Theme 4: A Level Business Edexcel

• Globalisation


  Companies operating internationally or on a global scale
• GDP


  Gross Domestic Product - the total value of all goods and services produced within a country in a given period of time (in an economy)
• HDI


  Human Development Index - focuses on three key measures of human development: longevity (how long people live), basic education and minimal income. The HDI tracks progress made by countries in improving these three basic development outcomes
• Health


  A state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity
• OECD

  The Organisation for Economic Cooperation and Development - a unique forum where the governments of 37 democracies with market-based economies collaborate to develop policy standards to promote sustainable economic growth
• Emerging Economies


  One in which the country is becoming a developed nation often driven by relatively high economic growth and a rapid expansion of trade and investment flows
• Purchasing Power Parity

  The exchange rate needed for say $100 to buy the same quantity of products in each country. PPPs measure the total amount of goods and services that a single unit of a country's currency can buy in another country
• Literacy


  The knowledge and understanding of the financial, accounting, marketing, and operational functions of an organisation. To put it in simpler terms, business literacy refers to how eager and quick you are to deal with risks and opportunities to get a favourable result
• Ease of doing business


  A measure of how easy or difficult it is to start or operate a business in a country and this measure can be in the form of an index measured and or provided by organisations
• The OECD defines globalisation as: "The geographical dispersion of industrial and service activities, for example research and development, sourcing of factor inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets."
• Globalisation is a process in which economies have become increasingly integrated and interdependent
• GDP per capita


  GDP per Capita measures the average level of national income (adjusted for inflation) per person. GDP, (Gross Domestic Product) measures the national output/national income of an economy; this is a measure of the volume of goods and services produced in a given year. Real GDP takes into account inflation
• Literacy


  The % of adults (over 15) that can read and write, is an important measure of economic growth potential. A literate population is more likely to provide an economically productive labour market in the long term
• Health


  Life expectancy and infant mortality are key measures of the health of a country. Good healthcare is essential in improving health statistics, a healthy population is an economically productive one
• Human Development Index (HDI)


  A collection of statistics (Literacy, Health and GDP) that are combined into an index, ranking countries according to their human development
• Increase in GDP per capita


  Beneficial for the economy, as there are higher tax revenues, which enables the government to spend more on public services such as healthcare and education, and overall, higher living standards
• Developing and emerging economies


  • A key focus for business looking to sell or produce their goods abroad
• Selling in new markets


  • Opportunities for growth in Sales Revenue and Profit, as well as economies of scale
• Producing in new markets


  • Opportunities to take advantage of lower labour and production costs, as well as access to raw materials
• Attitude to risk


  Implications of global economic growth for UK businesses
• Strategic thinking/Planning (BREXIT!)

  Implications of global economic growth for UK businesses
• Short term view/long term view


  Implications of global economic growth for UK businesses
• New markets (population/incomes)


  Implications of global economic growth for UK businesses
• New production Locations - producing abroad = offshoring


  Implications of global economic growth for UK businesses
• Increased Competition


  Implications of global economic growth for UK businesses
• Opportunity for Glocalisation (Starbucks/VW/Apple)


  Implications of global economic growth for UK businesses
• Those on lower incomes in lower economies, will generally stick with their domestic competitors/operators
• Growing middle class will desire what the western trends show
• Easy access to products/services


  Implications of global economic growth for individuals in the UK
• Entrepreneurial opportunities - growth in number of start up businesses


  Implications of global economic growth for individuals in the UK
• Employment patterns (secondary/tertiary sector)


  Implications of global economic growth for individuals in the UK
• Growing economies focus on selling or producing abroad


  Driving globalisation
• Producing in new markets


  Opportunities to take advantage of lower labour and production costs, as well as access to raw materials
• Ansoff Matrix


  Used to evaluate the relative attractiveness of growth strategies that leverage both existing products and markets vs. new ones, as well as the level of risk associated with each. Each box of the Matrix corresponds to a specific growth strategy. Globalisation allows organisations to have an even greater global footprint. Despite its usefulness and popularity, the Ansoff Matrix is not always the best fit for this ever-changing world due to its simplicity
• Key drivers for globalisation

  • Trade agreements (liberalisation) - WTO, EU, NAFTA, ASEAN
  • Improvements in transportation and infrastructure - Reduction in cost of containers
  • Improvements in communications technology - internet, email, media, e-commerce
  • Specialisation - competitive advantage, comparative advantage, division of labour
• WTO


  World Trade Organisation - to regulate, liberate and establish international trade, it is based on the free trade theories after WW2, 23 countries signed this agreement in 1938, today there are 160 countries who are involved, and 24 governments have observer status. Every member of the WTO has to agree that they will trade with the other countries. The idea of trade liberalisation is that it reduces the costs of tariffs (taxes) making it important for countries to have trade agreements
• Containerisation


  The large-scale movement of goods, where large containers of cargo are shipped overseas with minimal costs, instead of unloading trucks and reloading trucks, which take a lot longer
• Specialisation


  A production strategy where a business (or country) focuses on a limited scope of products or services
• Comparative advantage


  The theory that a country should specialise in goods and services so that it can produce more efficiently than other countries
• Competitive advantage


  The idea that a business should specialise in an area in order to perform better than its competitors