

  This is an agreement between two countries to work together on a specific project for a period of time
• Why do businesses want to target international markets

  • Domestic market is saturated
  • Intense competition in domestic market
  • Outsourcing and offshoring
  • Risk spreading
  • Growth opportunity
  • Economies of scale
• What is global market development

  Involves selling existing products in a new foreign market
• What is an ethnocentric marketing approach

  This is when marketing strategies in the domestic market is used in international markets
• What is a geocentric marketing approach


  This is when the marketing approach is slightly adopted from domestic market
• What is a polycentric marketing approach

  This involves completely changing the marketing approach for each market to suit the local needs and wants
• what is a global niche

  This when customers across many countries have similar specific needs and wants
• What is cultural diversity

  Recognising that different groups have different interests
• What issues does a business need to consider before expanding

  • Inappropriate/offensive branding
  • Cultural differences
  • Language
  • Unintended meanings
  • Different tastes
  • Inappropriate/inaccurate translations
• What is a multinational corporation (MNC)


  This is when a business has its physical operations in two or more countries
• What is control

  This limits/impacts how someone or something behaves
• What is influence

  This involves trying to sway or change the character, development of behaviour of something or someone.
• What are ethics

  Moral principles that underpin business decision making