benefits of globalization and costs Flashcards
developed countries
disadvantage of this
Consumers have benefited from globalisation as there has been an increase in the range of goods and services for them to purchase. Competition should also lead to an increase in the quality of the goods and services, as well as innovation within those markets, which also leads to better products.
However, across the world, there are generic high streets filled with big brand names as smaller firms cannot compete against these huge companies.
Consumers’ incomes have risen everywhere due to globalisation, there has been a rise in demand forscarce resources. As demand increases, this leads to a rise in prices (as we have seen with commodities such as oil and copper) which then makes people worse off in real terms.
benefits of globalisationfor developed countries
Consumers are able to visit more places and experience new cultures, and this can be of benefit to society as a whole
Consumers have benefited from globalisation as there has been an increase in the range of goods and services for them to purchase. Competition should also lead to an increase in the quality of the goods and services, as well as innovation within those markets, which also leads to better products.
Producers are able to set up almost anywhere in the world and this means they can find the workerswith the lowest wages plus governments with the lowest taxes and environment regulations in order tolower their costs and boost their profits.
Producers also benefit from increased markets as they can expand across the globe and this also allowsthem to benefit from economies of scale, which reduces their average costs, which should increaseprofits. They can also learn quickly from other producers as ideas spread rapidly. For example, whenJapanese companies moved to the UK, they brought with them a host of new ideas about stock control(JIT or Just In Time), production methods (lean production) and management systems (Kaizan) that weresoon being used by UK firms.
developed countries
disadvantage of this
They might also benefit from the increased amount of immigration that has occurred across the globe.This has meant ‘skills gaps’ have been filled in the developed countries and this has suppressed businesscosts and therefore lowered prices.
However, increased immigration does mean that demand has increased for local goods and services and this can be problematic for consumers as prices will rise accordingly.
