Edexcel Business A Level Revision

Foreign Direct Investment - is investment made by a business or other entity from one country into the production capacity of a business or other entity from another country e.g. factories Inward FDI / Horizontal FDI - An investment into a country involving an external or foreign company either investing in or purchasing the goods of a local economy. Outward FDI / Vertical FDI - A business strategy in which a domestic firm expands its operations to a foreign country via an investment, merger/acquisition or expansion of an exisiting foreign facility. FDI can be used by businesses to achieve the aim of growth. Countries try to attract FDI using strategies such as lower levels of corporation tax, subsidies for the building of factories, and investment in infrastructure such as roads, ports and airports. It was originally believed that FDI occurred due to differing interest rates in different countries. Businesses would transfer money globally to where they could obtain the highest

Competitive advantage -  A sustainable advantage over the competitors in the long term, gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. Specialisation - When a business concentrates on a product or task and in many cases means producing only a small number of products. Specialisation is particularly important when competing in international markets as it can create a competitive advantage for the business and act as a barrier to stop others from entering the market. Specialisation increases output as economic units become more effective and efficient in what they produce due to: Greater understanding of the requirements of production Each economic unit can specialise in what they are best at Efficient use of time as there is no switching between tasks Technical economies of scale such as capital equipment is used to produce goods and services The increased output can the

Exports - Goods produced in one country and shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services in other countries. Imports - Commodities, products or services brought in from abroad for sale. Balance of payments =  Exports - Imports. This explains the financial relationshio between the UK and rhe rest of the world. Currency Appreciaition - An increase in the value of one currency in terms of another Currency Depreciation - The loss of value of a country's currency with respect to one or more foreign reference currencies. Price elasticity of demand (PED)  - Measures the extent to which the quantity of a product demanded is affected by a change in price.  FACTORS AFFECTING EXPORTS AND IMPORTS   The impact of exchange rates Price elasticity The state of the world economy THE IMPACT OF EXCHANGE RATES An increase

GDP (Gross Domestic Product) - The total value of output (goods and services) produced in the UK in a particular time period, used to measure change in economic activity.   NATIONAL INCOME / POPULATION To assess the economies development of growing economies the following indicators can be used; GDP (represented in US dollars ($), which allows for direct campariosn between countires) Literacy Health Human Development Index (HDI) GROSS DOMESTIC PRODUCT  The main measure used is GDP and is calculated by - NATIONAL INCOME / POPULATION Gross domestic product is the economic activity of a country and shows its up and downs if measured over time, known as the business cycle. This is the most commonly used method to measure a country's living standards. As GDP per capita rises, it is also assumed that living standards in that country also rise.   LITERACY   This refers to the percentage of adults who can read and write. Investment in human capital raises the

Foreign Direct Investment (FDI) - The transfer of funds by a foreign business to purchase and acquire physical capital,  such as factories and machines. TRADE OPPORTUNITIES Opens up new markets which increases wealth in countries such as China who want western brands British provenance (" the place of origin or earliest known history of something. "). For example, fashion, finance, cars, arts, education etc. Additionally, BRICS countries can help with supplying materials and resources to British companies to help their provenance. Access to raw materials Greater movement of goods and services between countries Opportunities for cheaper production and therefore cheaper unit costs Greater investment opportunities such as Foreign Direct Investment (FDI) Increased profits for businesses. Trade opportunities will arise in new markets leading to an increase in demand and increased revenue and profit. The owners of businesses will see and increase in income e.g. through hi

Traditionally, western countries such as the UK, Germany and the US have been markets of growth for businesses to target in terms of exports and international trade. Economies such as China and India have comparatively high levels of investment compared with western countries such as the UK, which brings with it jobs, infrastructure and new markets for businesses to expand into. Other developing countries such as Indonesia and Tanzania have large and growing populations, a good supply of relatively young workers and increased industrialisation of the economy. The emergence of Middle-Income Countries (MIC's) has lead to significant changes in the world economy: Countries such as Brazil, India and China have become significant global players in terms of all aspects of trade. The collapse of communism in Russia and other Eastern bloc states has opened up global markets significantly These countries have seen significant economic growth and they have utilised their abundant na

Growth rate - is the rate at which a nation's gross domestic product (GDP) changes/grows from one year to another Gross Domestic Product - The total value of output (goods and services) produced in the UK in a particular time period, used to measure change in economic activity. Emerging economies - An economy with incomes that are growing but are still quite low. Such countries constitute approximately 80% of the global population and represent about 20% of the world's population. BRIC economies - The economies of Brazil, Russia, India and China, which are at a similar stage of economic development. Exchange rates - The price of one currency in terms of another Purchasing Power Parity (PPP) - Allows for differences in the cost of living in different countries, which gives more realistic comparisons of GDP According to the Office for National Statistics, the UK economy has grown by an average of 2.2% every year since 1956. However, emerging economies such as China an

Risks - in business are factors that are not expected but can be quantified, such as the risk of your factory being flooded. Uncertainty - is being unsure of the factors influencing sales and therefore being unable to predict what will happen to the business in terms of its profits or growth. A business might try to minimise uncertainty by using marker research to anticipate the likely its decisions will have on its position in the market.

Competition - is where rival businesses in the same market try to win customers from each other. Price - The value at which a product or service is offered to customers Businesses can gain customers through using the price of their product or service, for example by offering a lower price for a product or service that is similar to that of a competing business.