Unit 3 A2 Economics and Business

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Absolute Advantage
Exists if the real resource cost of a product is lower in one country than other
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Backward Innovation
Developing lo cost products that will appeal to people with relatively low incomes
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BRIC
Brazil, Russia, India and China. They are the world's four largt fast-growing economies, and are often described as emerging economies
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Commodities
Raw materials or semi-manufactured products that are traded in bulk and are not recognisably originating from any particular business e.g. iron ore, cotton, wheat and oil
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Common Markets
Have completely free trade internally and a single unified trade policy covering all member countries' trade with the rest of the world
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Corporate Culture
Set of important assumptions that are shared by people working in a particular business and influence the wyas in which decisions are taken there
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Corporate Social Responsibility
Taking decisions in a way that takes into account all stakeholders' interests
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Cultural Imperialism
Practice of promoting, distinguishing, separating, or artificially injecting the culture of one society into another
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Developed Countries
All have high incomes and through capital investment, they have acquired sophisticated production facilities
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Developing countries
Have relatively low standards of living and they may have small manufacturing sectors and the majority of the populationmay be engaged in agriculture
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Diversifying
Selling more than one product, or the same product in more than one market
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Economies of Scale
A reduction in average costs of production brought about by an increase in the size and scale of the business
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Emerging Economies
Characterised by rapid economic growth and have seen big increases in manufacturing output and standards of living are rising
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Ethical Decision Making
Following codes or practice that embody moral values
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Ethnocentric Model
Approach to marketing based on the tendency to look at the world primarily from the perspective of one's own culture. Believes that success story in the domestic market will be a success in the other countries
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Extension Strategies
Aim to extend the life of a product either by making small changes in it, finding new uses for it, or finding new markets
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Foreign Direct Investment (FDI)
Investing in a country other than the one where the head office is
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Free Trade Areas
Groups of countries that trade completely freely with each other, with no trade barriers, but each member country retains its own independent trade policies in relation to the rest of the world
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Geocentric Approach
Sees the world as a potential market with both similarities and differences in domestic and foreign markets
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Global Market Niches
Smaller, more specialised parts of a global market where customers in more than one country have particular needs that are not fully met by the global mass market
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Globalisation
The process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies
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Glocalisation
Combines the words 'globalisation' and 'localisation' to emphasise the idea that a global product or service is more liekly to succeed if it is adpated to the specific requirements of local practices and cultural expectations
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Human Development Index
Constructed by the United Nations Development Program and provides a measure of development based on access to health care and education as well as national income. Includes qualitative and quantitive aspects of development
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International Monetary Fund (IMF)
Co-ordinates the international monetary system, and tries to keep it stable as well as providing adequate finance for world trade to continue without interruption
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Infrastructure
All transport and communication facilities as well as the provision of basic services such as energy and water supplies
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Inorganic Growth
When a business expands by taking over or merging with another company. Both mergers and takeovers may allow rationalisation that can cut costs and expand makets
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Intellectual Property Rights (IPR)
Rights to own and to exploit ideas or inventions, or literary or other cultural works. They give legal protection to the owners or originators of the ideas and prevent others from copying them
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Joint Ventures
Collaboration between two businesses
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Market Saturation
When it becomes impossible to expand sales further in that particular market. If the poduct is durable (a washing machine) it may still be possible to sell replacement machines
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Merger
Combining with another company on a collaborative basis
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Multinational Corporations
Businesses which are active in more than one country
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Offshoring
Locating production in a foreign country. The objective is to exploit cost savings, most often lower wage rates
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Outsourcing
Buying inputs from an independent supplier, rather than producing tem in-house
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Polycentric Model
An approach that considers each host country to be unique. They develop unique business and marketing strategies in order to suit particular needs
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Product Life Cycle
Phases which many products go through between their first introduction to the market and the eventual decline in sales. Development, introduction, growth, maturity (sales fairly constant) and decline
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Protectionism
Any government policy aimed at protecting the domestic economy from the effects of imports that might otherwise damage domestic industries and employment
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Pressure Groups
Organisations that attempt to influence public policy and especially government legislation, regarding their particular concerns and priorities
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Purchasing Power Parity (PPP)
A way of adjusting monetary values to allow for differences in prices between countries
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Quotas
Physical limits on the level of specific imports in any one year
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Race to the Bottom
The way MNCs move to the country that offers the lowest tax rates or the weakest environmental controls.
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Risks
Threats that may or may not occur, but can be quantified using probabilities
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Social and Cultural Differences
Individual societies and groups within them may have a distinctive way of life
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Specialisation
People or an economy make the most of their skills by concentrating on what they do best
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Stakeholders
Someone who has a vested interest in a particular business
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Subcultures
Groups of people who have interests and values in common.
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Synergy
After a merger or takeover, the performance of a combined enterprise will exceed that of its previously seperate parts. 2+2=5
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Takeover or Acquisition
When one company is buying another. Either an amicable process or it may involve a hostile bid
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Tariffs
Taxes on imported goods. They make the price higher so sales will generally be lower
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Theory of Comparative Advantage
If two countries each specialise in the product with the lowest opportunity cost, and then trade, real incomes will increase for both countries
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Trade Blocs
Groups of countries where barriers to trade are reduced or eliminated between member states
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Trade Creation
When there is an increase in the total amount of goods and services traded becuase of reduced trade restrictions within a trading bloc
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Trade Diversion
When a trading bloc reduces imports from non-member countries, enabling businesses within member countries to increase sales inside the trading bloc
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Trade Liberalisation
The process of reducing barriers to trade so that economies can move gradually closer to free trade, meaning no trade barriers at all
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Transfer Pricing
When one part of an MNC in one country transfers (sells) goods or services to another part in another country
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Uncertainty
The possibilities that cannot be quantified and may appear without warning
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World Bank
Lends to developing coutries in order to fund projects which will help them to raise incomes and make their economies more efficient
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World Trade Organisation (WTO)
Supervises world trading arrangements and trade negotiations and helps to resolve disputes between governments
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Other cards in this set

Card 2

Front

Developing lo cost products that will appeal to people with relatively low incomes

Back

Backward Innovation

Card 3

Front

Brazil, Russia, India and China. They are the world's four largt fast-growing economies, and are often described as emerging economies

Back

Preview of the back of card 3

Card 4

Front

Raw materials or semi-manufactured products that are traded in bulk and are not recognisably originating from any particular business e.g. iron ore, cotton, wheat and oil

Back

Preview of the back of card 4

Card 5

Front

Have completely free trade internally and a single unified trade policy covering all member countries' trade with the rest of the world

Back

Preview of the back of card 5
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