Summary *A-Level/AS Business Studies Pearson Edexcel Theme 4: Global Business Revision Booklet
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Unit 4 - Global business
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PEARSON (PEARSON)
*A-Level/AS Business Studies Pearson Edexcel Theme 4: Global Business Revision Booklet
Includes all FORMULAS!
CONCISE BUT DETAILED NOTES WITH A BOOKLET AVAILABLE FOR EACH THEME!
THESE BOOKLETS HELPED ME ACHIEVE AN A* AT A-LEVEL!
MAKE YOUR REVISION EASY THIS EXAM SEASON!
, Tariff = duty/tax on goods brought from or sold to a particular country.
Quota = limiting the number or value of goods that can be sold to another country.
Trade BLOC = agreement reached to remove trade barriers between countries/regions.
Free Trade = exists when there are no restrictions on trade between different countries.
Regulations = rules that apply to the goods and services sold in a country.
Multinational = a business that has operations in more than one country.
Import = buying goods/services from a foreign supplier.
Export = selling goods/services abroad.
Globalisation = The process through which the world is becoming more interconnected. – the growing integration of the worlds
economies.
Tourism = example of a global industry based on travel.
International = type of trade carried out between business’ in different countries.
Transnational/Multinational Companies = companies that own/control production or service facilities outasid3e the country their
based.
World trade Organisations (WTO) = an international organisation promoting free trade – persuading countries to abolish tariffs &
other barriers – polices free trade agreements, settles trade disputes between governments and organises trade negotiations.
Developed Countries – (Europe and UK) – established support agencies, higher employment rates and established trading rules. –
However: very competitive and higher tax.
Less Developed Countries (developing economies) – BRIC – Brazil, Russia, India, and China – potential for high sales, structures in
place to continue expansion and existing knowledge. – However: different tax or legal systems that present risks – protection of
country for its own products and services or reluctance to adopt products or services from, other countries.
Emerging Markets - (produce most of manufactured goods – globally consumed) – Turkey, Mexico, and Iran – opportunity first
entrant into market – government incentives offered creating jobs/reduced taxes. However: ethical considerations (use of child
labour), lower employment rates/lower wages resisting sales growth, international relationships/restrictions on trading with that
country.
What is meant by an emerging economy market? = business increases profits and divides – high growth and high risk - the economy of a
developing nation that’s becoming more engaged with global markets as it grows. Transition à low income (pre-industrial economy) àhigher
income (modern industry economy) with a higher standard of living.
BRIC (Brazil/Russia/India/China) and MINT (Mexico/Indonesia/Nigeria/Turkey)
Economic Growth = an increase in a country’s productive capacity.
UK economy – 150 years ago Britain = industrial powerhouse but 2008/10 recession and manufacturing slumped.
Economic Growth definition = an increase in a country’s productive capacity (GDP) (for example if the UK has a negative economic
growth GDP will decrease).
Gross Domestic Product (GDP) = monetary value of all the finished goods/services produced within a country’s borders in a specific
time period (can be annually or quarterly) – broad measurement of a nation’s overall economic activity.
Circular Trade = trading cycle- where imports/exports are interconnected
China emerging economy and established UK economy help each other’s GDP to grow and allow greater margins and recycling to occur –
ethical considerations need to be taken (sweatshops!! But recycling??)
Growing Economic Power of Asian, African, and other countries –
Most BRICS/MINT countries experienced growth – increases overall economic power of many of the countries in Africa/Asia and
other parts of world – China (largest economy in world in 2015) – top of rankings exporting ad destination for foreign investment 0
one of the biggest investors in other countries.
Largest economies in the world: US, Japan, Germany, and the UK
70% of the word GDP growth comes from emerging market economies - China/India (40/50% of this figure – 20/30% of the future
global growth comes from the rest.
China
In 1990 produced less than 3% of global manufacturing output but by 2015 it was almost 25%!1
Its position across South East Asia throughout supply chains and outsourcing.
Drives what is known as ‘Factory Asia’ – for its dominance of global manufacturing.
Strength of regional trading bloc looks set to continue.
It’s so strong as – it has:
Very efficient clusters of suppliers
, Excellent infrastructure
Access to lower cost labour throughout South East Asia
Chinese and Asian consumers are spending more each year increasing demand.
Growth of Chinas GDP may be because of – HOWEVER SOME FIGURES ARE INFLATED! SO ARE FALSE!
Technology/resources
Highly educated population
Climate (access to raw materials)
Developing economy
Changing employment patterns (greater productivity)
Economic/culture changes leading to increase in personal spending.
Economic growth for individuals and businesses implications –
Consumers in emerging markets may be buying more goods/services both from domestic companies and more developed
economies.
May make the emerging markets attractive to new entrants, create trade opportunities and alter existing employment patterns.
Trade Opportunities – why do trade opportunities increase because of the number of markets available.
Employment rates show the % of people able to work.
Higher employment rate more people can afford to spend – access to disposable income!
Investment is attracted as the number of able spender’s increases
Unemployment may be high in an area where a firm set up as it will make their applicant pool higher – cheap top-quality staff. –
better skilled workers.
Employment trends = patterns – jobs existing at different times in different places.
Indicators of growth: GLHHP
GDP = measure of the economic activity including all of the goods and services produced. (whole economy)
- GDP per capita = GDP/N. o of people in country (per resident).
- Real GDP = considers inflation of prices overtime.
- Nominal GDP = doesn’t consider inflation of prices overtime.
Literacy Rate = % of adults that can read and write - employees need to be able to do a good job – adults that can read and write –
increased percentage = increase in GDP growth as employment will be higher and more efficient.
Health = indicates level of development of economy by:
- Life expectancy at birth.
- Infant and maternal mortality.
- Pollution exposure.
- Access to clean water.
Human Development Index (HDI) = collection of stats that are combined into an index, ranking countries according to their human
development.
- Life expectancy – how many tears an average a person will live.
- Mean years of schooling.
- Gross national income (done as an average) per capita – shows relative wealth of the population (as measured in PPP $).
PPP (Purchasing Power Parity) exchange rates are preferred.
PPP = price of purchasing a standardised good/service and allow you to compare prices across economies.
Using PPP estimates of GDP – an investor had a good idea of what buyers in different countries can afford and what their overall welfare might
be in real terms.
International Trade = exporting (selling abroad) and importing (buying from abroad)
Export = money entering the UK – easiest mode of entry – a physical good or service (invisible exports).
e.g. financial services, tourism, transport, and professional services such as accountant and lawyers.
Australia = Coal Zambia = Copper South Africa = Gold UK = Cars Italy = Drugs
Producing goods abroad for less – less expensive manufacturing and lower overall costs.
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