Globalisation

Question 1

Globalisation means…

Answer 1

Companies selling goods around the world instead of just their country of origin

Question 2

Factors that drive/have allowed the growth of globalisation are… X6

Answer 2

Technological change
Improve transportation
Changed consumer tastes
Deregulation in trade and capital movements
Economies of scale
Access to different resources

Question 3

How do technological changes drive the growth of globalisation? X2

Answer 3

Video conferencing and cloud storage makes it much easier for various parts of the company to talk to each other
What can be shared through computer systems which gives companies more freedom to choose their location

Question 4

How does improved transportation allow for the growth of globalisation? X2

Answer 4

Goods can be made from one place to another faster meaning suppliers worldwide can be considered
MNCs can be closer to the countries they are selling goods to which makes it cheaper and quicker to reach customers

Question 5

How does changing consumer tastes drive the growth of globalisation? X3

Answer 5

As tastes change consumers are more willing to try foreign products
Due to global advertisement and the Internet, consumers can see what’s available in other countries and try it
Companies can sell the same product on a larger scale due to increased brand awareness

Question 6

How does deregulation of trade and capital movements drive the growth of globalisation? X1

Answer 6

Growth in trading blocs like the EU and ASEAN Led to a reduction in trade barriers so there is less tariffs and quotas. This means MNCs can move goods and services more easily

Question 7

Tariffs means…

Answer 7

Cost to import or export goods

Question 8

Quotas means

Answer 8

Limits how much can leave or enter a country

Question 9

How does economies of scale drive the growth of globalisation? X1

Answer 9

Companies can produce a large scales and get lower costs if they buy in bulk

Question 10

How can access to different resources drive the growth of globalisation? X5

Answer 10

Operating globally allows access to new customers which increases brand awareness and demand
Being physically close to markets allows businesses to alter products to fit local demands as they are aware of local tastes
Access to labour could be cheaper due to low or no minimum wage
HOST governments may offer financial incentives to attract foreign companies to set up in an area
If the market is saturated at home, access to new markets may be a key driver in operating globally

Question 11

The factors of increasing importance of global operations are… X4

Answer 11

Markets
Stakeholders
Competitors
Reduced trade barriers

Question 12

Markets are a factor that increase the importance of global operations because…

Answer 12

Due to improvements in e-commerce, businesses can operate in the global market including emerging markets like ASEAN and China

Question 13

Stakeholders are factors that increase the importance of global operations because…

Answer 13

Operating on a global scale can improve dividends and increase share value

Question 14

Competitors are a factor that increases the importance of global operations because…

Answer 14

They will be selling and sourcing materials globally so it makes sense to follow in the footsteps to maintain the businesses competitiveness and market share

Question 15

Reduced trade barriers is a factor that increases the importance of global operations because…

Answer 15

Countries can concentrate on producing what they are best at an export the surplus without having to pay tariffs which increases international trade

Question 16

Benefits of globalisation on a business include…x6

Answer 16

E-commerce allows businesses to sell to the global market which increases the businesses customer base, potential sales and profit
Cadbury sells its products in many countries such as the UK Australia New Zealand and Canada which increases their demand an outfit due to selling in the global market. This means they can benefit from economies of scale which reduces unit costs.
Businesses may operate in a host country with lower corporation tax than their home country. This reduces their total tax bill and increases dividends
Globalisation allows businesses to be closer to role materials which produces transportation costs and carbon footprint which will gain the business a good reputation
Globalisation allows UK businesses to access lower labour costs due to low or no minimum wage in that country. This increases the businesses competitiveness
Globalisation allows UK businesses to be physically close to the markets that they sell in. This allows businesses to alter their products to fit local demands as they’re aware of local tastes which can increase profits

Question 17

Costs of globalisation on UK businesses include… X4

Answer 17

Shortages and supply chain problems can cause the price of foreign inputs to increase substantially. this means UK organisations will have to increase their prices are reduced their profit margins
UK builders using globally sourced materials will need to perform costly quality checks to ensure that they meet UK standards which will increase the time it takes to complete the project.
UK organisations may become too dependent on foreign supply chains. This means that external factors like the pandemic or wars can make it difficult to obtain supplies of materials which can cause production to stop and deadlines to be missed
If UK organisations are unfamiliar with local customs and can reduce the chance of success in international trade. Cultural differences between foreign managers and local employees can cause conflict and misunderstandings as different cultures could misinterpret information that could be offensive to the other resulting in a lack of productivity.