Mock Exam 2
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- Created by: LivStorm
- Created on: 08-03-22 12:47
Trading Bloc definition
Usually groups of countries in specific regions that manage and promote trade activities
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Main benefits of trading blocs
FDI
Economies of scale
Competition
Greater trade
Market efficiency
Economies of scale
Competition
Greater trade
Market efficiency
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Advantages of trading blocs
Sell as part of a free market
Economies of scale - low costs
Access to large markets
Migration - more access to potential staff
No tariffs/quotas
Economies of scale - low costs
Access to large markets
Migration - more access to potential staff
No tariffs/quotas
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Disadvantages of trading blocs
Government have to pay a lot
Increased influence of MNCs - dominate
Increased competition
Increased influence of MNCs - dominate
Increased competition
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Some examples of trading blocs
EU
EFTA
NAFTA
ASEAN
COMSEA
SAFTA
Pacific Alliance
Mercosur
EFTA
NAFTA
ASEAN
COMSEA
SAFTA
Pacific Alliance
Mercosur
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Four freedoms of the EU
Free trade in goods
Mobility of labour
Free movement of capital
Free trade in services
Mobility of labour
Free movement of capital
Free trade in services
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Main export partners for the UK economy
Germany
United States
Netherlands
Switzerland
France
Ireland
Belgium
United States
Netherlands
Switzerland
France
Ireland
Belgium
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Main import partners for the UK economy
Germany
China
Netherlands
United States
France
Belgium
Italy
China
Netherlands
United States
France
Belgium
Italy
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What is the Trans-Pacific Partnership (TPP)
Aim is to deepen economic ties between certain nations.
Providing no tariffs and the trade boosts growth
Providing no tariffs and the trade boosts growth
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ASEAN trading bloc aim and it's diversity
Aim - to establish an economic community (AEC)
Diversity - range of economies (from advanced to developing)
Diversity - range of economies (from advanced to developing)
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A global workforce consists of...
Migrant workers
Working in export
Employed by MNCs
Employed by offshoring companies
Working in export
Employed by MNCs
Employed by offshoring companies
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Advantages of a global labour force
Increase selection choices
Access to a high skilled workforce
Reduce costs
Invest in skilled workers - shortages?
Access to a high skilled workforce
Reduce costs
Invest in skilled workers - shortages?
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Internal recruitment definition
A role filled by someone that is already employed by the business
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Advantages of internal recruitment
Cheaper and quicker to recruit
People already familiar with business and how it operates
Promotional prospects and opportunities
People already familiar with business and how it operates
Promotional prospects and opportunities
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Disadvantages of internal recruitment
Business already knows the strengths and weaknesses of candidates
Limits number of potential applicants
No new ideas can be introduced
Creates another vacancy
May cause resentment amongst candidates
Limits number of potential applicants
No new ideas can be introduced
Creates another vacancy
May cause resentment amongst candidates
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External recruitment definition
People employed from outside the business
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Advantages of external recruitment
Outside people bring new ideas
Larger pool of workers
Wider range of experience
Local, National or International
Larger pool of workers
Wider range of experience
Local, National or International
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Disadvantages of external recruitment
Longer process
More expensive due to advertising and interviews
Upsets current staff as they aren't being promoted
Process may not reveal best candidate
More expensive due to advertising and interviews
Upsets current staff as they aren't being promoted
Process may not reveal best candidate
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Reasons to recruit staff
Business expansion
Existing employees leave
Business needs employees with new skills
Business is relocating
Existing employees leave
Business needs employees with new skills
Business is relocating
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Dynamic Market definition
A market that is rapidly changing business envrionment
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Reasons for dynamic markets changing
Social trends
Changes in tech
Competitiveness
Trends
Consumer tastes
Fashion
Rising/falling incomes
Arrival of superior product by competition
External shocks
Changes in tech
Competitiveness
Trends
Consumer tastes
Fashion
Rising/falling incomes
Arrival of superior product by competition
External shocks
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Exports definition
Goods produced in one country and shipped to another country for future sales or trade
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Advantages of exporting
Can change existing products to suit new markets
Build relationships with other countries
Access to new markets
Increase market share
Increase profitability
Increase profit
Economies of scale
Build relationships with other countries
Access to new markets
Increase market share
Increase profitability
Increase profit
Economies of scale
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Disadvantages of exporting
Can lose focus on home markets and existing customers
Must consider tax and VAT
Communication problems
Overseas markets so may lose some control
Administration costs rise as you have to deal with regulations
Must consider tax and VAT
Communication problems
Overseas markets so may lose some control
Administration costs rise as you have to deal with regulations
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Factors that affect exporting
Impact of exchange rates
Price elasticity
State of the world economy
Price elasticity
State of the world economy
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Non-price factors affecting exporting
GDP of other countries increases
Changes in taste and fashion
Price inelastic exports are likely to fall in volume sales but increase total revenue
Productive capacity increases
Product differentiation leads to greater demand
Changes in taste and fashion
Price inelastic exports are likely to fall in volume sales but increase total revenue
Productive capacity increases
Product differentiation leads to greater demand
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Percentage Change
(new-old/old) x 100
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Demand definition
The quantity that customers are willing and able to buy at a given price in a given period of time
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Causes of changes in demand
Seasonal factors
External shocks
Demographics
Advertising and branding
Fashions, tastes, trends and preferences
External shocks
Demographics
Advertising and branding
Fashions, tastes, trends and preferences
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Supply definition
The quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period
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Main causes of changes in supply
Costs of production
External shocks - war, diseases (COVID)
Technological change
Indirect taxes -VAT
Government subsidies
External shocks - war, diseases (COVID)
Technological change
Indirect taxes -VAT
Government subsidies
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Supply shifts
Increase in supply shifts to the right
Fall in supply shifts to the left
Fall in supply shifts to the left
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Impact on supply
Gain economies of scale
Sell at a cheaper price - sell more or higher profit margin
Sell at a cheaper price - sell more or higher profit margin
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Market Equilibrium definition
Means a state of equality or balance between market demand and market supply
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Disequilibrium definition
Prices where demand and supply are out of balance
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Limited Liability definition
The company is responsible for it's debts, the owners can not lose more then they have already invested in the business. Owner and business have sperate legal entities
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Advantages of a limited company
Much less risky for the owners
Owned by it's shareholders - not personally responsible for debts
Most shareholders lose their original investment
Protects shareholders
Easier to raise finance
Stable form of structure
Owned by it's shareholders - not personally responsible for debts
Most shareholders lose their original investment
Protects shareholders
Easier to raise finance
Stable form of structure
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Disadvantages of a limited company
There are rules of governing the setting up and running of the company
May be more difficult to raise finance because limited liability is limited
Greater admin costs
Public disclosure of company info
Directors legal duties
May be more difficult to raise finance because limited liability is limited
Greater admin costs
Public disclosure of company info
Directors legal duties
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Private limited company (Ltd)
Setting up requires registration with Company House
Not listed on the stock exchange
Shares cannot be bought and sold by the public
Not listed on the stock exchange
Shares cannot be bought and sold by the public
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Public limited company (PLC)
As a business expands it can transition from an Ltd to a PLC
It involves the process of stock market flotation
A % of the business is offered for sale as shares
Investors buy shares, raising a large sum of money for the PLC
It involves the process of stock market flotation
A % of the business is offered for sale as shares
Investors buy shares, raising a large sum of money for the PLC
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Advantages of a PLC
Large amounts of capital raised and can be used for expansion
Original owners can make a lot of money
Business gains status
Access to new sources of capital
Increases ability to make mergers and acquisitions
Original owners can make a lot of money
Business gains status
Access to new sources of capital
Increases ability to make mergers and acquisitions
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Disadvantages of a PLC
Original investors lose some money to shareholders who bought shares
Shareholders could conflict with the original investors
Shareholders expect a dividend
Stock exchange can be costly
Has to comply with legal requirements
Shareholders could conflict with the original investors
Shareholders expect a dividend
Stock exchange can be costly
Has to comply with legal requirements
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The marketing mix
4Ps
Price
Place
Promotion
Product
Price
Place
Promotion
Product
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Distribution in emerging economies
Many potential consumers are isolated and distanced from shops
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Distribution in developing countries
Internet use is much lower and reduces scope for online retailing
Poor infrastructure can make supply chains unreliable
Distribution of perishable goods can be an issue in hot countries with poor infrastructure
Poor infrastructure can make supply chains unreliable
Distribution of perishable goods can be an issue in hot countries with poor infrastructure
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Distribution - Agents
Agents can be used when entering new markets overseas.
They can be used to break the language barriers and ensure the product will be a success and advise cultural changes needed to certain products
They can be used to break the language barriers and ensure the product will be a success and advise cultural changes needed to certain products
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Impact on supply when there is an increase in minimum wage
decreases
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Impact on supply when there is an increase in orders
increase
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Impact on supply when there is an increase in productivity
increase
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Impact on supply when there is an increase in VAT rate
decrease
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Impact on supply when there is a decrease in inflation
increase
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Impact on supply when there is an introduction of robots
increase
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Impact on supply when there is an introduction of new labour laws
decrease
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Other cards in this set
Card 2
Front
Main benefits of trading blocs
Back
FDI
Economies of scale
Competition
Greater trade
Market efficiency
Economies of scale
Competition
Greater trade
Market efficiency
Card 3
Front
Advantages of trading blocs
Back
Card 4
Front
Disadvantages of trading blocs
Back
Card 5
Front
Some examples of trading blocs
Back
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