Business and globalisation

• What does globalisation refer to in business?

  Globalisation refers to companies operating internationally or on a global scale.
• How do the world’s economies work together in globalisation?


  They collaborate to provide and produce goods and services.
• What are the three main elements of globalisation?

  • Imports
  • Exports
  • Business location
• Why do businesses engage in globalisation?

  Businesses engage in globalisation to buy and sell around the world, often due to cost or availability of products or cheap labour.
• How does the reputation of a product's origin affect its demand?

  Products from certain locations may be highly desired, leading consumers to pay more for them.
• What are examples of products that have a reputation for their origin?

  Pizza and pasta are examples of products that are highly desired when they are from Italy.
• What is the process of buying from and selling to overseas countries called?

  International trade.
• What does importing refer to?

  Importing refers to the process of purchasing goods or services from overseas and bringing them into another country.
• How does importing affect the UK economy?

  Goods are brought into the UK in exchange for money leaving the UK economy.
• Which types of entities in the UK commonly import products and services?

  Most companies in the UK import products and services.
• Why might some products be imported instead of manufactured domestically?

  Some products are imported because they cannot easily be manufactured in the importing country due to climate, capacity of businesses, or availability of raw materials.
• Give an example of a product that is imported into the UK due to manufacturing challenges.

  Fruit and vegetables are often imported because they cannot easily be manufactured in the UK due to climate conditions.
• Why is it cheaper for the UK to import certain products from other countries?

  It is cheaper to purchase products from other countries than to make them in the importing country.
• From which countries does the UK commonly import electrical products?

  The UK commonly imports electrical products from China and India.
• How does the principle of cost apply to service industries in the context of importing?


  Many UK companies locate their call centres in India due to the cheaper labour costs in that country.
• What does exporting refer to in the context of international trade?

  Exporting refers to a country selling products and services to other countries.
• How does exporting benefit the UK economy?

  Money comes back into the UK economy when products and services are sold abroad.
• What is one of the UK's biggest exports?


  Vehicles
• What happens to vehicles produced by UK car brands?

  They are produced in the UK and then shipped abroad in return for money.
• Name two products that are famous for being produced in the UK and Ireland.

  Heinz Baked Beans and Harris Tweed
• Where are Heinz Baked Beans and Harris Tweed sold?

  They are sold around the world.
• What does SPICED stand for in the context of business imports and exports?

  SPICED refers to a situation where importing goods and services is beneficial due to favorable exchange rates.
• How does SPICED affect businesses that import goods and services?

  It makes products cheaper due to favorable exchange rates.
• What is a potential downside of SPICED for businesses that export goods and services?

  They may sell less or have lower profit margins.
• Why might overseas buyers pay more under SPICED?

  Because the exchange rate makes imported goods more expensive.
• What happens to the profit margin of exporting businesses under SPICED if they keep the same price?

  Their profit margin will be lower.
• What does WPIDEC indicate about the cost of importing goods and services?

  Importing becomes more expensive due to the exchange rate.
• How does WPIDEC affect customers when importing goods and services becomes more expensive?

  The extra expense is often passed on to customers.
• What is a potential benefit for businesses that export goods and services under WPIDEC?

  They may see an increase in sales.
• Why might exporting businesses benefit from WPIDEC?

  Because the exchange rate makes their goods cheaper for foreign buyers or increases their profit.
• What does the acronym SPICED stand for in relation to currency value effects?

  Strong Pound makes Imports Cheaper but Exports Dearer
• What does the acronym WPIDEC stand for in relation to currency value effects?

  Weak Pound makes Imports Dearer but Exports Cheaper
• How do currency values affect imports and exports according to SPICED and WPIDEC?

  • SPICED:
  • Strong Pound:
  • Imports Cheaper
  • Exports Dearer
  • WPIDEC:
  • Weak Pound:
  • Imports Dearer
  • Exports Cheaper
• What is a common reason for businesses to operate overseas?

  To access new markets of customers
• How might an online business expand internationally?

  By developing a website in a foreign language and opening distribution centres in a foreign country
• What are the advantages and disadvantages of increasing the scale of operations for a business?

  Advantages:

  • Access to more customers
  • Potential for more sales and profit
  • Potential to grow product range
  • Increased brand awareness

  
  

  Disadvantages:

  • Increased responsibility
  • More risk
  • Potential for failure
• What is the ultimate goal for a growing business that wants to increase its operations?

  To compete abroad
• What are multinational companies also known as?

  Transnational corporations (TNCs)
• What do multinational companies do in different countries?

  They adapt their products to suit consumers while keeping their brand image recognizable
• How might a fast food chain adapt its menu for different countries?

  By selling beef burgers in the UK or USA and developing a spicy taco for Mexico