Globalisation Flashcards
Define Globalisation
Globalisation is the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, as well as flows of investment, people, and information.
What is the nature of globalisation
The nature of globalisation revolves around a multinational corporation that is located in different parts of the world with the same aims and objectives.
These different parts of the business will pull in resources to the main business and will then use those resources to work on their aim (mainly profits, market share and sales).
Define Developing markets
Developing markets are those where businesses believe that there is potential to sell products or services at a profit (most likely in economies which are starting to develop).
What are the factors that contributed to globalisation
Reduction of international trade barriers (cheaper for MNCs)
Political change
Reduced cost for transport and communication
The internet and global technology
Consumer tastes (consumers no longer restricted to national stereotypes more developing markets)
What is the effect of globalisation in Wales and the UK
Increased competition, particular products from emerging markets can price penetrate to gain market share
Increased competition in Wales has meant many traditional industries such as steel and coal have been affected by cheaper imports.
Cheaper imports mean Uk domestic firms must become more efficient
What are the strategies used by businesses to achieve global growth
Global branding creates brands which are recognised across the world, businesses benefit from economies of scale.
Use of the internet, much more accessible
Use of outsourcing part of production
What are the benefits for businesses operating in a global market
New markets mean expansion and potentially increased profits
An extension strategy can be used for products that are mature or even in decline.
As emerging economies tend to be rich in natural resources, businesses tend to be rich in natural resources, businesses can buy these resources for cheap.
Foreign countries are willing to offer incentives such as tax breaks in order to gain multinational companies to locate there.
What are the drawbacks for businesses operating in a global market
New markets and particularly emerging economies can be difficult and costly to enter (tariffs)
Potential for insufficient workers available with the required skills, leading to training costs.
Products may need significant re-design and re-marketing to meet the needs of the local customers.
How do businesses adapt their products for local markets
This includes changing the brand identity to reflect local customs and lifestyles, ensuring the product is compatible with local rules and regulations and finally make sure manufacturing techniques meet social requirements.
How do businesses adapt their marketing for local markets
Glocalisation –the business thinks globally about its overall marketing strategy
A business uses global marketing, aims to find a fit between individual business objectives and its unique market position.
What are the benefits of the impacts of globalisation
Encourages businesses to innovate
Increased competition
Access to new markets
Spreads risk
Lower unemployment
What are the drawbacks of the impacts of globalisation
Local businesses are more likely to be driven out of business by larger foreign rivals.
May prevent competition if global businesses with dominate brands and superior technology takes charge of key markets.
Negative effects on local firms (more employed to MNC due to better pay
Rising inequality in income and wealth
Vulnerable to external economic shocks (more sensitive to outside events of their connected operations.
Define multinational company
(MNCs) Firstly multinational companies are businesses which operate across a number of countries
Why do MNCs exist
Producing goods closer to target markets reduce costs, such as transport costs and improves market research
Significant savings in costs of production can be made particularly in emerging economies
Operating in another country may also help avoid protectionist measures (tariffs etc)
What are the benefits of operating as a MNC
Exploiting economies of scale
Increase brand awareness
Reduced costs e.g labour, transport
