A2 2 Globalisation Flashcards
four factors that affect globalisation
increased in trade and the number of transations taking place - sales beinmg achieved
increased in the movements of capital if investment
increased in the movements of people across international borders for work
increased in availability of knowledge, particulary through the internet
facts that contribute to speeding up process of globalisation
trade is no freer on a world level than it has ever been as trade barroers between countries are reduced
telecommunications have improved in all areas from, the use of mobile phones to teleconferencing and the internet. in developing countries new mobile phone networks have opened communications to all- no longer nessessary to install expensive landline systems
there are huge economies of scale possible now in transport of freight by air and sea- brexit- length of time it takes to import products
charateristics of globalisation
greater trade on goods and services between countries
development of global brands which are recognised throughout the world
spatial division of labour- sourcing and off-shoring of production and support services as production supply-chains has become more international
higher levels of labour migration within and between countries
a fast changing shift in the balance of financial power from developed to emerging economies and markets
increasing spending on investment, innovation and infrastructure across large parts of the world
supports of globalisation believe:
it brings health and development to many counties- investment, jobs and training
it has made billions of people around the world better off in both financial and material ways
it is argued that it binds counties together and helps maintain peace and stability
news and ideas are spread quickly and easily around the world so that we know about events such as natural disasters
critics of globalisation believe:
unhealthy dominance of US and European corporate culture across the globe- multinational corporations mioght impose its ideas, morales and ethics on local populations in less economically developed countries
a process by which rich western economies exploit less well-endowed nations
images of low paid sweat shops workers symbolise all that is wrong with globalisation
main drivers of globalisation
containerisation- costs of ocean shipping- lower costs helps to bring prices in the country of manufacturing clser to prices in the export market- makes it more contestable in an international sense
technological change- reducing the cost of transmitting and communicating infromation- monolpoly
economies of scale- ability top produice and sell a greater output means that forms can benefit froim economies of scale- i.e. their average costs of production are reduced
differences in tax systems- desire of corporations to beefit from lower unit labour costs has encouraged counties to adjust their tax systems to attract foreign direct investent
less protectionism- old forms of non-tariff protection e.g. import licencing and foreign excahnge controls have gradually been dismantled. borders have opned and average tariff levels have fallen- rise in protectionism as countires have stuggle4d to achieve growth after global financial crisis
disadvantages of globalisation
growing inequality leading to political and social tensions
threats to the global commons e.g. irriverable damage to ecosystems, land degradation, defrostation, water sarity
macro-economic fagility- external economic shocks in region can rapidly spread to other centers
trade imbalances- leadinjg to cvalls for protectionism and a move towards countries using managed exchange rates
higher structural unemployment in countries where production has shifted to lower labour costs nations
less cultural diversity as global brands dominate
why is international trade benefical?
variety- trader enabes countries to obtain products they cannot themselves or could produce at a vast resource costs
economic efficiency- the development of exports markets can enable a business to gain economies of scale. also, foreign firms competing in the domestic market helps force UK firms to be efficient
growth- access to millions of new customers creates the potential for buisnesses and therfore the economy to grow
international co-operation- trade leads to co-opertaion rather than a conflict as nations become dependent on each other
specialisation- a country can specalise in what it does bestr i.e. what its resources are most suitable for. the UK as a post-industial country speaclises in high grade engineering parts, pharmaceutical products and plastics
why do NI firms engage in internation trade?
technology
global contact
gloablisation of markets
reduced marketing costs
creation of new market oppourtunites
growth in business revenue streams
advantages of globalisation
declining barriers to trade and increased investm,ent facilitate greater prosperity, stimulate economic growth
job creation and increased income levels for staff and realted stakeholders
increases wealth and efficiency
generates labour in developed nations
advances developing nations economies
disadvanatges of globalisation
job losses are suffered in industries facing competiton from foerign competitors
download pressure is exerted on the wage levels of unskilled workers. critics argue that the decline in unskilled wage rates is due to the movement of low wage manufacturing jobs off-shore and a corresponding reduction in demand for unskilled workers
enviornmental degedation- a concern in this respect that trade encourages firms from advanced nations to move manufacturing facilites to less developed countries- that lack adequate regulations to protect labour forces from enviornment abuse
meeting labour and eviornmental regulations in developed countries put such business at a cost disadvanatges, since there costs are significantly greater in less developed countries
wealth gap- it is agrued that the gap between rich and poor nations of the world has increased
reasons of global marketing
population and size of market
economic cycles
consumer law
spreads risk
tax/financial incentives
acquire resources or secure access to resources
advanatges of e-business
available 24/7
global exposure
economies of scale
corporate image
ssaves on expensive showrooms
disadvantages of e-business
competition is increased
costly to maintain an attractive website and efficient and reliable transport systems msust be in place
the business must be aware of differing culture of customers
business must understand different legl requirements in different countries. failure to adhere to legal requirements could result in hefty fines and a damaged corporate image. reseaching different time-consuming
Differences in oversea marketing
legislation- business going overseas need to make themselves aware of the laws of those countries so that they do not run into any problems- e.g. difference in laws of safety of toys
cultural differences- need to be aware of different cultures within each global market- lead to misunderstanding, hostility- e.g. colours of packaging
politaical climate- some countries are used to freedom of speech e.g. alchol is strictly prohibited in some countries
religions/ cultural differences- could have impact on advertising, can be easy to offend different countries
language differences- translaions will need to be made by someone who speaks fluently. a name for product that is acceptable here may not be in other countries- standardisation of the marketing mix
tariffs and quotas
