Component 3 - Globalisation Flashcards
Explain : What is meant by Globalisation
Globalisation - The integration of the worlds economies by process of increasing interconnectedness and interdependences.
Explain : The factors that have contributed to globalisation including
1) communication technologies
2) liberalisation of trade
3) Internet,
4) cost of transportation
5) consumer tastes
1) Communication Technologies - Technological development has significantly increased the speed and ease of communication, allowing for global communication and networking.
2) Liberalisation of trade - Reductions in Protectionism, to promote trade and investment across borders, thus leading to the growth of global markets.
3) Cost of transportation - Containerisation and air travel, have lowered the cost and time of transportation.
4) Consumer tastes - As Consumers have become more globally connected, they have developed similar tastes and preferences, leading to the growth of global brands and the standardisation of products and services across borders.
The effect of globalisation on businesses and their stakeholders including
- Increased Competition
- Opportunities for Growth
Increased competition - Firms are exposed to more competitors, increasing the pressure to keep up with the global standards.
Opportunities for Growth - New markets for businesses to explore means Businesses can expand operations.
The different strategies that businesses might use in order to achieve global growth including
- Global branding
- External growth
- Choice of target markets
1 ) Global Branding - Developing a strong brand across countries means businesses can establish presence in new markets. This can be achieved by investing in Tailored Marketing.
2 ) External growth - Expanding through Mergers and Acquisitions or forming strategic alliances with foreign Firms can help the business penetrate new markets.
3 ) Choice of target markets - Firms select the most appropriate target markets for their products or services, By assessing factors such as market size, growth potential and consumer preferences.
Explain : The benefits and difficulties for UK businesses of operating in global markets
Benefits:
1) Access to new markets
2) Economies of scale
Difficulties:
1) Cultural differences
2) Legal and regulatory challenges:
Explain : Explain Localisation with an example.
localisation - Tailoring products and services to the unique preferences and customs of the local market. For Example, different countries are custom to different food tastes/ norms.
Explain : Localisations affect on Marketing Activities and Working practices
Marketing Activities - This may involve translating advertising materials or using different advertising channels.
Working practices - Changes need to reflect local customs and regulations. For example, A Religious country may require Prayer Rooms and breaks at certain times.
Explain : What is meant by a multinational company
A Multinational Company (MNC) - A Business that operates in multiple countries, with a home base in one country.
Explain : 3 Reasons why MNC operates on a global Scale.
1 ) Economies of Scale - Operating in multiple countries allows them to reduce average unit costs.
2) Diversification - Reduces Risks and takes advantage of different business cycles in different countries.
3 ) Resources - They may gain access to resources or technologies that are not available in their home country.
Evaluate : The strategies that businesses use to
achieve global growth
( DUPLICATE )
Global branding: Establishing a strong brand identity that is recognizable and consistent across different markets.
External growth: Merging with or acquiring other companies to gain access to new markets, resources, and technologies.
Joint ventures: Collaborating with local partners in foreign markets to share knowledge, expertise, and resources.
Licensing and franchising: Allowing other companies to use a brand or product in exchange for royalties or fees.
Choice of target markets: Identifying and targeting specific markets with the greatest potential for growth and profitability.
Product adaptation: Modifying products to meet the specific needs and preferences of local consumers.
Marketing adaptation: Adapting marketing strategies to suit local cultures and consumer behavior.
Operational adaptation: Adapting business practices and processes to comply with local laws and regulations, as well as to take advantage of local opportunities and resources.
The effectiveness of these strategies will depend on a variety of factors, such as the nature of the business, the characteristics of the target markets, and the competitive landscape. Each strategy also carries its own risks and challenges, such as cultural differences, legal and regulatory issues, and the need for significant investment and resources. Therefore, businesses must carefully consider the pros and cons of each strategy before deciding which one(s) to pursue.
Evaluate : The impact of globalisation on UK businesses
and their stakeholders
Evaluate : The decision of a business to operate as a
multinational company
Evaluate : The impact of multinational companies on the countries in which they operate”
