A2 Chapter 6 Business Structure
Case Study: Thai businesses page 61
Local business: operates in a small, welldefined part of a country.
National business: has branches or operations across the country.
International business: operates in more than 1 country.
The nature & Scope of International Trading Links
All countries engage in international trade to some extent. World trade
has seen rapid growth in recent years.
Benefits & drawbacks of international trade
+'s 's
• Local firms may not becompetitive job losses may occur,
• Improves political links and if conflict arises between countries, a lack of necessities
may arise.
• Switching to noncompetitiveproduction is time consuming
• Improves social ties
& costly.
• Helps to resolve differences • Infant industries strugglingagainst imports may not survive.
• "Dumping" at below costs by foreignbased businesses to
eliminate local competition mayoccur.
A Balance of Payments deficit may arise leading to a lack of
foreign currency e.g. Zim food crisis 2008.
A2 Free Trade & Globalisation
Free Trade: No restrictions or trade barriers exist that might prevent or
limit trade between countries.
(Use of trade barriers is known as protectionism).
Types of trade barriers
• Tarrifs Taxes on imported goods makes them more expensive
• Quotas Limits on physical quantity or value of imported goods
• Voluntary Export Limits
Agreement by exporting country to limit exports to one country
(possibly to avoid tariffs/quotas being set)
Benefits of Free Trade
• Imports allow consumers access to products otherwise not
available e.g. bananas in Europe
• Raw materials not available locally can be accessed can increase the
rate of industrialisation in developing nations.
• Competition encourages efficiency & quality improvement.
• Countries can gain comparative advantage by specialising in those
products it is best at.
• Global living standards should improve
1
Case Study: Thai businesses page 61
Local business: operates in a small, welldefined part of a country.
National business: has branches or operations across the country.
International business: operates in more than 1 country.
The nature & Scope of International Trading Links
All countries engage in international trade to some extent. World trade
has seen rapid growth in recent years.
Benefits & drawbacks of international trade
+'s 's
• Local firms may not becompetitive job losses may occur,
• Improves political links and if conflict arises between countries, a lack of necessities
may arise.
• Switching to noncompetitiveproduction is time consuming
• Improves social ties
& costly.
• Helps to resolve differences • Infant industries strugglingagainst imports may not survive.
• "Dumping" at below costs by foreignbased businesses to
eliminate local competition mayoccur.
A Balance of Payments deficit may arise leading to a lack of
foreign currency e.g. Zim food crisis 2008.
A2 Free Trade & Globalisation
Free Trade: No restrictions or trade barriers exist that might prevent or
limit trade between countries.
(Use of trade barriers is known as protectionism).
Types of trade barriers
• Tarrifs Taxes on imported goods makes them more expensive
• Quotas Limits on physical quantity or value of imported goods
• Voluntary Export Limits
Agreement by exporting country to limit exports to one country
(possibly to avoid tariffs/quotas being set)
Benefits of Free Trade
• Imports allow consumers access to products otherwise not
available e.g. bananas in Europe
• Raw materials not available locally can be accessed can increase the
rate of industrialisation in developing nations.
• Competition encourages efficiency & quality improvement.
• Countries can gain comparative advantage by specialising in those
products it is best at.
• Global living standards should improve
1
