311 - Globalisation Flashcards
Globalisation
The process that enable product,f inancial, and investment markets to operate across the globe
Communication technologies and the internet
The internet can be used to sell products or goods on their websites and also int eras of marketing and communication
Liberalisation of trade
The efforts of the WTO to remove barriers to trade and cross border deregulation and trading blocs have led to teh creation of an international trading community
Cost of transportation
The increased use of containerisation and business efficiency in moving large quantities of goods has led to transportation costs falling
Increased competition
Globalisation implies increased trade as barriers to trade are removed which means more competition or domestic businesses, and it might be harder to survive as the new competition may have lower costs and be able to offer lower prices
Opportunities for growth
A domestic business will be able to find new markets abroad so this could help the grown, gain economies of scale, and pass these savings on to the consumer
Global branding
Businesses need to establish a strong brand identity both domestically and globally
External growth
The most common strategy for achieving external growth is merging with or acquiring a business in another country, as it gives them immediate access to that market
Advantages of operating in global markets
Growth, spread of risk, increasing sales and profits, spreading technical knowledge
Disadvantages of operating in global markets
Language barriers, cultural barriers, supply chain issues, local taxes, local laws
Multinationals
Businesses operating gin a number of countries, whether extracting resources, manufacturing, retailing, or a combination of these actives.
Examples: HSBC, Tesco, and Vodafone
Reasons businesses become MNCs
Increased sales/market share, to spread risk, cheaper production costs, economies of scale, avoid barriers to trade by producing inna c out ray rather than exporting to it, potential government grants
Key factors MNCs need to take into consideration
Promotional strategies, modification, pricing, laws
Positive impacts of MNCs
Creation of wealth and jobs, size and scale of operation, large profits used for research and development, ensure minimum standards, outsourcing of production
Negative impacts of MNCs
Profit at the expense of the consumer, tax avoidance, market dominance, pushing local firms out of business, pollution, ‘sweat shop labour’ outsourcing for cheaper labour costs
