External Influences - Global Context Flashcards
Define globalisation?
process which countries and economies have become more interconnected OR the world coming together to trade in each other’s markets
what are the advantages of globalisation?
- economies of scale
- reduction in monopolies
- reduce poverty
- spreading risk
what are the disadvantages of globalisation?
- takes time and money
- language/culture barriers
- interdependency on country’s employees
- environment, ethics and economic factors
- product may not be suitable in new countries
what factors facilitate globalisation?
- reduction in trade restrictions
- ease of transportation
- improvement in infrastructure
- internet/e-commerce
- communication technologies
- rise of multinationals
define multinationals
a business that has operations in one or more country (must have a facility in another country)
what is the difference between a multinational and an international business?
multinational operates in another country, but internationals just sell to other countries
what are the advantages of multinationals
- economies of scale
- take advantages of lack of legal constraints
- enter new markets where less competition exists
- take advantages of low wages
what are LEDCs?
Less Economically Developed Countries
what are MEDCs
More Economically Developed Countries
what are the positive effects of multinationals for LEDCs?
- provides employment opportunities
- equips local people with skills
- investment in local infrastructure
- utilisation of local resources
what are the negative effects of multinationals for LEDCs?
- low wages
- low skilled jobs
- unsafe working practices
- pollution and health worries
- child labour affects education
- local businesses out of market
- profit goes back to home country
what are the threats of globalisation to the business?
- lower labour costs may damage reputation
- reduced domestic efficiency as businesses in developing countries begin to produce themselves
- lack of local knowledge/culture threatens global growth
what are the opportunities of globalisation?
- new markets (high income?)
- move production into countries with low labour costs
- investment opportunities
