Global Business

Question 1

What is Globalisation?

(Describe)

Answer 1

• Companies who operate internationally
• World’s economies working together = producing goods and serivces
• Helping to create more wealth in developing countries but hasn’t closed the gap between the pooriest and richiest

Question 2

How does Globalisation have a positive impact?

(7 bullet points made)

Answer 2

• Raw materials in developing countries = cheaper
• Increased customers = more sales
• Bulk buying and high volume production = cost saving
• cheaper locations in developing countries due to cheap land
• vertical integration = helps to remove the middle man and increases control over operations
• New management techniques discovered = improves efficiency and effectiveness
• New production technigues learned = reducing waste

Question 3

How does Globalisation have a negative impact?

(6 bullet points made)

Answer 3

• leaves strong carbon footprint = bad envirnomental reputation
• Senoir managers visisting abroad organisation = time away for office and travel costs.Developed technology can help but better to be in person
• No knowledge of local market = finding it difficult to react to changes
• Increase in global companies = increased competition
• Customers can browse the interent and compare products more easily = higher consumer expectation
• Challeneges of multicultural societies = may need different products and marketing messges

Question 4

What are Multinationals?

(Describe)

Answer 4

• Any company that has operations in two or more countries and has a home base
• Reseach and development, finance and marketing = carried out on an international basis but still have a definate home base

Question 5

Multinationals

Give an example

(5)

Answer 5

• AG BARR = manufactured in Scotland [home base], England and Rusia
• Range Rover
• Coca-Cola
• Unilever
• BP

Question 6

Multinationals

What are Transnationals?

(Describe)

Answer 6

• Operates internationally but doesn’t have a clear home base
• Make decsions depending on each countires local needs

Question 7

TNC

Give an example

Answer 7

News Corporation - owns Tv companies e.g, Sky and newspaper outlets e.,g The Times but has no clear HQ

Question 7

MNC’s

What are the reasons for increased size/number of Multinationals

(6 bullet points made)

Answer 7

• Large scale = increased market share and dominance
• Developing countires don’t have minimum wage = lower labour costs = higher profit margins
• Lower land and raw materinal costs = reduces production costs in developing countires
• Avoid monopoly legislation in home country. Exists –> ensure doesn’t grow so big = exploit customers. Expand into other countires = registered in The Uk
• Avoid stagnant sale in home country = setting up in foiegn ciuntires if they have growth potential
• Benefit from government incentitives = helps generate employees

Question 8

Multinationals

What is the POSITIVE impact on the home country?

(4 points made)

impact = bold

Answer 8

• Foreign subsidary = demand for home country goods - increased employment
• Inwared flow of foriegn earnings = improved balance of payments
• Return of profits to the Uk = increases spending power
• Increased jobs in Scotland HQ if compant expands = encouragment to Britions to stay in education

Question 9

Multinationals

What is the NEGATIVE impact on the home country?

(5 points made)

impact = bold

Answer 9

• Reduction in maufacturing or serivce jobs = transfer to cheaper countires e.g call centres
• Job loses from transfer = many effects e.,g, lower spending power and reduction in tax revenue
• Need increased training and skills develempot to redeploy workers = requires gov intervention e.,g more courses and apprenticeships
• Investments abroad = negative effect on balence of payments
• Grow in size/power = loss of control

Question 10

Multinationals

What is the POSITIVE impact on the host country?

(4 points made)

impact = bold

Answer 10

• For local people = increased employment oppurtunites which leads to higher living standard
• Increasee range of goods and services to local peple = consumer has more choice
• Better infrastructure = may imporve networks/ roads is they are insufficiant; therefore, benefitting the whole community
• Technology transfer = knowledge and expertise bewteen locations; therefore, leads to operations becoming more efficient e.,g JIT from Japanense manufactures