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Business structure

business a level ch1

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10 views2 pages

Business structure

business a level ch1

Uploaded by

yuvan.brahmbhatt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as RTF, PDF, TXT or read online on Scribd
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Local businesses: operate in a small part of a country, they do not have expansion

objectives.
National businesses: branches throughout the country, but do not operate in other
countries.
International or multinational businesses: operate in more than 1 country.

International trade: business

(+)
1 economies of scale: import cheaper raw materials
2 access to better information
3 spreads risk: one country in recession, other booming, increasing in demand
4 access to wider market

{-)
1 diseconomies of scale: management becomes difficult
2 higher transport costs
3 higher competition and risk
4 trade barriers
5 cultural and language differences
6 using agents increases prices
7 supply chain issues

International trade: country

(+)
1 improved political and social links
2 higher GDP, employment and living standards

(-)
1 loss of output and jobs
2 decline in domestic industries due to increased imports
3 high competition making it difficult for new businesses
4 increased chances of dumping
5 if value of imports exceeds exports, there’s loss of foreign exchange
6 over dependance on other countries

Protectionism
- Process of protecting domestic firms from foreign competition with the use of trade
barriers
- Tariffs - tax on imports
- Quotas - limit on the quantity of imports
- Embargoes - ban of particular imports
- Voluntary export restrictions - an export country agreeing to limit the quantity of
exports sold to another country

Free trade and globalisation


- free trade is when countries face no trade barriers while exchanging goods and
services
- globalisation is the increase in movement of labour, capital and goods and services
between countries
- trade blocs and trade organisation help encourage globalisation
- world trade organisation (WTO) - countries committed to reduce trade restrictions
- free-trade blocs - groups of countries who trade without restrictions. Ex. NAFTA,
ASEAN, EU

(+) of free trade


- wider choice of goods and services
- wider choice of raw materials
- helps developing countries increase the rate of industrialisation
- low prices, improved quality
- encourages specialisation
- economies of scale
- improved living standards

Multinational businesses
- A business which produces in many countries

Why become a multinational?


- avoid tariffs
- access to cheaper raw materials
- lower labour costs
- lower transport costs
- closer to the market
- better control
- access to grants and subsidies
- economies of scale
- cheaper rent and site costs

Problems for multinationals


- cultural differences
- legal regulations
- coordination & communication problems
- diseconomies of scale
- differences in skill levels of employees, increasing training costs

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