Unit 7. 6 th Year Business Higher Level Rónán Murdock

Transcription

1 6 th Year Business Higher Level Rónán Murdock Unit 7 No part of this publication may be copied, reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission from The Dublin School of Grinds. Ref: 6/bus/h/Unit 7

2 6-HOUR CRASH COURSES MAY & JUNE 2016 % 01.! čƫ +*+)% /ƫ0! $!.ƫ *8*ƫ 1. + ' The final push for CAO points... $!ƫ 1 (%*ƫ $++(ƫ +"ƫ.%* /ƫ %/ƫ.1**%*#ƫ ćġ$+1.ƫ. /$ƫ +1./!/ƫ 0ƫ 0$!ƫ!* ƫ +"ƫ 5ƫ * ƫ 0$!ƫ!#%**%*#ƫ +"ƫ 1*!ċƫ $!/!ƫ +1./!/ƫ #%2!ƫ /01!*0/ƫ 0$!ƫ!/0ƫ,+//% (!ƫ 2 *0 #!ƫ /ƫ 0$!5ƫ,.!,.!ƫ "+.ƫ 0$!ƫ ((ġ%),+.0 *0ƫ 0 0!ƫ 4 )%* 0%+*/ċƫ *!ƫ ( /0ƫ +1*!ƫ +"ƫ!""+.0ƫ +1( ƫ ) '!ƫ ((ƫ 0$!ƫ %""!.!*!ċ!.!ƫ%/ƫ$+3ƫ0$!/!ƫ +1./!/ƫ3%((ƫ!*!"%0ƫ5+1č They will offer students one last opportunity to avail of expert teaching before the State Examinations They will provide students with a final boost of confidence before exam day They will give students an exam strategy plan to help them maximise their grade on the day +0!: At these courses our teachers will predict what questions are most likely to appear on your exam paper. These questions will be covered in detail and our teachers will provide you with model A1 answers. čƫĺāćāƫ ƫ To book, call us on 01ġ or book online at /$ƫ +1./!s Timetable 6th Year Subject Date Time Accounting Level H Sunday 29th May 9am - 3pm Biology H Saturday 28th May 9am - 3pm Business H Sunday 29th May 2pm - 8pm Chemistry H Saturday 4th June 9am - 3pm Economics H Saturday 28th May 9am - 3pm English H Sunday 29th May 9am - 3pm English H Saturday 4th June 9am - 3pm French H Saturday 4th June 9am - 3pm Geography H Saturday 28th May 9am - 3pm Irish H Saturday 4th June 9am - 3pm Maths Paper 1 H Saturday 4th June 9am - 3pm Maths Paper 2 H Sunday 5th June 9am - 3pm Maths O Saturday 28th May 9am - 3pm Maths O Saturday 4th June 9am - 3pm Physics H Saturday 28th May 9am - 3pm Spanish H Sunday 5th June 9am - 3pm Date Time 3rd Year Subject Level Business Studies H Sunday 5th June 9am - 3pm English H Sunday 5th June 9am - 3pm French H Sunday 29th May 9am - 3pm Irish H Sunday 29th May 9am - 3pm Maths H Sunday 29th May 9am - 3pm Science H Saturday 4th June 9am - 3pm H = Higher O = Ordinary (! /!ƫ*+0!ƫ0$ 0ƫ ((ƫ +1./!/ƫ3%((ƫ0 '!ƫ,(!ƫ 0ƫ +1.ƫ!.*%*#ƫ!*0.!ƫ 0ƫ $!ƫ.%).5ƫ $++(ƫ%*ƫ 0( * /Čƫ 0%((+.# *Čƫ +ċƫ 1 (%*ċ

3 What you need to know about Unit 7. Unit 7 has always appeared as question 3 on your long questions section. That question will be worth 60 Marks (15%). It can also appear in the short questions section. It is not examinable on your ABQ this year. Table of Contents Topic Page International Trade 2 European Union 33 Global Business 40 Dublin School of Grinds Page 1 Rónán Murdock

4 International Trade International Trade Exports and Imports International trade is commerce between different countries. It involves exporting and importing. When Irish businesses sell products and services to foreign countries, this is called exporting. When Irish businesses and people buy products and services from foreign countries, this is called importing. Exports and imports are either visible or invisible. Visible Exports Invisible Exports Visible Imports Invisible Imports Ireland sells tangible goods to foreign countries. Examples include: Jameson selling whiskey to U.S.A. Dell sells computers made in Ireland to Spain. Ireland sells services to foreign countries: Examples include: British tourists holidaying in ireland. An U2 touring U.S.A. Ireland buys tangible goods from foreign countries. Examples include: Superquinn buying oranges from Spain. Ireland buys services from foreign countries. Examples include: Sixth years going on their leaving cert holiday. An Rihanna performing in the O2. WHAT DO WE EXPORT AND IMPORT? Exports Imports Dublin School of Grinds Page 2 Rónán Murdock

5 Significance of International trade to the Irish Economy 1. Increased Sales and Profits The Irish market consists of only 4.7 million people. Through international trade, Irish businesses can sell their products to billions of customers all over the world. This leads to increased sales and profits. 2. Economies of Scale Making more products to export to the world gives economies of scale to Irish businesses. This means that the more money that make, the cheaper it becomes to make each product. This makes Irish products cheaper to make. = Inflation 3. Foreign Currency When Irish businesses sell goods to non-euro countries, they receive foreign currency. For example, when we sell goods to the USA, they pay us in dollars. This foreign currency is important because, with it, we can pay for the foreign products we need to import. Who are our two biggest trading partners? 4. Increased Employment Increased sales arising from engaging in international trade means that businesses have to hire more employees. Thus, international trade leads to job creation in Ireland. Remember TNCs 5. Low Prices Irish businesses face a lot of competition from foreign firms. This forces them to keep their costs low and their prices low so that they can compete. Dunnes Stores keep its prices low to compete with LIDL and ALDI. = Inflation 6. Bigger choice for Consumer Some countries want to give their consumers more choice over the products they buy. So, even though Ireland produces more than enough potatoes, we can still buy potatoes from many countries in our shops. Free Trade and Protectionism Free trade means that countries can buy and sell products with other countries without any barriers or restrictions placed in their way. The countries in the EU practice free trade with each other. Protectionism means that countries try to stop foreign imports coming into their country or help their own businesses to export their goods. They can do this by using different barriers to trade. Dublin School of Grinds Page 3 Rónán Murdock

6 Barriers to InternationalTrade Q-SET 1. Quota To reduce the number of foreign imports and to help indigenous businesses, a country puts a limit (called a quota) on the amount of foreign imports it will allow. Once this limit has been reached, no further imports are allowed. Consumers have no choice then but to buy from indigenous businesses. 2. Subsidy A subsidy is money that a government gives to its own domestic (indigenous) businesses to allow them to sell their products or services more cheaply. In international trade, it can help businesses to export more. 3. Embargo To reduce the number of foreign imports and to help indigenous businesses, a country puts a complete ban (called an embargo) on all foreign imports (or imports from a specific country) into the country. Its consumers have no choice then but to buy from indigenous businesses. The USA has a trade embargo with Cuba. It does not allow any Cuban imports. 4. Tariff A tariff is a tax that a country adds to the price of foreign imports. This makes them dearer and they will not sell as well in that country. Trading Blocs A trading bloc is a group of countries that agree to freely buy from and freely sell to each other without any barriers to trade. However, they may impose a tariff on all imports coming in from non-member countries. An example of a trading bloc is the North American Free Trade Agreement (NAFTA), which is a trading bloc consisting of Canada, the USA and Mexico. Another example is the European Union (EU). The EU is the world s largest trading bloc. It comprises many countries in Europe, including Ireland. There is totally free trade between all the members of the EU. NAFTA EUROPEAN UNION Dublin School of Grinds Page 4 Rónán Murdock

7 Changes in International Economy The major trends in international commerce include the following. 1. Globalisation A big trend in international trade is the increasing number of global businesses. These are businesses that operate throughout the entire world. Examples include Pepsi, BMW, McDonald s, Dell etc. Global businesses treat the whole world as one big market. IMPACT 2. Improved Information and Communication Technology Many businesses are using the Internet for international trade. They can sell their products all over the world on their website without having to set up shops all over the world. Customers everywhere can see and buy the business s products from its website. IMPACT This means that even the smallest Irish businesses can engage in international trade. They can also advertise worldwide through google, facebook etc 3. Increasing Number of Trading Blocs Many countries in the world are co-operating with each other by forming trading blocs together. A trading bloc is a group of countries that agree to freely buy from and freely sell to each other without any barriers to trade. However, they may impose a tariff on all imports coming in from non-member countries. IMPACT The EU allows Irish businesses to sell their products in all the member states without any restrictions at all. 4. Deregulation of International Trade Deregulation is the process of removing all the government rules (and barriers to trade) that prevent free trade between countries. The World Trade Organisation (WTO) is a body of consisting of over 150 countries. Its job is to remove barriers to international trade. IMPACT Deregulation presents Irish businesses with the opportunity to increase their sales and profits by exporting their products more freely all over the world. 5. New Markets (BRICS) In the past, communist countries did not trade with the West. However, communism has collapsed in many countries, including Brazil, Russia, India and China. These former communist countries are now starting to grow and develop and are importing and exporting. This provides an opportunity for Irish businesses to sell more products to these countries. IMPACT Dublin School of Grinds Page 5 Rónán Murdock

8 Opportunities for Irish businesses from International Trade 1. Increased Sales Ireland s membership of the European Union allows Irish businesses to sell their products and services anywhere in the EU without any barriers to trade. Furthermore, deregulation by the World Trade Organisation has removed many worldwide barriers to trade and allows for freer international commerce. 2. Economies of Scale Irish exporters have to make lots of products to satisfy international demand. This gives them economies of scale. The more products they make, the cheaper it costs to make each one. Thus, international trade helps Irish businesses to lower their costs and become more competitive. 3. English Irish people speak fluent English. English is the international language of business. This means that all Irish people can automatically converse with other businesses worldwide in the International language of business. This helps Irish businesses to do business more easily abroad. 4. Educated Workers Ireland has a well-educated workforce. Most young people go to college. Many study science. Their excellent education helps Irish entrepreneurs invent new products that can be sold all over the world to make a lot of money for Ireland. Our biggest knowledge-based exports are medicines, chemicals and computers. 5. Green Image Ireland has a good image around the world as a clean, green and unspoilt country. This makes it easier for us to sell food to other countries as they can trust our food to be of top quality. It also helps to attract foreign tourists. Both these industries bring in billions of euro to the county. Dublin School of Grinds Page 6 Rónán Murdock

9 Challenges for Irish businesses from International Trade 1. Foreign Languages Although English is the international language of business, many foreign customers obviously prefer to deal in their own language. This poses a number of communication problems for Irish exporters. They have to make their websites available in many languages. 2. Exchange Rate Changes Ireland s currency presents a problem for Irish businesses engaging in international trade. If the euro increases in value, the price of the Irish products in non-euro countries increases. Therefore, foreigners buy fewer Irish products and out exports fall. 3. Distribution Problems Ireland is an Island. This makes transporting goods more difficult and more expensive for Irish businesses. Goods can only be exported from Ireland by ship or plane. However, the goods can be transported only according to shipping and airline companies timetables and the weather. 4. Competition from Low-Wage Economies The rate of pay in Ireland is still considered to be quite high. Other countries have much lower wages and therefore their products are always cheaper than Ireland s. It is almost impossible for Irish manufacturers to compete against these low-wage economies. 5. Payment Problems Irish firms may have difficulties getting paid for the goods they export. If a foreign customer does not pay, there may be a little that the Irish business can do to recoup its money. Role of ICT in International Trade New Information and Communications Technology (ICT) has made it easier and cheaper for businesses to engage in international trade. Businesses can communicate with customers, suppliers and subsidiaries around the world quickly and cheaply. ICT has many benefits for international trade: 1. Increased sales 2. Advertising 3. Faster and Cheaper Communications 4. Decision-Making 5. Reduced Costs Dublin School of Grinds Page 7 Rónán Murdock

10 Government help for Irish Exporters Enterprise Ireland Enterprise Ireland helps Irish firms to export their products by providing: Market research information on opportunities in foreign countries. Low-cost loans to Irish businesses to help them export Grants to help them export. Department of Enterprise, Trade and Employment This government department helps Irish businesses to export their products by: Giving advice on the documents used in foreign trade and in the regulations that must be obeyed. Providing Export Credit Insurance for industries. This is where the Irish government promises to pay the Irish exporter if a foreign customer does not pay him. Dublin School of Grinds Page 8 Rónán Murdock

11 PAST LEAVING CERT QUESTIONS 2013 Section 3 Question 3a 20 Marks Read the information below, supplied by the CSO and answer the questions which follow: Balance of Trade Balance of Invisible Trade m Quarter 2, ,004 (6,769) deficit Quarter 2, ,660 (9,192) deficit (i) Explain the terms Balance of Trade and Balance of Payments. (ii) Calculate the Balance of Payments figures for both years from the above data. (iii) Illustrate what is meant by the term invisible exports with reference to the Irish economy. (20 marks) 2013 Section 3 Question 3b 20 Marks Discuss the opportunities and challenges for large indigenous companies, such as Kerry Group plc, in exporting to non EU countries. (20 marks) Dublin School of Grinds Page 9 Rónán Murdock

12 2012 Section 1 Question 4 10 Marks Illustrate your understanding of the term Trading Bloc Section 3 Question 3b 20 Marks Protectionism is a Government policy of placing barriers on free trade. Describe, using examples, barriers to free trade between countries Section 1 Question 5 10 Marks Illustrate what is meant by the term invisible imports, with reference to the Irish economy. Using the following data, calculate (i) Balance of Trade, (ii) Balance of Payments. State in each case whether it is a surplus or deficit. (Show your workings.) Visible Exports 50bn Invisible Imports 40bn Visible Imports 30bn Invisible Exports 35bn Workings Balance of Trade Balance of Payments ANSWER BOX Surplus OR Deficit 2011 Section 3 Question 3(a) 20 Marks Discuss how the changing nature of the international economy affects Irish exporters. Dublin School of Grinds Page 10 Rónán Murdock

13 2010 Section 1 Question 8 10 Marks Distinguish between a Quota and a Tariff as barriers to free trade between countries Section 3 Question 3(a) 20 Marks (i) Explain what is meant by the term Open Economy. (ii) Illustrate your understanding of the terms, Balance of Trade and Balance of Payments. (i) Open Economy is one in which people including businesses can trade goods and services in global markets. Ireland is a small open economy that engages in international trade. (ii) The Balance of Trade is the difference between visible exports and visible imports. The Balance of Payments is the Balance of Trade plus the Balance of Invisible trade Section 3 Question 3b 20 Marks Analyse how the changing trends in the international economy have impacted on Irish businesses Section 1 Question 6 10 marks What is a trading bloc give two examples. European Union NAFTA 2007 Section 3 Question 3(a) 25 marks Discuss the opportunities provided by international trade for Irish business. Access to larger markets Economies of scale English, a trading language EU membership Highly-skilled (Educated) workforce Green image. 5 marks (2 + 3) 25 Marks Dublin School of Grinds Page 11 Rónán Murdock

14 2006 Section 1 Questions marks (a) Explain the term invisible exports : (b) Using the following information, calculate the (i) Balance of Trade and (ii) Balance of Payments: Total Imports 16 billion Invisible Exports 11 billion Total Exports 19 billion Invisible Imports 9 billion Balance of Trade Balance of Payments Answer Surplus or Defecit 2006 Section 3 Question 3(c) Analyse how changes in the international economy are impacting on Irish business. Use relevant examples to illustrate your answer Section 3 Question 3c 20 Marks Discuss two business opportunities for Irish business in developing markets e.g., in the European Union Section 1 Question 7 10 marks Distinguish between grants and subsidies. Grants Subsidies Dublin School of Grinds Page 12 Rónán Murdock

15 2002 Section 3 Question 3a 40 Marks Evaluate the significance of international trade for the Irish Economy. In your answer include the opportunities and challenges for Irish businesses as a result of engaging in international trade Section 3 Question 3(a) 25 marks Analyse the significance or otherwise of international trade for Ireland. Refer to the development of trading blocs Section 3 Question 3(c) 30 marks) Discuss the changing nature of the International Economy. Include in your response the effects it has on Irish business. Dublin School of Grinds Page 13 Rónán Murdock

16 European Union The European Union (EU) is a trading bloc of 28 countries in Europe, including Ireland. The countries are called member states. There is free trade between all the member states. Importance of EU Membership for Ireland The European Union is very important for Ireland. Our membership of the EU played a part in making Ireland the wealthy country it is today. The EU has helped Ireland in a number of ways. 1. Increased Profits The Single European Market provides Irish businesses with the opportunity to increase their profits by allowing them to sell their products and services freely to a market of over 500 million people. 2. Grants The EU has given Ireland grants to improve its infrastructure, such as motorways, airports, ports and so on. This has helped Irish businesses to transport their products more quickly and cheaply. 3. Transnational Companies Ireland s membership of the Single European Market attracts transnational companies here, such as Dell and Intel. These transnational companies provide thousands of jobs in Ireland. They also buy materials from Irish businesses, which helps to increase their sales and profits. 4. EU Policies The EU Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP) have helped Ireland s primary industries of agriculture and fishing by giving those who operate in these sectors a decent standard of living and by helping to modernise and improve these industries with grants. EU Institutions The EU has established a number of organisations or institutions to look after the running of it. Among the most important are: 1. The European Commission 2. The European Parliament 3. The Council of the European Union 4. The European Court of Auditors 5. The Court of Justice Dublin School of Grinds Page 14 Rónán Murdock

17 1. Propose Laws 2. Enforce Laws 3. Draft Budget THINK OF LAWS AND BUDGET European Commission The European Commission is the institution that runs the EU. It consists of commissioners. There is one commissioner from each member state. Therefore there is commissioners. Each commissioner is in charge of a different area of responsibility within the EU, such as transport, the environment, education, health, agriculture and trade. The main functions of the European Commission are: 1. To propose new European laws The Commission thinks up new ideas for laws that are needed in the EU. Therefore, the commission has to be aware of problems in the EU. The commission then draft a law that it thinks will solve the problem 2. To enforce EU laws The Commission supervises the EU to make sure that everyone obeys EU laws. If it finds any EU country not obeying an EU law, the Commission takes that country to the Court of Justice to force it to obey the law. In 2007, the Commission did not allow Ryanair to take over Aer Lingus, stating that such a takeover was a threat to consumer choice and a recipe for higher fares. 3. To draft the EU budget The Commission is responsible for drawing up the EU budget. This means that it makes the initial decision as to how much money each country should get back from the EU. This is important for Ireland because the Commission decides how much money Ireland will get from the EU. This money is important to Ireland because it is used to build our infrastructure and develop poorer parts of the country. REMEMBER THERE ARE 28 COMMISSIONERS. ONE COMMISSIONER FROM EACH STATE. IRELANDS COMMISSIONER IS SHE IS IN CHARGE OF Dublin School of Grinds Page 15 Rónán Murdock

18 European Parliament The European Parliament (Strasbourg, France) is the only institution that is directly elected by the citizens of the EU. Elections to the parliament are held every five years. There are 766 Members of the European Parliament (MEPs) representing the people in all the member states. Ireland has 12 seats. The main functions of the European Parliament are 1. To debate and approve new European laws The Parliament considers laws proposed by the Commission. The MEPs discuss the advantages and disadvantages of the law and suggest changes it makes to make it better. Under the co-decision principle, proposals rejected by the parliament cannot become law. 2. To supervise the EU Commission The Parliament interviews all the candidates for the European Commission. It then votes on whether to accept the new Commission or not. The Commission cannot be appointed without Parliaments approval. Parliament also has the power to sack the entire Commission if it is unhappy with it. 3. To represent EU citizens MEPs are directly elected by citizens of the EU, therefore they must ensure that the EU acts in the best interest of these citizens. 4. To approve the EU budget The Parliament had the power together with the Council of the EU to approve of or reject the entire EU budget. Therefore, it can influence how the EU spends its money. Dublin School of Grinds Page 16 Rónán Murdock

19 Council of the European Union This is the most important decision-making body in the EU. It represents the member states and its meetings are attended by one minister from each of the EU s national governments. If the Council is meeting to discuss the environment (Environment Council), each country will send its government Environment Minister to represent it. If the Council is meeting to discuss finance issues, each country will send its governments Minister for Finance. The main functions of the Council are: 1. To pass European laws The Council is the institution (together with the European Parliament) that has the final say on hat becomes EU law. This is called co-decision. 2. To conclude international agreement between the EU and other countries Every year, the council officially signs such agreement on behalf of the EU. These agreements often cover areas such as trade with the non-eu countries or organisations, fisheries, science, technology and transport. 3. To approve the EU s budget The Council had the power together with the European Parliament to approve of or reject the entire EU budget. Therefore, it can influence how the EU spends its money. 4. To allow member states to work together in foreign policy, security and defence. For example, to enable it to deal with the international crises, the Council of European Union created a Rapid Reaction Force, consisting if soldiers from each EU army who work together to carry out humanitarian, rescue and peacekeeping duties in the world. In 2004, the EU began a peacekeeping operation in Bosnia and Herzegovina Dublin School of Grinds Page 17 Rónán Murdock

20 MONITOR E.U. BUDGETARY SPENDING European Court of Auditors The European Court of Auditors is responsible for ensuring that the EU budget is managed properly. Its job is to check that EU funds, which come from EU taxpayers, are properly collected and that they are spend legally, economically and fro the intended purpose. The Court has one member from each EU country. It can audit any country or organisation that received EU funding to make sure that the money was not wasted and was spent for the purpose intended. The court writes a report on its findings and this draws the attention of the Commission and the member states to any problems. ENSURE EU LAWS ARE IMPLEMENTED ACROSS ALL EU COUNTRIES. Court of Justice The role of the Court of Justice is to make sure that EU laws are implemented across all EU countries so that EU law is the same for every EU citizen. The Court is made up of one judge from every EU country. The functions of the Court of Justice are as follows: 1. Gives advice to member states The Court of Justice gives advice to member states national courts to help them understand EU laws and how they apply to their country. It makes sire that different countries do not give different rulings on the same issue. 2. Ensures compliance with EU legislation The Court of Justice makes sure that each country and institution in the EU obeys EU laws and does exactly what EU laws requires. It has the power to settle disputes between EU countries, EU institutions, citizens and businesses. 3. Strike Down EU Law The court of Justice can strike down and EU law that is illegal. If any of the member states or institutions of the EU believe that a particular EU law is illegal, they may ask the Court to annul it. Dublin School of Grinds Page 18 Rónán Murdock

21 Decision Making in the EU The process of passing a law that suits each country in the EU is a complicated one and involves a number of steps. The Four Steps 1. European Commission draft the law The first step in EU decision making involves the European Commission. Its job is to identify problems in the EU and then to think if laws that will solve these problems. The Commissions sends its ideas for a new law to the European Parliament. 2. European Parliament suggest ammendments The European Parliament debate the proposed new law. It suggests how it could be improved. They then send its amendments back to the Commission. 3. European Commission - Modification The European Commission then modifies the proposed new law after it has listened to the debate in the Parliament. It implements the amendments suggested by the European Parliament. The Commission then sends the amended law on the council of the European Union and the European Parliament. 4. Decision The Council of the European Union and the European Parliament jointly have the final say. This is caked co-decision. They decide whether the proposal will become law in the EU. If either disagrees with it, it does not become law. If both accept it, it becomes law in the EU and is implemented by 1. Regulation (applies immediately in all countries), 2. Directive (all countries must obey it with a given time limit) or 3. Decision (applies to only one country, business or citizen who must obey it immediately). STUDY THIS CHART BELOW AND MAKE SURE YOU CAN DRAW IT 1. European Commission THE E.C. PROPOSE A LAW AND SEND IT TO 2. European Parliament THEY DEBATE IT AND MAKE AMMENDMENTS THEN RETURN IT 3. European Commission THE E.C MAKE THE NECESSARY CHANGES AND SEND IT TO 4. European Parliament and Council of EU IF THEY JOINTLY AGREE (CO-DECISION) IT BECOMES LAW Dublin School of Grinds Page 19 Rónán Murdock

22 Role of Special Interest Groups in EU Decision-Making An interest group is an organisation of people who come together to fight for a common goal. By joining forces, they have more power, more money and more talents at their disposal and hence are more likely to be listened to by the decisionmakers. There are thousands of these special interest groups in the EU, including the Irish Farmers Association (IFA) and businesses such as Intel, IKEA, Ford etc. The aim of these special interest groups is to pressurise EU decision-makers into making decisions that they want to achieve in their aims. Special interest groups will do the following to achieve their aims. 1. Lobby Members of the European Parliament (MEPs) Special interest groups will phone, write to and meet with MEPs to try persuade them to vote a certain way. They will send a petition to the European Parliament about an issue they feel strongly about in order to pressurise the MEPs into doing something about it. 2. Lobby the European Commission and individual commissioners Before it can think up ideas for new laws, the Commission had to be aware of problems in the EU that need to be solved. This is where special interest groups come into their own. They meet with the commissioners and make them aware if the particular issues they are concerned about and tell the commissioner what to do to sort it out 3. Set up and office in Brussels Many EU decisions are made in Brussels, so special interest groups use their Brussels offices to lobby decision-makers on a regular basis. For example, IBEC and the IFA have offices in Brussels close to the Commission and the Parliament. EU Directives An EU directive is a law that all EU members states must obey. It sets out a desires result that each country must achieve by a given date. Member states must change their own national law to implement the directive. REGULATION DIRECTIVE DECISION Dublin School of Grinds Page 20 Rónán Murdock

23 EU Policies EU policies are major programmes that are designed to help specific categories of people in the EU. There are EU policies for 1. EU farmers Called the Common Agricultural Policy 2. EU Fishing industry Called the Common Fisheries Policy 3. EU workers Called the EU Social Charter 4. EU consumers Called the Competition Policy 5. EU businesses Called the Single European Market and the Euro Common Agricultural Policy (CAP) The CAP was established to give all farmers in the EU a decent standard of living. It achieves this in a number of ways: 1. No barriers or restrictions EU farmers are allowed to sell their produce anywhere in the EU without any barriers or restrictions. There is a totally free market. This gives Irish farmers a much bigger market. 2. Grants to farmers The CAP gives grants to all farmers to guarantee them basic minimum wage. This is called the single payment scheme. The EU makes these payments to farmers to help them survive but only if they obey food and safely and environmental standards. 3. Improved Produce To help farmers improve the quality of their produce and therefore will sell more, the CAP gives EU farmers grants to spend on improving their land and animals. This helps Irish farmers to grow better quality crops and rear better quality animals, which helps them to sell more and thus increase profits. 4. Protect Farmers from Competition To protect EU farmers from competition from other countries, the CAP adds tariffs to non-eu food imports to make them dearer. This will encourage consumers to buy more EU produced food. What were the problems with the C.A.P.? How is it being reformed? Dublin School of Grinds Page 21 Rónán Murdock

24 REMEMBER IF THIS QUESTION COMES UP JUST THINK OF TWO THINGS 1. Create a decent standard of living for fishermen Explain how!! 2. Prevent over-fishing Explain how!! Common Fisheries Policy (CFP) The common Fisheries Policy (CFP) was devised to give those involved in the EU fishing industry a decent standard of living and to conserve fish stocks (making sure there is enough fish for everyone to eat for years to come). It tries to achieve this in the following ways: Decent Standard of Living 1. Prices for fish are fixed at the start of the year to guarantee Irish fisherman a decent income. 2. To improve the quality of fish caught and this to help EU fishermen sell more, the CFP gives grants to EU fishermen to buy better boats and fishing equioment. 3. To increase fishermen s sales and profits, the CFP pays for marketing campaign to encourage consumers to buy more fish. Prevent Over-Fishing 1. Every country is given a quota, setting out the maximum amount of each type of fish it can catch each year. 2. The CFP sets down limits for the size of the holes in nets to stop immature fish being caught. 3. The CFP helps member states to patrol their waters and catch those involved in illegal fishing. PROTECT THE RIGHTS OF WORKERS AND CONSUMERS EU Social Charter (Policy) The EU Social Charter is the EU s social policy. Its aim is to improve working and living conditions for EU citizens. It gives all EU workers the following rights: 1. Freedom of Movement EU citizens have freedom of movement. This means that they have the right o work in any EU country they want and be treated the same as nationals of that country. 2. Fair Wage EU workers have the right to a fair wage that will give them and their families a decent standard of living. All EU countries must set a minimum wage. 3. Maximum working hours EU workers can work only a maximum of 48 hours a week. They also have the right to public holidays and pay for four weeks paid annual holiday. Dublin School of Grinds Page 22 Rónán Murdock

25 Competition Policy The EU Competition Policy is a set of rules intended to ensure free and fair competition between businesses in the EU. Its aim is to ensure that EU consumers get quality products at reasonable prices. It contains a number of rules. 1. Business cannot operate from cartels A cartel is an illegal secret agreement between competitors in which they agree to restrict competition. The Competition Policy states that businesses cannot work together to take advantage of consumers by agreeing that that will all charge the same high price for their products. 2. Cannot increase prices Businesses in a dominant position in the market cannot abuse their power by increasing prices. 3. No Monopoly Position The EU competition policy ensures that Ireland s state-owned enterprises cannot enjoy a monopoly position. This means that they cannot be the only business selling a particular product. They must be open to competition. 4. Permission for Mergers/Takeovers EU competition policy prohibits mergers and takeovers that would reduce free competition. Any proposed merger or takeover must seek and obtain permission from the European Commission to go ahead. Permission is denied if the Commission believes that the merger would seriously damage competition. In 2007, the Commission did not allow Ryanair to take over Aer Lingus, stating that such a takeover was a threat to consumer choice and a recipe for higher fares. Dublin School of Grinds Page 23 Rónán Murdock

26 Single European Market (SEM) - GLC The Single European Market (SEM) part of Economic and Monetary Union (EMU) makes the EU the world s largest free trade area. There are no barriers to trade in the SEM. WHENEVER YOU SEE ANYTHING ON THE SINGLE EUROPEAN MARKET (S.E.M.) THINK OF A GOOD LOOKING CHICK. THE S.E.M. ALLOWS THE FREE MOVEMENT OF GOODS, LABOUR AND CAPITAL. IF YOU GET ASKED ABOUT THE S.E.M. THINK ABOUT ME Goods Labour Capital Businesses can sell their products anywhere in the EU without any restrictions (such as tariffs, quotas or embargoes) EU workers can live and work anywhere in the EU. EU citizens and businesses can invest their money anywhere in the EU. Significance of the SEM for Irish Businesses 1. No barriers to trade Irish businesses can sell their products anywhere in the EU just as easily as they can sell them here. There are no barriers to trade between the countries. 2. Lucrative Contracts Irish businesses can bid for government contracts of other EU countries. National governments are not allowed to show favouritism to their own country s businesses. They must choose the best quote they get from within the EU. 3. No customs checks/border controls The SEM has made trade within the EU easier. There are no customs checks or border controls anymore. This means that Irish goods are not physically inspected by government officials when they enter an EU country. 4. Attracts Transnational Companies Ireland s membership of the SEM provides another opportunity for Irish businesses. Transnational companies come here to get free access to the EU market. 5. Free Movement of Capital The SEM allows for the free movement of capital. This means that EU citizens can invest their money anywhere in the EU. This makes it easier for Irish entrepreneurs to raise the capital they need to set up, run and expand. Dublin School of Grinds Page 24 Rónán Murdock

27 Challenges of the SEM for Irish Businesses 1. Increased Competition The SEM has brought challenges for Irish businesses. In the same way that we can sell our products all over the EU other EU businesses can set up here and sell their products in Ireland. For example, Irish chemists face a major competition from Boots (UK). Dunnes faces major competition from ALDI and LIDL. This increased competition may force some Irish businesses out of business if they cannot cope with the threat from big EU competitors. 2. Emigration The free movement of labour means that EU citizens have the right to travel and work in any EU country. This could have a negative impact on Irish business because Irish people may decide to live and work elsewhere in the EU, leaving Irish businesses short of workers. 3. State Subsidies Under the SEM state subsidies have been outlawed and that means only the most efficient businesses can survive. This is bad news for struggling businesses Section 3 Question 3(a) 30 marks Evaluate the opportunities and challenges for Irish business in the EU market Section 3 Question 3(a) 25 marks Discuss the impact of the Single European Market (SEM) on Irish business Section 3 Question 3a 40 Marks Evaluate the significance of the Single European Market for Irish Business Section 1 Question 7 10 Marks The Single European Market helps business because it: Dublin School of Grinds Page 25 Rónán Murdock

28 European Monetary Union The Euro Monetary union (part of EMU) involved establishing one single currency ( the euro) for some countries of the EU and the setting up of the European Central Bank (ECB). 18 countries have the euro as their currency. Advantages of the Euro 1. It reduces business costs Irish businesses no longer have to pay bank charges to change currency when they are buying from and selling to the other enrozone countries. Furthermore, they don t need to worry about the exchange rate going up or down because they pay and are pain in euro. 2. Interest rates on the eurozone countries are set by the ECB So far, the ECB has set interest rates lower than those previously charged in Ireland. These low interest rates mean lower loan repayments for Irish businesses. This reduces their costs and increases their profits. 3. It increases trade between the eurozone countries A major barrier to trade (exchange rate fluctuations) has gone. This gives Irish businesses the opportunity to sell more to these countries and thus increase their profits. It will increase tourism. 4. It has led to greater transparency in prices in the eurozone Customers can now directly compare the prices of different goods in all the eurozone countries because they are all priced in the same currency. This leads to similar prices all over Europe. Disadvantages of the Euro 1. The UK has not adopted the euro as its currency yet The UK still uses the pound sterling. A large part of Ireland s international trade is with the UK. Irish businesses still face the costs of changing money and the risks of fluctuating exchange rates when it comes to buying from and selling to the UK. 2. Ireland has no control over its interest rates They are set by the ECB. If Ireland s economy falls out of sync with the rest of the eurozone countries, Ireland could suffer. The ECB might decide to help the rest of the eurozone countries by changing interest rates to suit them rather than Ireland. 3. Irish businesses may face increased competition Irish business consumers can now compare prices directly because products are priced in euro in all the eurozone countries. They may decide to buy goods from foreign businesses. Dublin School of Grinds Page 26 Rónán Murdock

29 PAST LEAVING CERT QUESTIONS 2014 Section 3 Question 3c 20 Marks Evaluate the impact that any two of the following EU policies have on Irish businesses: (i) European Monetary Union (EMU) (ii) European Union Competition Policy (iii) European Social Charter Section 3 Question 3b 20 Marks Describe the legislative process within the European Union. Dublin School of Grinds Page 27 Rónán Murdock

30 2013 Section 3 Question 3c 20 Marks Ireland s Presidency of the Council of the European Union is an opportunity to play an active part in shaping Europe's future. Discuss the benefits for the Irish economy of ongoing membership of the EU Section 3 Question 3c 20 Marks Discuss the role of the Council of the European Union (Council of Ministers) and the European Commission in the European Union (EU) decision making process Section 3 Question 3c 15 Marks Evaluate the role of special interest groups in the decision making process of the European Union (EU). Use examples to support your answer. Dublin School of Grinds Page 28 Rónán Murdock

31 2010 Section 1 Question 4 10 Marks 2010 Section 3 Question 3(C) 20 Marks Discuss the importance for Ireland of any two of the following EU policies: (i) Competition Policy; (ii) Common Fisheries Policy (CFP); (iii) Common Agricultural Policy (CAP). Competition Policy Common Fisheries Policy Common Agricultural Policy Dublin School of Grinds Page 29 Rónán Murdock

32 2009 Section 1 Question Marks Explain the role of the Council of the European Union in EU decision making. Name two other EU decision making institutions Section 3 Question 3(a) 30 marks Evaluate the opportunities and challenges for Irish business in the EU market Section 3 Question 3(a) 25 marks Discuss the impact of the Single European Market (SEM) on Irish business Section 3 Question 3b 20 Marks Explain the functions of any two of the following European institutions. (i) The European Parliament (ii) The Council of Ministers (iii) The European Commission The European Parliament The Council of Ministers The European Commission Dublin School of Grinds Page 30 Rónán Murdock

33 2008 Section 3 Question 3 15 Marks In the context of the European Union (EU) distinguish between a Directive and a Regulation. Choose one example of either and describe its purpose Section 1 Question 3 10 Marks An EU directive is 2007 Section 3 Question 3 15 Marks Outline, using an example, the role of interest groups in the European Union. Dublin School of Grinds Page 31 Rónán Murdock

34 2006 Section 3 Question 3 25 Marks (i) Outline the decision making process of the European Union (ii) Explain the term EU directive and the effect of one of them on Irish business Section 3 Question 3 20 Marks Evaluate the impact on Ireland of any two of the following. (i) The Common Agricultural Policy (ii) The Competition Policy (iii) The European Union Social Charter Common Agricultural Policy Competition Policy European Union Social Charter 2005 Section 3 Question 3 25 Marks Explain the opportunities and challenges for Irish business as a result of the new member states who joined the Single European Market in Dublin School of Grinds Page 32 Rónán Murdock

35 2005 Section 3 Question 3b 10 Marks Outline the importance for Ireland of any one institution of the European Union Section 1 Question 7 10 Marks What do the following letters stand for? CAP PLC EU ROI PRO 2004 Section 1 Question 8 10 Marks List four institutions of the European Union 2003 Section 3 Question 3a 40 Marks Evaluate the significance of the Single European Market for Irish Business Section 1 Question 9 10 marks Define Deregulation 2001 Section 1 Question 7 10 Marks The Single European Market helps business because it: Dublin School of Grinds Page 33 Rónán Murdock

36 2001 Section 3 Question 3b 25 Marks Explain the decision-making process of the European Union. Include the relevant institutions in your answer Section 3 Question 3b 15 Marks Explain the importance for Ireland of any one of the institutions of the European Union. Dublin School of Grinds Page 34 Rónán Murdock

37 Global Business Transnational Companies Transnational company is a business with a head office in one country and branches or factories in a number of other countries. The head office controls the entire business, whereas the branches around the world may carry out different jobs. Examples include Dell, Intel, Marks & Spencer, Lidl and Zara. Reasons for the Development of Transnational Companies There are many transnational companies today. The reasons for this include the following: 1. Spread Risk Businesses expand into different countries to spread their risk. They don t want to become too dependant on one market. For example, Dell (a US transnational) expanded into Europe. If there is a downturn in the US economy and sales of computers falls in the US, European sales may keep the businesses in profit. 2. Increase Profits and Sales Businesses expand into different countries to increase their sales and profits. By expanding overseas, they can sell their products to many more customers than if they concentrated solely on their home market. 3. Transport and Communication Advances in transport and in communications technology have made it easier for businesses to run overseas branches. Video-conferencing enables managers to run a transnational business without having to travel. They can hold meetings with branches all over the world from their office. 4. Overcoming Trade Barriers Expansion into different countries is a way of overcoming trade barriers. Transnational companies that set up in Ireland have a major impact on the economy, mostly positive but there also can be some negative aspects to them. Dublin School of Grinds Page 35 Rónán Murdock

38 Advantages of Transnational Companies 1. Jobs They create thousands of jobs in Ireland. This leads to lower unemployment in the country and a higher standard of living for Irish people. For example, Dell and Intel employ almost 10,000 people in their Irish plants 2. New Technology They bring new technologies, new products and new management skills and ideas into Ireland. Dell and Intel bring the latest computer technology into Ireland and train their Irish employees in the latest computer skills 3. Competition They bring competition into the Irish market. This is good for Irish consumers because it leads to lower prices and better quality. Lild and ALDI have increased competition in the grocery market, leading to lower prices for Irish consumers. 4. Taxes They pay a lot of tax to the Irish government on the profits they make in Ireland. This money can be uses by the government to improve Ireland s economy through lower taxes and better infrastructure. 5. Buy Irish They buy raw materials from Irish businesses, thus increasing the sales and profits of these indigenous businesses. Tesco Ireland buys a lot of Irish produced food to sell in its stores. Disadvantages of Transnational Companies 1. They leave They can close down with very little notice and leave Ireland in Ireland in order to move to countries where wages and other costs are lower. 2. Too much power Many are so big that they can put pressure on the government to give them their own way. 3. Repatriate profit They often repatriate most of their profits. This means that they send most of the profits they make in Ireland back home 4. Decisions taken abroad Most decisions are taken by the lead head office abroad and they may not take Irish interests into account. Dublin School of Grinds Page 36 Rónán Murdock

39 Global Businesses 1. A global business sees the world as one giant market and production location. 2. A global business provides the same, undifferentiated product worldwide. 3. It uses a global marketing strategy, which involves the same or sometimes an adapted marketing mix (product, price, place, promotion) throughout the world to build a global brand. Examples of global businesses include Coca Cola, Dell, Nike, Toyota, Microsoft, Intel, HP, Google, and Nokia. Reasons for the Development of Global Companies (GLOBALISATION) There are a number of reasons why there are so many global businesses operating today. 1. Increased Profits Businesses become global to increase sales all over the world. This leads to higher profits. Also making enough products for the whole world leads to economies of scale for the business and lower. 2. Technological advances in manufacturing It is now possible to mass produce enough products to satisfy global demand. Technological advances, such as Computer Aided Manufacturer and robots, have improved mass production techniques. These technologies can make enough products to satisfy world demand. 3. Development in Communications Communication and transport advances have made it easier to run a global business. Video-conferencing enables managers to run a global business without having to travel. They can hold meetings with branches all over the world from their office. 4. Deregulation Deregulation by the World Trade Organisation has made a global business possible. Businesses can now enter markets previously denied to them thanks to freer world trade. For example, one of the biggest markets in the world, China, did not trade with the rest of the world until relatively recently. 5. Improvements in Infrastructure and transport methods This makes it easier to move goods around the world, thus facilitating globalisation. Dublin School of Grinds Page 37 Rónán Murdock

40 Global Marketing Global marketing means selling the same product all over the world using a global marketing mix (4Ps). When a global business uses the same marketing mix in each country, this is called a standardised marketing mix. The global business concentrates on the similarities across world markets. One example of this is Coca- Cola. Global Product This is a product that is sold throughout the world. Coca-Cola is an example of this. This is the one element of the global marketing mix that is most likely to stay the same all over the world. However, global businesses must take local needs and cultures into account if they want their product to succeed. Global Price The price that the company charges fro its product may vary around the world. This is due to a number of factors including: The standard of living varies in different countries. Prices will normally be higher in wealthy countries because people can afford to pay more. Taxes and tariffs may have to be paid. Countries that the global business exports to may add different taxes to its price. Local rival firms charge different prices. The level of competition in the market will also determine the maximum price the global business can charge for its product in different countries. Global promotion If a global business can use the same promotion methods all over the world, this will save it a lot of money. Global companies sponsor global events such as the Olympic Games and the World Cup because sponsorship of these events reaches a truly global market. However, it is not always possible to use the same promotion throughout the world. Promotion may change in different countries to take account of differences in language, culture and advertising laws. If global businesses do not take these differences into account when promoting their product, they may offend locals and lose their sales. Global Place In global marketing, getting the product to customers all over the world can be a daunting process. Many global businesses rely on local agents and distributors to deliver their product for them. Dublin School of Grinds Page 38 Rónán Murdock

41 Importance of Global Marketing Global marketing is important for businesses for the following reasons. 1. Economies of Scale By selling the same product throughout the world, the global business can enjoy lower costs. It makes so many products to satisfy global demand that it enjoys massive economies of scale the more products the business makes, the cheaper it becomes to make each one. 2. Expertise Selling the same product all over the world requires makes it in huge quantities. The global business becomes an expert in making the product and, through practice, better than anyone else at making it. Furthermore, the global business can afford to invest in research and development on the product to make it the best in the world. For example, the global business Sony is one of the best electrical goods manufacturers in the world. 3. Marketing Mix Global businesses must realise that a truly standardised marketing mix is not possible. If local tastes are ignored, the global business will alienate local people and lose sales. For example. Sales of Barbie dolls were low in Japan because the doll looked too Western. The company changed the doll to make her look more Japanese and sales increase rapidly. 4. Cultural Differences Global businesses must consider cultural differences when advertising its global products. For example, ads shown in Western countries depicting women in a certain way might cause offense in some other countries. Furthermore, global business must be aware of the backlash against globalisation. Many people vehemently oppose the imposition of one culture For example, the McDonald s fast food American culture on the world. Global businesses have to change their promotion methods to reflect local cultures. Otherwise, they risk negative publicity, boycotts and loss of sales. Dublin School of Grinds Page 39 Rónán Murdock

42 PAST LEAVING CERT QUESTIONS 2014 Higher Level Section 3 Question 3a 20 marks (i) Explain the term global business. (4 Marks) (ii) Discuss the effects of globalisation on the Irish economy. Provide examples to illustrate your answer. (16 Marks 2 8 Marks) Sales Globalisation can be viewed as an opportunity for Irish businesses to sell goods and services abroad and grow and expand their operations. Companies get access to much wider markets E.g. Kerry Group and GlanBia Plc leading to economic growth for the Irish economy. Labour Globalisation impacts on the labour market within the Irish economy. Having experienced net emigration for decades, Ireland now has significant immigration as global companies located here try to fill high skill vacancies, for example in the technology sector, where there is a skill shortage. Employment Global companies located in Ireland are a significant source of employment. It is estimated that American global companies alone directly employ 115,000 people. Companies such as Dell, Microsoft, Google, Hibernian Aviva, Palm Inc., Facebook & Intel have all made significant contributions to the success of Ireland s economy. Wider Choice Consumers get much wider variety of products to choose from and they get the product they want at more competitive prices, leading to increased domestic demand thus leading to economic growth in the Irish economy. Cheaper imports Globalisation can be viewed as a threat to the Irish economy because if Ireland is uncompetitive, its domestic industries will decline in the face of cheaper imports of goods and services produced globally. Dublin School of Grinds Page 40 Rónán Murdock

43 2012 Higher Level Section 3 Question 3a 20 marks Outline four developments in technology that have facilitated the growth in globalisation Higher Level Section 3 Question 3 25 marks Illustrate how foreign transnationals (i.e. foreign direct investment (FDI) companies) have impacted on the Irish Economy Higher Level Section 3 Question 3b (30 marks) (i) Explain the term global marketing and name two global businesses. (ii) A business involved in global markets faces additional marketing challenges. Discuss these challenges, using examples to support your answer Higher Level Section 3 Question 3c 15 Marks Discuss the concept of Global Marketing for Irish Business Higher Level Section 3 Question 3a 20 Marks Define Global marketing. Discuss the role of global Marketing in international business. Dublin School of Grinds Page 41 Rónán Murdock

44 2004 Higher Level Section 3 Question 3b 20 Marks Explain, using examples, where appropriate the impact of Transnational companies in Ireland Higher Level Section 3 Question 3b 20 Marks Explain the role of global marketing of products and services in international business. Illustrate your answer with relevant examples Higher Level Section 3 Question 3a - 35 Marks Analyse the significance or otherwise of international trade for Ireland. Refer to the development of trading blocs and transnational companies in your answer Higher Level Section 3 Question 3a 20 Marks Explain, using examples, the importance of global marketing for a global business Higher Level Section 1 Question Marks What is a Transnational Company? Name two Transnational companies. Dublin School of Grinds Page 42 Rónán Murdock

45 OUR EXPERT TEACHERS Rónán Murdock 6th Year Business Higher Level Rónán is the Head of the Business Department at The Dublin School of Grinds. He is the author of the Leaving Certificate Business Revision textbook and has acquired a reputation nationally as the expert on Leaving Certificate Business. Rónán s immense success is due to a unique approach to the course that explains the material and answers the questions in a memorable way that significantly aids students when revising the topic, thereby reducing study time. His expert knowledge of the marking scheme equally provides students with all the tips and tricks required to enhance their grade.