GCSE Revision Exercise WIDER WORLD AFFECTING BUSINESS

Define the following terms; Tariff – Quota – Protectionism – Subsidy - Tariff – a tax on imported goods Quota – a physical limit that is put on imported goods Protectionism – tariffs and quotas used by a country to protect its own firms Subsidy – where a government gives money to a firm to help it lower its costs

Ethics?

Ethics?

Ethics Write down 5 ways a firm could be ethical (can you give real examples)? Write down 5 ways a firm may act unethically (can you give real examples)?

23 China 700 m Which country’s flag is this? How many workers today will have gone to work today in China for Around a dollar (75p) a day? China’s population is 1.4 billion. For each one of you, how many Chinese people are there? (This shows the potential size of the market) 23

India 8p per hour Which country’s flag is this? What is the minimum wage in this country (per hour)?

1. Is it morally correct for firms such as Nike paying a dollar a day to workers making clothes in Asia acceptable (create a balanced argument)? For Creates jobs New skills Probably pay above the local wage rate and offer better conditions than the local factories No one is forced to take the jobs – locals in the countries often want to work for Nike Against Pay a $ a day, often for a 10 hour day, whilst giving Tiger Woods a $100 million sponsorship deal – is that morally correct? Often move to countries where they are taking advantage of tax breaks and often lower health and safety standards and less strict labour laws. Expensive premium priced product, but low wages! Morally correct?

Why do countries use import protection (e. g. tariffs) Why do countries use import protection (e.g. tariffs)? Advantages and disadvantages Definition: A tariff is a tax on imported goods. Reasons a country does it To protect domestic industry, by making imports from abroad more expensive. To raise money for the government. There will be more local jobs. Disadvantages Goods will become more expensive in the country. Consumers will have to pay more money. The consumers will have less of choice goods.

India and China are growing at around 10% per year whist the UK economy isn’t. They have very large populations and their businesses are expanding? What are the threats and opportunities for UK businesses? Advantages and disadvantages. Design an answer plan; Paragraph 1 Define economic growth – Threats to UK business ; Paragraph 2 Opportunities for UK business; Conclusion

India and China are growing at around 10% per year whist the UK economy isn’t. They have very large populations and their businesses are expanding? What are the threats and opportunities for UK businesses? Advantages and disadvantages. Wage rates are very low in countries such as China and India, sometimes just $1 a day. Many goods are being manufactured there as it is cheaper, as a result many UK firms have closed down because they can’t compete on cost. All countries use tariffs to increase the price of imported goods from abroad in order to protect their own industries e.g. If a UK firm wants to sell watches in India it has to pay the Indian government 58% import tax (tariff). Britain may still specialise in high tech manufacture such as aero engines which may not be affected by Indian and Chinese low tech manufacturing. India has 1.1 billion consumers and China 1.4 billion, making them massive potential markets for UK firms, although consumers are often quite poor. The Chinese and Indian economies are growing at around 10% per year (GDP increasing), whilst the UK economy is in recession without any growth. As the countries are becoming richer, the potential market for British exported goods will increase. In addition, many UK firms are taking advantage of the cheap labour in countries such as China by designing and selling their products in the UK and manufacturing them at low cost in China. In conclusion, the growth of China and India have resulted in many UK businesses closing down as they can not compete on cost. However, others have been able to take advantage of their growth by producing their products in China/India and selling to their increasingly expanding economies.

£6.11 48 hours 4 weeks Employment Laws 13 weeks What is the maximum working week? Which of the following is the correct minimum wage? How many weeks a year holiday is a worker entitled to? After how many weeks must a firm give a worker a written contract? 48 hours £4.20 £5.05 £6.11 £6.11 4 weeks 13 weeks

How does the UK government and EU legislation impact on UK firms? Bureaucracy and Red Tape means a lot of rules and regulations made by government that business have to follow. There is complete free trade within the EU. UK firms can sell to any EU country without tariffs. Many countries in the UK have rich consumers e.g. France & Germany. However, all the firms from these countries can also sell their goods in the UK. Many UK firms, such as Rover have closed down due to competition from abroad. There is also free movement of people, hence UK firms can recruit workers from any EU country. The EU and UK government imposes many laws on business e.g. Health and Safety legislation, taxation, Paternity (fathers given time off work when they have a baby) & Maternity legislation and minimum wage. All these increases the costs of business significantly making UK businesses less competitive when compared to firms from countries such as China

Write down 3 advantages and 3 disadvantages of economic growth for a country such as China? Higher incomes More jobs Greater choice of goods Cheaper goods Disadvantages More stress More pollution Adverse effects on the environment Loss of local culture and traditional businesses

Environmental policies at Innocent Innocent is a business that makes fresh fruit drinks. It tries to live up to its name by doing more than just following the law. Innocent try to be ethical by: using alternative fuels and power producing recyclable packaging offsetting its carbon emissions by 120% each year buying from suppliers certified by the Rainforest Alliance donating 10% of its profits to charity. The Rainforest Alliance is an not-for-profit organization that works to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behaviour. Possible answers: Innocent want to act ethically in their business activity to minimize the damage it will inflict. Many businesses are promoting themselves as ethical because many customers prefer to buy ethical goods, products and services, even if it means paying higher prices. The students could be asked to investigate a business in their local area to find out what it is doing to help the environment and give two other environmental targets it could set for itself (remembering the principle of SMART objectives). Photo: © Innocent Why do you think Innocent have set themselves these environmental targets?

Write down one example of how a pressure group has affected a business Many pressure groups put pressure on businesses to be environmentally friendly e.g. Greenpeace who campaign for renewable energy and give bad publicity to any firm that pollutes the environment e.g. BP

Test Define the term tariff. (1 mark) Define the term protectionism. (1 mark) Write down two ways a firm could attempt to become more ethical (or socially responsible). (2marks) Write down two advantages and two disadvantages of a country experiencing economic growth. (4 marks) Nike pay their workers around 2 dollars a day in the Philippines. Evaluate whether you feel this is acceptable. (10 marks)