Factors Affecting Globalisation

Question 1

What do systems include?

Answer 1

Systems include ways of working, procedures and methods of organization that allow a particular function to be carried out, e.g. the just - in - time manufacturing system is a way of making products in response to the demand for them. Since the 1940s, many new systems have been introduced to make it easier for flows of information, capital, products, services and labor to cross national boundaries

Question 2

What has technology used for information done?

Answer 2

The technology used for information, communications and transport has advanced rapidly. For example, the Internet allows people from all over the world to access information, and aeroplanes allow people and goods to be transported around the world swiftly and efficiently.

Question 3

What was trading like before WW2?

Answer 3

Before the Second World War, most relationships between countries involved one country losing and another gaining. Nowadays, relationships are based on trade and common rules - these allow everyone involved to gain

Question 4

What does the global financial system do?

Answer 4

They govern the flow of capital between countries

Question 5

What are Financial systems based on?

Answer 5

Financial systems are based on companies called investment banks. The main role of investment banks is to help companies raise capital by selling shares on behalf of those companies. People or groups who buy shares are called investors, and they receive a fraction of the profits that the company makes.

Question 6

What happened in the 1980’s that made the financial system more global?

Answer 6

Information technology, such as the Internet, allowed investors greater access to information. Investors and investment banks could easily find out whether a company was doing well or struggling, and make an informed decision about whether to invest.

Question 7

What did invest banks create?

Answer 7

Investment banks created new financial products that made foreign investment less risky.

Question 8

What did governments around the world do?

Answer 8

Governments around the world undertook a process called financial deregulation, where they relaxed rules about what banks were allowed to do.

Question 9

What is Financial deregulation?

Answer 9

Financial deregulation included allowing banks to charge people more for their services, as well as letting banks invest in a greater range of businesses.

Question 10

What does Financial deregulation also include?

Answer 10

Financial deregulation also involved removing barriers to capital coming in and out of a country, making it easier for investment banks to buy and sell shares and other products across the world.

Question 11

What did changes in 1980’s led to?

Answer 11

These changes led to a greater range of companies getting involved in finance - e.g. commercial banks also began selling shares. It also enabled investment banks to take on a greater number of services, such as exchanging currencies between countries to allow them to trade across national borders.

Question 12

What is it like today?

Answer 12

Today, investors, banks and other companies are all over the world are part of the global financial system. The decisions of banks or investors in one part of the world can affect a company on the other side of the world.

Question 13

What is Trade is primarily regulated by?

Answer 13

Trade is primarily regulated by countries’ governments, who control which products they let into the country and at what price. Controls include tariffs (taxes on products coming into the country), non - tariff barriers (e.g. rules on the quality of products coming into the country) and the banning of certain products (e.g. illegal drugs).

Question 14

What does controls do to trade?

Answer 14

Controls make it more expensive for companies to sell their products abroad, as well as for consumers to buy them.

Question 15

What is done to make trade cheaper?

Answer 15

To make it cheaper, countries can enter into a trade agreement. Trade agreements act like contracts country agrees to remove controls in exchange for the other country doing so. This benefits both countries’ companies and consumers. Trade agreements between two countries are called bilateral trade agreements.

Question 16

What are Multilateral trade agreements?

Answer 16

Multilateral trade agreements are trade agreements between several countries to remove tariffs and other controls. Multilateral and bilateral agreements together make up the global trade system.

Question 17

What is the Global trade system govern by?

Answer 17

by the World Trade Organization ( Established in 1995, the WTO sets rules on how countries can trade with each other, e.g. to stop countries imposing unfair tariffs on each other’s companies. It also acts as a forum for countries to negotiate trade deals with each other and settle trade disputes. one

Question 18

What has Improved transportation systems done?

Answer 18

Improved transportation systems (e.g. high-speed rail networks, larger and faster ships and faster planes) have allowed people and products to get to places around the world more easily than ever before.

Question 19

What has Uniform metal containers allowed?

Answer 19

Uniform metal containers (known as shipping containers) were introduced in the 1950s - this allowed more goods to be loaded onto ships at once and transferred straight onto other forms of transport, e.g. trains. This has made it easier for goods to be moved quickly and cheaply around the world.

Question 20

What has communication satellites allowed?

Answer 20

Communications satellites were first launched into Earth’s orbit in the 1960s. They allow relatively cheap wireless communication between two devices, regardless of where they are. This means even people and companies based in rural or remote areas can access the Internet and communicate with others.

Question 21

What have optic cables allowed?

Answer 21

Optic fiber cables use signals of light to transmit more information than any other cable. They allow fast communication between two devices, allowing almost - instant communication between two people or companies.

Question 22

What has happened over the last 20 years?

Answer 22

Over the past twenty years there has been a significant growth in software that allows free communication from anywhere in the world, e.g. email hosts, text messaging services and video messaging services.

Question 23

What has increased companies Efficiency?

Answer 23

Management

Question 24

What does making supply chains global effective?

Answer 24

Companies’ supply chains have become global - a company’s supplier may be in a different country to their factories, which is in a different country to their research and development departments.

This allows - companies to minimize costs.

Question 25

What can Large companies benefit from?

Answer 25

Large companies can benefit from economies of scale.

Question 26

What to larger companies do to keep costs down and keep the advance?

Answer 26

The average cost of making an item is usually high if they make a limited number They reduce the average cost of making each item by purchasing specialized equipment and using production lines. buy raw materials at a lower price as they buy in bulk. This gives large companies an advantage over smaller companies.

Question 27

What is Outsourcing?

Answer 27

Outsourcing is when a company pays another company to do work that in the past may have been done in - house, usually to save costs. E.g. Rather than developing its own call center, a company might pay another company to take on these services. Cheap labor costs mean many companies choose to outsource abroa

Question 28

What have working practices done?

Answer 28

Companies’ working practices have also changed. E.g. casual and temporary contracts allow companies to take on workers as and when they are required - they don’t have to pay them a fixed yearly wage, so they save money.

Question 29

What does globalisation create between countries?

Answer 29

Globalisation creates new trading relationships between countries . By forming trade agreements, countries become interdependent - if two countries need each other to buy and sell their products, it would not be in their interests to be at war with one another. This means trade makes war less likely.

Question 30

What does countries working together allow?

Answer 30

By working together, countries are able to improve security. E.g. The North Atlantic Treaty Organization (NATO) was founded by several countries in 1949, with the aim of providing security during the Cold War - by grouping together, they were able to deter common threats.