Business Revision

Advantages and disadvantages of the topics reviewed in lesson.

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Globalization

Globalization is the increasing global relationships of culture, people and economic activity.

Advantages

  • it creates a global equality as large TNC's create jobs for many around the world.
  • providing larger incomes for workers.
  • positive multiplier effect for the area which TNC's locate to.

Disadvanatges

  • Lead to the workers being exploited.
  • Cultural homogisation 

Examples

Mcdonalds, Nike, Manchester united

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Outsourcing

Outsourcing is the movement of an organisation or a part of an organisation to another location

Advantages

  • Closer to an emerging market
  • Cheaper manufacturing costs
  • offer products in an emerging market
  • extending the product lifecycle
  • specialism

Disadvanatges

  • Bad publicity for the TNC
  • Possible language barriers
  • Job loss the host country 
  • Quality issues 

Examples

Apple, Primark, Dell


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Why Become Global

Business become global in the intentions to have a growth in their sales and higher profit margins

Advantages

  • Extending the product life cycle
  • Increasing the sales revenue
  • Become well known around the world

Disadvantages

  • People lose their identity 
  • companies begin 'taking over'

Examples

Addidas, KFC, M&S

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Mergers and Takeovers

This is when two companies join together this could be an equal partnership or sometimes one company will buy the other

Advanatages 

  • increase in sales
  • stability (sometimes)
  • creates jobs 
  • Increase in dividens for shareholders
  • increased market share

Disadvantages

  • could see some unemployment
  • cause a company to become efficient 

Examples

Co-op/safeways, Disney/Marvel, VW/Bentley, Audi, Bugatti, Lamborghini Seat

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Comparative advantage

Two countries which trade with each other both offering different products in order for them to both benefit 

Advanatge

  • Both countries recieve cheaper products than they can make
  • reduces conflicts
  • promotes trade for both countries

Disadvantages

  • unlikely to ever occur
  • some countries have absalout advanatge meaning that one country will never gain trading partners
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Specialization

When a country is able to produce a product at a much cheaper price as they have specialised in the production of that product

Advanatges

  • A country is able to be competitve globally 
  • producing larger GDP as a result of being the cheapest globally

Disadvantages

  • If the market decline the countries economy will collapse

Examples

Ugandas GDP is 95% made up from coffee

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Quotas and Tariffs

Place on imports by the government in the shape of taxs or sometime stops certain amounts entering the countries economy

Advanatges

  • Protects infant industries 
  • stops any country dumping

Disadvantages

  • Maintains the developent gap
  • Stop any developing country access the growing economies
  • consumers generally have to pay more
  • Companies are unable to grow effectively

Example

E.U put tariffs on importing goods into europe

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Protectionism

When a country or trade bloc makes attempts at stopping all companies outcompete their local businesses and take over.

Advantages

  • Reduces any risk to infant industries
  • protects the countries economy

Disadvantages

  • outside countries have no chance to enter
  • Maintaing the development gap
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Global Marketing

its the advertising and branding around the world and due to language barriers can cause problems and misunderstandings 

Advanatges

  • The companies image is branded across the whole world
  • marketing economies of scale

Disadvantages

  • Language barrier causing misunderstanding 
  • Humiliating
  • creating the wrong image

Examples

united airline giving Asians white flowers which are sign of bad luch and death

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World Trade Organisation

A multilateral organisation who are making attempts to liberalise trade by removing or reducing the tariffs put onto imported products

Advantages

  • helping developing nation access to developed markets
  • developing nations are given money to reduce their issues

Disadvanatges

  • Infant inudstries under threat
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Liberalization

removing limitations on trade which have being erected over a number of years 

Advanatges

  • level playing field for all comptetitors
  • reduced customer pay

Disadvanatges

  • infant industries are in danger
  • certain countries have absolout countries
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