6.1 - Globalisation Flashcards
Factors fuelling globalisation:
- Travels between countries is easier
- Communication is faster
- Many conduct business in more than one country
Globalisation definition
The process which allows businesses to trade all over the world.
What is the International Monetary Fund?
An international body comprising of 188 countries that aims to promote international co-operation on exchange rates and other economic matters
Disadvantages of globalisation:
- One size fits all solution - may not take into account the way in which people like to do things in their own country
- Supports increased offshoring
- Led to the emergence of very large multinational companies, which can result in local businesses failing
Example of financial services providers trying to avoid the impression that they do not adapt to local needs
HSBC used to describe itself as ‘the world’s local bank’
What does increasing globalisation mean for UK providers?
- More competition from overseas providers
- They may decide to expand overseas
What does increased competition between providers mean for consumers?
Better services and lower prices
Outsourcing definition
The process of one provider paying another to carry out certain functions
Benefits of outsourcing to the provider:
- It can focus on the core functions of the business
- May bring cost savings as the company offering outsourced services may be able to achieve economies of scale through its focus on only a single process
Offshoring definition
The practice of moving some of a company’s operational functions to overseas locations
How does offshoring result in lower operational costs?
By relocating operations to countries such as India where wage costs are lower
Disadvantages of offshoring and outsourcing:
- Customers can sometimes feel as though they are talking to someone from a company with which they did not expect to be dealing
- Employees can become redundant
