IAL Business Unit4 Global business

C.
N Aquib
Senior Teacher of Economics and Business
Contact-01795710679 O/A Levels
Email-akibchowdhury596@gmail.com Cambridge/Edexcel
CHAPTER 22 : Growing Economies

1. Developing and Developed countries
Developed Country Developed Country

1. High income level 1. Low income level
- High GDP per capita - Eg. Income per capita

2. High literacy Rate 2. Low literacy rate
- The majority of people in - Not enough resource to educate the
developed countries can read and entire population. This means it is
write.
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population are able to read and write
effectively.
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3. High life expectancy
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4. Good Infrastructure 4. Poor infrastructure
- Developed countries have access - Developing countries have lack of roads,
to schools / colleges / healthcare / railway networks, school, hospitals and
railway etc. production facility

5. Highly industrialized 5. Reliance on the primary sector
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- Not rely on primary sector and rely - eg. Large proportion of citizen rely on
heavily on the tertiary sector agriculture / mining.

6. Low population growth 6. High population growth
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2. Emerging economies
: defined as rapid growth (the increase in a country’s productive capacity – usually
measured by Gross domestic product (GDP) eg. BRICS (Brazil / Russia / India /
China / South Africa)
3. Implications of economic growth for individuals and business
In emerging countries may be more attractive to new businesses in the market. It
may create trade opportunities and change existing employment patterns.
3.1 Trade opportunities : As an economy grows, consumption may also be
growing as people have higher disposable income.
: This is good for firms looking to invest or sell their products and services.
3.2 Employment patterns
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: a business might want to access the employment patterns across an economy.
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4. Indicators of growth
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4.1 Gross domestic product (GDP) per capita
: means all goods and services produced in the year divided by the number of
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people in the country.
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Benefits
1. It can indicates average revenue per capita
2. It is simple and worldwide used
3. It is easy to compare GDP per Capita among counties
Drawbacks
1. It cannot indicate standard of living. Higher GDP per capita may face with
higher cost of living
2. It exclude negative externality
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3. It exclude some non-monetary job eg. Charities

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4.2 Human development index

- Life expectancy : This is the average number of years a person can expect to
live it. ( Measure healthcare system)
- Mean years of schooling: This measures the average amount of education a
25-year-old person might have had.
- Gross National Income per capita ( GNI) : This calculation illustrates the
relative wealth of the population (As a measured of PPP).
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CHAPTER 23 : International Trade and Business Growth

1. What is international trade?
- Buy or trade goods and services between countries.
- It creates opportunities for business growth, increase competition, and provides
more consumer choice.
- Allow countries to obtain goods that cannot be produced domestically and

cheaper from oversea Helps to improve consumer choice
- provides opportunities for countries to sell-off surplus commodities

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2. The difference between visible and invisible trade
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2.1 Visible Trade : Involves in trade in physical goods
- Export : goods that a firm produces in its home market but sells in a foreign
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- Import : goods that are bought into one country from another
- If export > import, there will be Visible trade surplus
- If export < import, there will be Visible trade deficit
2.2 Invisible Trade : Involves in trade in services
- Export : services that a firm produces in its home market but sells in a foreign
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market
- Import : services that are bought into one country from another
- If export > import, there will be Invisible trade surplus
- If export < import, there will be Invisible trade deficit
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3. Implications of increasing specialisation by countries and business
: The concept of division of labour : Each worker work in specific tasks and as a
consequence, there will be specialize in the productive activity.
3.1 : Specialization by countries : A country may be more efficient because it has
access to cheaper resources such as labour / higher quality of raw material etc. Eg.
Australia in mining and Bangladesh in the production of textile.
3.2 Specialization by business : The principle of specialization can be applied to
businesses. Businesses will gain a competitive advantages if specialize in the
production of those products in which they are more efficient.

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4. Foreign direct investment (FDI) and link to business Growth
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Foreign direct investment : is investing by setting up operation or buying assets in
business in other countries. Firm may choose to invest directly because the
business will
- Has a high potential for making a profit if it invests in new location

- Needs to maintain control over its subsidiaries in the new market
- Is trying to acquire direct knowledge of the local market
- Is attempt to avoid barrier to the market
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- Manager want to keep tight control over operations in the other countries. The
business may need to share a common culture or communication systems
- A firm wants to protect its intellectual property such as patents, copyrights

- It needs to be close to its customers
- Its products have high transportation and logistic costs
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There are different forms of FDI : A joint venture, Strategies alliances, Cross-
boarder mergers and acquisition (M&A) etc.
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CHAPTER 24 : Factors contribute globalisation

1. What is globalisation
It is often defined as the growing integration (ie. Combining things so that
they work together) of the world’s economies.
- Goods and services are traded throughout the world.
- Many people are able to live and work in a country of their choice.
- High interdependence between countries. Eg. Financial crisis impact

around the world.
- Capital flows freely between different countries. Eg. British can invest
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money in USA.
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- The sharing of technology and intellectual property (eg. Intangible assets
(patents, copyright, brandname)
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However, Some countries still have limitation of globalisation. Eg. Tariff / limit
number of immigrants
2. Trade liberlisation : the reduction of trade barriers and the role of the world
trade organisation.
- Trade liberlisation means free trade agreements help to encourage trade

between nations. Increase in international trade maintains the process of
globalisation.
- World Trade Organisation (WTO) established in 1995, replacing GATT (General

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Agreement on Trade and Tariffs) WTO has 164 members and employs over 600
people including lawyer, economists, statistics and etc.
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Aims of WTO
1. Trade negotiations : aims to reduce or eliminate trade barrier through

negotiation.
2. Implementation and monitoring : WTO employs various councils and

committees. They manage and monitor the application of the WTO’s rules for
trade in goods and services and intellectual property rights.
3. Settling trade disputes: WTO’s procedure for resolving trade disputes is vital
for enforcing the rules and making sire that trade flows smoothly. WTO also
appoints independent expert to make judgements about disputes after
arguments from both sides have been presented.
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4. Building membership : WTO encourages new members to sign up.
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3. Factors contribute globalisation
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3.1 Politic changes
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3.2 Reduce cost of transportation and communication
3.3 Increase significance of global (multinational) corporations
3.4 Increases investment flows
3.5 Migration
3.6 Growth of the global labour force
3.7 Structural change

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4. Impact on businesses of globalisation
Advantages Disadvantages
1. Access to huge market 1. High competition in the market
2. Lower cost 2. The power of MNCs globalisation
3. Access to labour 3. Interdependence
4. Reduce in taxation 4. Exploitation
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CHAPTER 25 : Protectionism
1. What is protectionism
: it is the barrier to protect domestic firm and individual in the country.
2. Reasons why protectionism
2.1 Prevent dumping
: Dumping means where foreign producers sell goods below cost in domestic
market.
: The main objective is to be monopoly in the market and raise selling price after
that
2.2 Prevent employment
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: Trade barriers may used if domestic industries need protection from overseas
competitors to save jobs.
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2.3 Protect infant industries
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: Since infant industries still cannot grow and compete with others, so need to
protect them first
2.4. To gain tariff revenue
: Government can increase tax from imported tariff
2.5 Preventing the entry of harmful or undesirable foods
2.6 Reduce current account deficit
2.7 Retaliation
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2.8 National security

: Some nation become s over-dependent on trade with other countries for its
economic sustainability. Eg. If USA import oil supply, it might suffer considerably if
that supply was restricted or broken.
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3. Type of protectionism
3.1 Tariffs
: tax which imposed on import goods and services. This makes import product
more expensive, reduce demand for import and switch to consume domestic
product instead. Protect domestic revenue and save domestic job. Also, reduce
current account deficit.
Limitation : Demand inelastic cannot reduce quantity of import goods
3.2 Import quota
: By restrict the quantity of imports in the country. Domestic producers face less of
a threat. They will have more of the market for themselves. However, quotas will
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raise price because fewer of cheaper import are available.
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Limitation : Government cannot receive revenue
3.3 Embargo
: Where imports are completely banned from a country.
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3.4 Government registration
: Some countries avoid the use of tariffs and quotas, but still manage to reduce the
amount of imports coming in. They do this by insisting that imposed goods meet
strict regulations and specifications. Eg. Many of these controls are to protect
environment, wildlife, domestic animals from infection.
3.5 Domestic subsidies
: Government provides subsidy to domestic in order to reduce cost of production.
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Hence, domestic goods will be more competitiveness and increase revenue. Job
can be saved.
Limitation : There will be high opportunity cost
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4. Impact of protectionism on business
1. It can reduce competition from the 1. Domestic can less motivate to
overseas which can save domestic improve efficiency
business and job 2. Free trade also leads to increased
specialisation
3. Firms cannot import raw material
from overseas, which brings to

on ite higher cost of production
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CHAPTER 26 : Trading bloc

1. Trading bloc
: is a group of countries that have signed a regional trade agreement to reduce or
eliminate tariffs, quotas, or other protectionist barriers between themselves.
1.1 Free trade area (FTA)
: where member states remove all trade barriers such as tariff, import quotas,
between themselves. Eg. NAFTA
1.2 Custom Unions
: is similar to a free trade area, except that the member adopt a common set of
barrier against non-member . This means only one set of rules regarding customs
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duties and rules of origin will apply when a product is shipped from outside the
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union to any of the member states.
1.3 Common markets
: s much more integrated than free trade arrangements or customs unions. This is
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because goods, labour, capital can move freely across the member states.
1.4 Single market
: A common market is considered to be the starting point for the creation of a single
market. Here, most of trade barrier between members removed. Common laws or
policies work to make the movement of goods, services, labour, capital between
countries as easy as the movement with each country.
1.5 Economic unions
: is a type of trade bloc involving both custom union and common market. Its aim is
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normally closer economic, political and culture ties between member states. Where
an economic union involves a common currency, it is called an economic and
monetary union.
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2. Factors to consider in trading bloc

- Where to produce : Where to produce : A company may be able to move to
neighbouring country where costs of land , labour or capital are most favorable.
- Where to sell : This can present opportunities or threats
- How to enter market
- Business strategies
3. Impact of trading blocs on business
: Trading blocs are likely to create both opportunities and drawbacks for business.
Opportunities for business Drawbacks for business
1. Freeing regional trade may allow 1. Trading bloc can lead to trade
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individual members to specialise in diversion
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the areas their country already has 2. Inefficient producers may be
advantages in protected from competition.

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2. The market for firms’ goods and 3. The overall benefits may tern out to
services should increase be small if any agreement limits the
3. Producers can achieve economies goods and services that are traded
of scale as the trade volume
increases
4. Resources may be easier to source
and labour easier to recruit

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CHAPTER 27 : Conditions that prompt trade

1. Introduction to the condition that prompt trade
• International trade : help to raise living standards and results in higher output,
income and employment.
- Obtaining goods that cannot be produced domestically : Countries might
lack of resource to produce g&s so need to import g&s from others. Eg.
Iceland cannot produce food in winter.
- Obtaining goods that can be bought more cheaply from oversea : Some
countries can produce goods more efficiently that others. This is because
it is cheaper raw material and abandon of resources.
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- Excess supply : Some countries might have surplus, so better to export
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and receive money
2. Push and Pull factor

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2.1 Push Factor : negative factors in the existing market that encourage an
organization to seek international opportunities. A firm may be attempting to
overcome weakness in its existing market, or it may look lower cost.
- Saturated market
- Competition
2.2 Pull Factor : A rise in competitors or a high level of competition in the
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domestic market may force a business to sell aboard. Competitors could sell
products in cheaper price or higher quality. This make the original product
difficult or unprofitable.
For example :
- New or bigger markets

- Lower cost or more secure resources , such as minerals land or labour
- Lower cost of production
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- Technological expertise, including research facilities

- Managerial or Financial expertise
3. Improving cost competitiveness by offshoring and outsourcing
3.1 Offshoring : involves moving manufacturing or services industries to a location

with lower cost. Eg. India to the UK : Firm would like to reduce labour cost and
hire worker with particular skills
Limitations : It need to concern about productivity, Transportation cost and

etc.
3.2 Outsourcing : involves moving an entire business function or project to a

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specialist external provider. For example : many large firms have outsourced
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their information technology and payroll functions. The objectives :
- To reduce cost
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- In order to specialize areas of the business
- To focus on the core competences of the business rather than the supporting
function
- Improve speed, flexibility and quality

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CHAPTER 28 : Assessment of a country a market

1. Factors to consider
1.1 Level and growth of disposable income
• Disposable income : income after tax
• Higher disposable income means higher ability to pay goods and services
• This makes the market an attractive one to expand into.
1.2 Ease of doing business
: An important factor to consider when evaluating a country as a potential market is

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how easily it can do business.
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: There are 10 indicators produced by World Bank that track the life cycle of a
business from its creation to its end.
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• Staring a business
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• Dealing with construction permits
• Getting electricity
• Registering property
• Getting credit
• Protecting minority investors

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• Paying taxes
• Trading across borders
• Enforcing contracts
• Resolving insolvency
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1.3 Infrastructure
: This requires a certain level of communication and adequate transportation links
: If lower quality of transportation, this can add significantly to a company’s

production and operating cost.
1.4 Political stability
: A country with a calm political situation can reduce uncertainty. This might make
that country attractive as a potential market to businesses.
Example of risk of political instability
- Increasing level of corruption

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- Internal power changes
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1.5 Exchange rates
: Changes in exchange rates can have a large impact on business that is operating
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internationally.
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: Appreciated currency can makes export less competitiveness and cheaper
imported raw material
: Also fluctuating exchange rates causes problem for business. It is difficult to

estimate cost and sales.
2. Application of porter’s five forces model to assess markets
2.1 The bargaining power of suppliers

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: Limiting the power of supplier can improve the competitive position of the business
2.2 The bargaining power of buyers
: If buyers or customers have considerable market power, they will be able to beat
down price offered by suppliers
2.3 The threat of new entrants
: If businesses can easily come into an industry and leave it again if profits are low
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2.4 Substitutes
: The more substitute there are for a product, the fiercer the competitive pressure
on business making the product. Equally, a business making a product with few or
no substitutes is likely to be able to charge higher prices and making high profit
2.5 Rivalry among existing firms
: Rivalry among existing firms in an industry will also determine price and
profits for any single firm. If rivalry is fierce, businesses can reduce that rivalry
by forming anti-competitive practices.
Porter’s model can be used to assess the potential of an oversea market. It

can help businesses to look at the balance of power in a market between different
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types of organisations. It can determine whether entering into such a market will
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be profitable.
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CHAPTER 29 : Assessment of a country as a production location

1. Costs of production
: Lower labour cost is often an important factor in attracting the business. The rising
cost of energy and land is having an increasing impact on the location plans of
some business.
2. Skills and availability of labour force
: It also must consider the quality of human capital. A business has to also consider
whether the labour force in a country has the skills required to maintain standard or
not.
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3. Infrastructure
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• Roads : might be poorly constructed and inadequately maintained
: Some area might be at risk of natural disaster, such as flooding
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Good broadband network : great importance to business when considering
location of production. This is because businesses need rapid and reliable
internet connection to communicate with stakeholder.
• Airport and Port : This might make it difficult for business personnel to travel
to and from production facilities and to ship goods out of the country.
• Railway Network : This might be a problem if large or heavy goods need to
be transport.
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Lack of investment in education : This can affect quality go human capital

and may discourage managers and other senior staff from locating near the
site.
• Quality of healthcare : Impact on the quality and health of human capital.
• A lack of commercial services and suppliers : eg. IT support, Bankers,
insurance and etc.
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4. Location in a trading bloc

: Some business locate production facilities in certain countries to avoid trade
barriers, such as tariffs and quotas. This can be achieved by building a plant inside
a trading bloc.
5. Government Incentives
: Government may be able to influence the location of business. They are usually
keen to attract foreign direct investment because of benefits it brings, such as
income and employment. Some examples include
• Tax exemptions : New business investments are exempt from tax for
between five and seven years
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• Duty : All import duties are removed for export-oriented business ventures.
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• Income Tax
• Remittances : Capital, profits and dividends can be returned to the investor’s
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own country without penalty
• Easy exit : Business investors can withdraw their investment either through
the decision of an annual or extraordinary general meeting and the money
raised can be returned to the investor’s own country with authorisation
• Ownership : Foreign investors can set up operations independently or in joint
ventures
• Other incentives
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Financial Incentive : Government might be able to use other methods to

attract businesses. Eg. Investment in education and training / Reduce red tape
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6. Ease of doing business

: The commercial environment is a very important consideration. The ease of doing
business may depend on factors like the following :
• The ease with which business can be started and closed down
• The efficiency with which contracts are enforced
• The amount of bureaucracy eg. The ease with which permits can be obtained
for construction projects
• The available of trade credit
• The ease of resolving insolvency
7. Political Stability 8. Natural Resources
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: Some types of business activity, like mining, require larges quantity of resources.
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Mines can only be sunk in locations where there are proven mineral deposits.
9. Likely return on investment
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: Businesses looking for locations are likely to consider a number of different
options before making their final decision. During the decision-making process,
SWOT analysis and PESTLE analysis can help to assess the suitability of different
locations.
9.1 Payback method : The business will calculate how long it will take to get the
initial investment with the payback method.
9.2 Average rate of return (ARR) : The average rate of return method, the net
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return per annum is divided by the initial investment and expressed as a

percentage.
9.3 Discounted Cash flow: The value of future cash flows must be reduced to
show their present value. The important point about discounted cash flow is that,
just as money invested today will grow in value because of compound interest, so
the opposite is true. The value of cash available in the future is worth less today.
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CHAPTER 30 : Reasons for global mergers, takeovers or joint venture

1. Reasons why business join together
Since exporting may not make sense if countries can produce the product or
services more cheaply.
- Licensing: A firm enters into a licensing contract with another firm to use
its brand, in brand, intellectual property or to produce its product or
services in return for a fee.
- Franchising: Franchising involves a long-term co-operation relationship

whereby one party. Franchisor (Owner) and Franchisee (Run the
business)
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- Merger and Acquisition
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1.1 Spreading risk and economies of scale
• Spreading risk : If one market fail, firms still gain revenue from others.
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• Economies of scale : Higher level of production leads to lower average cost
1.2 Entering new markets and trading blocs
: Instead of growing organically, business can take a shorter route to international

growth through mergers and acquisitions.
1.3 Acquiring national and international brandnames / parents
A business may want to become a global player in the international market.

However, a lack of brand recognition or the possession of a patent my prevent
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other businesses from copying its product or producing similar products. By

purchasing a business or a product with strong brand name, it could gain both
quickly.
Using mergers, acquisitions and joint ventures is an effective way to gain a

strong reputation or to get access to intellectual property . It can have a number of
benefits for a business.
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- There is likely to be strong recognition

- There will be brand loyalty
- It limits competition for the product
- A business will not face the high risk, cost and uncertainty of launching a new
product.
In order to protect brand , there will be many way as followed
- Patents for inventions

- Copyrights for literary works or computer programs
- Trademarks for brand names or designs
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Establishing intellectual property can be expensive. It is often easier to gain
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access to intellectual property by buying it in an acquisition or through a joint-
venture agreement.
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1.4 Securing resources or supplies
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Firms may often choose to merger with another firm to secure resources or
supplies further back in the supply chain. (Backward vertical integration)
- The resources used in the creation of its product or services are rare or hard to
get. It needs to ensure reliable sourcing.
- It needs to ensure that inputs are of a suitable quality or price.

1.5 Maintaining or increasing global competitiveness
: Merging or joining with another firm can provide bigger markets and provide
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opportunities to make cost savings by exploiting economies of scale.
: Also pricing power to overcome customers and suppliers➔ as a result, this would
allow for long-term planning.
: Alternatively, two firms can cross-sell product ranges or services. This can
increases sales and lower internal cost.
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1.6 Reducing competition
: An important motive for some cross-border mergers and acquisitions is to reduce

competition in the market.
1.7 Making use of local knowledge
: Sometimes business partnerships are formed across borders because a particular

company lacks of knowledge and expertise in order to enter foreign market.
1.8 Sharing costs and risk
: Developing foreign markets is very risky because of their unfamiliar nature. This
mean that business is more likely to speculate in new markets. If it can share cost
and risk with another.
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CHAPTER 31 : Global Expansion and Uncertainty

1. Advantages of global expansion
- Global operation can bring much bigger economies of scale
- Global sourcing can give firms more scope to find the best-quality
resources at the right price
- Global operation allow companies to get closer to their international

customers, both before and after sales
- MNCs are available to a much bigger range of knowledge and scope for
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innovation
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- MNCs can diversify risk by engaging in a wider range of business
activities
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2. Global Uncertainty
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: Globalisation is an increase in interdependence. This means that a key
event in one country can have serious impact on many other countries.
: The level of uncertainty created by such events tends to have a negative

impact on international trade. Therefore, it has the potential to reduce job and
wealth creation.
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3. Effect of exchange rate movement on business
3.1 Thai baht depreciated against British pound
For example : 1 British pound = 50 Baht to 1 British pound = 70 Baht. If

Thailand export rice to the UK 200 kg.
• Existing, British need to pay money 200/50 = 4 Pound
• New, British need to pay money 200/70 =2.9 Pound
To sum up, when currency depreciated, TH goods becomes cheaper and more
competitive in foreign view. Therefore, Export can be higher.
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Thailand import steel from the UK10 British pound.
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• Existing, Thai need to pay money 10 x 50 = 500 Baht
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• New, Thai need to pay money 10 x 70 =700 Baht
To sum up, when currency depreciated, Imported goods becomes more expensive.
Cost of production will be higher if firms import raw material from the UK.
3.2 Thai baht appreciated against British pound

Thailand export rice to the UK 200 kg.
• Existing, British need to pay money 200/50 = 4 Pound

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• New, British need to pay money 200/40 =5 Pound
To sum up, when currency appreciated, TH goods becomes more expensive and
less competitive in foreign view. Therefore, Export can be lower.
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For example : 1 British pound = 50 Baht to 1 British pound =40 Baht. If

Thailand import steel from the UK10 British pound.
• Existing, Thai need to pay money 10 x 50 = 500 Baht
• New, Thai need to pay money 10 x 40 =400 Baht
To sum up, when currency depreciated, Imported goods becomes cheaper. Cost
of production will be lower if firms import raw material from the UK.
4. The significant of change in the exchange rate on business
4.1 Elasticity of demand

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• If demand is elastic, depreciated currency can boost more export and more
revenue to business.
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• If demand is elastic, depreciated can makes higher cost of import goods,
therefore firms may import less.
4.2 If demand is inelastic
• If demand is inelastic, depreciated currency can make lower total revenue as

lower price but quality less significant changes.
• If demand is inelastic, depreciated can makes higher cost of import goods,

therefore total import will be higher.
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5. Skills shortages and their impact on international competitiveness
: Many companies have long-term access to skilled and low-cost

labour have an advantage over their competitors who do not. If a firm owns
these advantages in its home market, it may be able to produce and export
more effectively than its competitors.
: In some countries are skills shortage
: If businesses are unable to recruit sufficient members of skills workers, their

international competitiveness can be threatened. The main effects if skills
shortage are outlined below
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5.1 Higher wages : Shortage of skilled labour means lower supply ➔ wage
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increase
5.2 Lower quality : Lower skills ➔ Unable to produce high quality product ➔
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Bad reputation
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5.3 Lower productivity : can caused production delays ➔ Make longer
recruitment ➔ probably stop production
5.4 Loss of business : Customers are likely to find alternative products and as
a consequence business no order and might out from business.
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CHAPTER 32 : Global marketing
1. Global marketing Strategy
: They aim to sell their products beyond their national borders. Global
marketing involves the planning, producing, placing and promotion of
business’s products in a worldwide market. This process can involve a
business having offices in different countries, but the process is also
facilitated by the growth of the internet.
2. Global Localisation
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: Global localization ➔ approach differs from having common strategy
for all countries. It involves adapting to local expectations in order for a
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business to succeed in an international market. Eg. Local tastes,
Customs and traditions to be successful with those customers
3. Different marketing approaches
3.1.Ethnocentric (domestic approach)
: Overseas markets are seen as identical or similar to domestic

markets. This approach assumes that that is good for the domestic
market will be good for global market.
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Advantages : Economies of scale, Lower R&D cost
Limitation : Products cannot response specific wants to the local

market
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3.2. Polycentric (International) approach :
: Businesses adapt their product to the local markets in which they

plan to sell the product. This involves developing and marketing
different products for the demands of local customers in different
markets.
Advantages :
- Tailoring products to specific customer needs
Disadvantages :
- Higher development Cost

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- Higher risk if firm cannot response customer needed
3.3.Geocentric (mixed) approach :

El
om
: Businesses use a combination of the ethnocentric and polycentric
marketing approaches.
Ec
C.N Aquib
4. Application and Adaptation of the marketing mix (4Ps) to global

market
But if business operate in global scale? What strategies might a

business use when operating in mass markets. The marketing mix is
used in global markets and must be considered as part of a global
marketing strategy.
Price Products
:What price should be charged in : Should the product be adapted
the global market? What price for different markets or can it
are charged by competitors stay as it is?
on ite
t
Decision around price need to (Ethnocentric, Polycentric or
is
consider local factors such as Geocentric)
incomes, taxes, rents, and other
costs.
El
Promotion
om Place
: What are the most effective :How do consumers buy their

promotion methods in different products in local market?
countries?
Ec
C.N Aquib
5. Application of Ansoff’s matrix to global marketing decisions.
: Ansoff’s matrix is the tool to help a business achieve growth. It can be

applied to global markets and to help to inform decisions around
marketing strategy.
on ite
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is
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om
5.1.Market Penetration
: Existing where business adapt product to existing market. Eg. Mc

Donald develop Teriyaki Burger in Japan.
5.2.Market Development
: This involves the marketing of existing products in new markets.

(Can adjust tastes etc.)
Ec
5.3.Product Development
: This is where a business promotes new or modified product in

existing market.
5.4.Diversification
: This occurs when new products are developed for entirely new
market.
C.N Aquib
6. Application of Porter’s Strategic Matrix to global marketing

decisions
- Cost Leadership: Where business attempts to be the lowest cost

supplier in the market
- Differentiated : Where a business successful distinguished its product

from those of rival in mass market
- Focus : which involves a business targeting a narrow range customers

in one of two ways either cost or differentiation focus.
on ite
t
is
El
om
Ec
C.N Aquib
CHAPTER 33 :Niche Markets

1. Global Niche markets
: they target a very specific range of people, often referred to as target a very
specific range of people, often referred to as subcultures. ➔ common
interests or hobbies.
2. Cultural Diversity
: Any business that plan to push its sales into global markets needs to
understand that groups of people living in different countries may have
different cultures
on ite
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- Language
is
- Hobbies and interests
El
- Economic Development
om
- Religious norms
- Social norms
- Legal Systems
- Weather and Climate
- History and traditions

Ec
C.N Aquib
3. Features of global niche Markets
Some of the key features of global niche markets are outline bellowed
3.1. Economies of scale :If target domestic niche cannot achieve

economies of scales BUT if target a global niche market ➔ could be
economies of scales . However, if it is necessary to adapt products to
meet cultural differences, for example, the opportunity to exploit
economies of scales is reduced.
3.2. Limited competition : The levels of competition in niche markets are

often lower.
3.3. Premium Pricing :Business selling products in global niche markets

on ite
t
can often charge premium price due to lack of competition.
is
3.4. An emphasis on quality : It is common to find high quality of products
in global market ➔ Consumers in some global niche markets are very
El
om
wealthy and are prepared to pay high prices for artisanal craftmanship.
Global Niche brand ➔ Gucci / Rolex etc.
3.5. Focus on profit : Businesses serving global niche market are likely to
be more profit-orientated .
3.6. Brand Loyalty:

Ec
C.N Aquib
4. Application and adaptation of the marketing mix to suit global

niches
Product Price
: Charge higher prices for
: Global niche products often
products that are not intended for
place an emphasis on quality . eg.
the mass market.
Luxury car / Pen / Luggage /
: Business charge more price in
Watches
niche since demand inelastic
Promotion Place
: Promotions also have to : Network of exclusive dealer are
on ite
t
consider language differences that a common method of selling
is
might exist between countries. products to global customers.
: However, sensitive to national

El
om
and culture may impact on price
and how competitive a product is.
Ec
C.N Aquib
CHAPTER 34 : Cultural and Social Factors

1. Cultural Differences
: Cultural Sensitivity is crucial. It is very important to understand
differences in behaviour and languages.
: Working across differing national cultures can add levels of complexity.
➔ need to prepare carefully
: The sources of culture difference can be listed below
1.1. Language
1.2. Hobbies and Interest
1.3. Religions and Social Norms
on ite
t
1.4. Legal System
is
1.5. Weather and Climate
1.6. History and Traditions
El
om
2. Difference Tastes and Preferences
For example, McDonald’s launch Chicken Katsu Burger in Japan while adapt
to spicy burger in Thailand
3. Languages and Unintended Meanings
High – Context Low- Context

: Normally not use “ NO” : USA and Europe tend to say
especially in Japan. what they mean.
Ec
: Initial meeting are there to build : Agenda / Contract /Letter /Other

trust. Socialising is used to create formal documentation are
relationships for the next stage of essential.
negotiation.
C.N Aquib
Barrier to communication: may be more of problem when

communicating across borders. Business need to
- Avoid using unclear communication resulting from poorly written or

poorly expressed message.
- Ensure that technological communication methods, such as website,

are working properly.
- Provide adequate communication training staff
- Avoid the use of jargon

on ite
t
- Use the most appropriate medium when communication
is
- Eliminate sources of distraction, such as background noise when
El
communicating
om
- Ensure that the chain of command is not too long.
Ec
C.N Aquib
CHAPTER 35 : The impact of MNCs

1. Impact on MNCs on the local economy
1.1.Local labour and job creation
: Local economies ➔ creation of job and training
1.2.Wages and working conditions
: Wages in the locality may rise if a large business opens. This is because
demand for the workers in the local economy ➔ drive up rate
1.3.The local community and environment

on ite
t
: The people living in local communities are likely to welcome the location
is
of MNCs in their area, But this is only benefits outweigh the drawbacks. In
addition, to employment opportunities and boost to the local economy,
El
om
MNCs might also provide the following benefits
- Improvement Infrastructure : MNCs might use own money to develop

roads, electricity, water . This might develop / build trust to community .
- Contribute to local government taxes: Businesses have to pay local

taxes to local authorities.
- Help in local communities : Some MNCs make an effort to build strong

links with the local community. They might participate in local cultural
Ec
or sporting events.
However, MNCs may exploit natural resources and create negative

externalities
C.N Aquib
2. Impact of MNCs on the national economy
• Economic Growth : It can create job and more spending in the economy
• FDI Flow : When an overseas business locates a new facility in a foreign country,
the amount of money spent on establishing that facilities is classified as FDI.
Examples of specific benefits to the economy include the following
- Increase in income : flows of FDI should result in higher levels of GDP for the
host nations. ➔ raise in standard of living for people in the host country
- Increase in tax revenue
- Increase employment
on ite
t
- Reduce national debt : Some of the money received by the government from
is
FDI might used to reduce nation debt. ➔ financial more stability ➔ easier to
borrow in the future
El
om
However, Repatriated profits represents a flows of money away from the
host country.
- Technology and skills transfer: MNC investment in foreign countries often
means that new technologies and modern working practices are introduced
into the host nation. Transfer of technology and skills from an MNCs to
businesses into host nation will improve efficiency and productivity. This will help
to make domestic producers more competitive.
- Consumers : are likely to benefits from arrival of MNCs in their countries. This is
Ec
because they will be free to buy some of the goods that they produce. Specific
benefits to consumers include the following
⇨ More choice
⇨ Lower price
⇨ Improved quality
C.N Aquib
⇨ Better standard of living : They may benefits from employment

opportunities and enjoy access to cheaper and better quality
products
on ite
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is
El
om
Ec
C.N Aquib
CHAPTER 36 : International Business Ethics

1. Ethics
: Refers to the principles and acceptable norms that govern behaviour .
However, ethics may or may not be expressed in a country’s laws and
regulation.
2. Stakeholders conflicts
on ite
t
is
El
om
2.1.Consumers
: Misleading advertising
2.2.Employees
: Employee redundancies
: Safety of employee
2.3.Shareholders
Ec
: Conflict between management and shareholders

2.4. Countries communities
: Environment concerns, where activities of the business pollute or
damage the environment .
: Resource deplete, where company ‘s extraction objective are not good

for the future.
C.N Aquib
3. Environment Considerations
: Companies are becoming increasingly concerned about the impact their
activities have on environment. They are under pressure from many
stakeholders to stop or minimize any damage that their activities might inflict
on the environment.
: Emission / Waste disposal
: Sustainability : Have resources for next future generation
⇨ Avoid the use of large quantities of non-renewable resources
⇨ Makes more use of recycles material

on ite
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4. Supply chain considerations
is
: Global business have global supply chains. There are many ethic issues
involved in global sourcing and logistics as it becomes more complex.
El
om
⇨ Pay and working conditions : A major problem for business ethics
involves the complexity of global supply chain and the working conditions
of employees in other countries.
However, there are number of initiatives and organization that are working
to ensure fair working practices for all. Some concerned with employment
practices of multinationals and may address the following issues
- Employment is freely choosen

Ec
- Freedom of associate and corrective bargaining is freely choosen
- Working conditions and safe
⇨ Exploitation of labour
: “Modern Slave” often begins when an individual seeking work contract
recruiter.
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CHAPTER 37 : Controlling MNCs

1. The power of MNCs
• Contribute job and wealth over • Ruin non-renewable
the world resources
• Build investment • Pollute the environment
• Build foreigner country reserve • Profit repetitive
• More research and
development
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• More effective used of
is
resources
El
2. Political Influence
om
: Large MNCs are owned by the state. Eg. Manufacturing / Bank /
Telecommunications / Transportation / Agriculture and etc. => numerous
commercial and ethical issues.
However, state ownership or control is not very efficient, and so the drawbacks
often outweigh the benefits.
2.1 Corruption
2.2 Shareholder’s and other investors’ rights may be reduced or ignored

Ec
because they are not the true beneficiaries of the business.
2.3 Investment expenditure, especially on research and development, may be

ignored. This is likely to be less competitive pressure from other firms with state-
ownership.
C.N Aquib
• Tariffs, Quotas, Regulations and local content requirements can be used to

protect domestic businesses from international competitors.
• Many countries even place direct and indirect ownership restriction on
businesses that they consider to be critical.
• Countries can also support domestic industries through subsidies or tax
break. Subsidy can be designed to help create factory produce and distribute
goods and services
Benefits Drawbacks
on ite
t
- Can create, manage and end of - Helps to facilitate corruption
is
business
- Helps elected officials to challenges - Can add to inefficiencies, such as
El
om
the power of private business and to the misallocation of capital and lack
address issues of concern (eg. Ethics of research and development.
and the environment)
3. Legal Control
One of the best ways of controlling large international businesses is through

regulation, competition laws and taxation policies.
Ec
3.1 Competition Policy :
: promote competition and ensure that markets operate as efficiently as possible.
3.2 Taxation Policy
: Governments use taxation policies to raise the revenue to run their countries.:
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Benefits Drawbacks
Can be used to
on ite
It is difficult to achieve consistent legal practice
t
is
improve competition between countries, so businesses have an incentive
in the domestic to find the friendliest legal environment, where the

El
market
om
laws and tax policies are the best for them.
Helps to check It is easy for big international firms to move to friendly
corporate power environments and avoid treatment that they consider
to be unfavourable to their business

Facilitates consumer Even where there is agreement over laws, policies
protection and standards, they are often not easy to enforce.
3.4 Consumer Pressure

Ec
: Consumer can apply pressure by campaigning against an MNC or by avoiding the

products.
3.5 Pressure Group
: Pressure Group act as another control on MNCs. They can publicise bad
behaviour and threaten to damage the image of company. Pressure groups are
often voluntary organizations that operate at all levels of society.
C.N Aquib
3.5.1 Boycotting
: This involves withdrawing from commercial or social relations as a form of protest.
3.5.2 Media Criticism
3.5.3 Direct Action
: is the use of demonstration / protest / strikes /sabotage to achieve a political or

social goal.
3.5.4 Lobbying
: This is the taking of issues directly to government in an effort to influence change.
4. Social Media
on ite
t
is
: Social media cam be defined as an interaction between electronic and mobile
devices, application, and people that allows users to create contents. Eg. Online
El
om
magazine / weblogs / Social blogs etc.
: As well as being a tool for the promotion of a business’s objectives, social media
can act as a means of controlling behaviour by
⇨ Making collection of information from a variety of sources easier
⇨ Increase social awareness through communication
⇨ Ensuring greater transparency
⇨ Bringing together people in order to create kind of social authority to

Ec
challenges the power of large companies.

C.N Aquib
5. Self-Regulation
: This means that a group of firms in the same industry (perhaps the entire industry)
agree to follow a set of rules and guidelines to ensure “proper conduct”. To ensure
company can maintain common standard in their operation.
: Self- regulation is also self-policy. This means that businesses who are signed up
to an agreement monitor their own activities. They might do this by measuring
emission, recording , consumer complaint and listening to employee’s issues.
on ite
t
is
El
om
Ec

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C.

CHAPTER 22 : Growing Economies

Developed Country Developed Country

- High GDP per capita - Eg. Income per capita

- The majority of people in - Not enough resource to educate the

developed countries can read and entire population. This means it is

4. Good Infrastructure 4. Poor infrastructure

- Developed countries have access - Developing countries have lack of roads,

to schools / colleges / healthcare / railway networks, school, hospitals and

railway etc. production facility

heavily on the tertiary sector agriculture / mining.

3. It exclude some non-monetary job eg. Charities

4.2 Human development index

CHAPTER 23 : International Trade and Business Growth

- Allow countries to obtain goods that cannot be produced domestically and

- provides opportunities for countries to sell-off surplus commodities

3. Implications of increasing specialisation by countries and business

consequence, there will be specialize in the productive activity.

3.1 : Specialization by countries : A country may be more efficient because it has

Australia in mining and Bangladesh in the production of textile.

3.2 Specialization by business : The principle of specialization can be applied to

businesses. Businesses will gain a competitive advantages if specialize in the

production of those products in which they are more efficient.

- Has a high potential for making a profit if it invests in new location

- A firm wants to protect its intellectual property such as patents, copyrights

boarder mergers and acquisition (M&A) etc.

CHAPTER 24 : Factors contribute globalisation

- High interdependence between countries. Eg. Financial crisis impact

- Trade liberlisation means free trade agreements help to encourage trade

- World Trade Organisation (WTO) established in 1995, replacing GATT (General

1. Trade negotiations : aims to reduce or eliminate trade barrier through

2. Implementation and monitoring : WTO employs various councils and

3.3 Increase significance of global (multinational) corporations

3.4 Increases investment flows

3.6 Growth of the global labour force

3.7 Structural change

4. Impact on businesses of globalisation

1. Access to huge market 1. High competition in the market

2. Lower cost 2. The power of MNCs globalisation

3. Access to labour 3. Interdependence

4. Reduce in taxation 4. Exploitation

2.8 National security

4. Impact of protectionism on business

1. It can reduce competition from the 1. Domestic can less motivate to

overseas which can save domestic improve efficiency

business and job 2. Free trade also leads to increased

3. Firms cannot import raw material

from overseas, which brings to

CHAPTER 26 : Trading bloc

2. Factors to consider in trading bloc

Opportunities for business Drawbacks for business

advantages in protected from competition.

services should increase be small if any agreement limits the

of scale as the trade volume

4. Resources may be easier to source

and labour easier to recruit

CHAPTER 27 : Conditions that prompt trade

2. Push and Pull factor