Globalisation Flashcards
what is globalisation
its the process of growth in world markets
- through a process of integration where it is possible to trade in a global market in the same way as one would in a domestic market (trading in your own global village)
main causes of globalisation
- containerisation + transport infastructure
- communication technological change > internet/e-commerce
- EOS > the rise of the multinational + the desire to get bigger
- opening up a global financial markets/ removal of capital controls - the global expansion and opening up of money markets
- differences in tax systems means it attracts FDI (firms being drawn to places that dont pay tax such as Luxembourg)
- less protectionism/trade liberalisation = the removal of trade/tax barriers
- the rise of the multinational
the outcomes of globalisation
:) greater trade within regions
:) an increase in transfers of capital
:) the development of global brands (coke)
:) the ‘spatial division of labour’ = outsourcing, offshoring of production and support services
:) labour migration
:) new nations joinging the world trading system
:) shift in balance of economuc + financial power from developed to emerging economies
:) increased infastructre, innovation and investment spending
:) more interdependent world economy as it becomes more reliant
:) more complex/complicated supply chains
how does a firm benefit from globalisation
- fewer legal constraints
- EOS
- lower wages
- more customers/possible globla branding
how much a buisness/market is affected by globalisation
- the impact of global competition
- who youre selling too/customers = local or abroad
- your supply = raw materials etc.
multinational firms
- operate on a global scale
- sell to most countries
- those wanting to operate on a global scale must have a global strategy
^^^ build competitive advantage + best locations to sell and produce products
move to developing countries so they can take advantage of factors i.e. lower wages, fewer legal cnstraints, governemnt grants for setting up there, opportunities to sell
what are emerging markets
refers to the developing countries that are achieving rapid growth and industrialisation
quickly achieving the status of developed markets
India, China or BRIC + tiger economies
emerging markets opportunites + threats
OPPORTUNITIES
- new markets with higher disposable income
- opportunity to move production and take advantage of new consumers
- investment opportuntiies for new consumers
THREATS
- lower labour costs and ability to produce more cheap than in MEDC
- fewer exports from MEDC as the emerging econmies can rpdocue for themselves
- greater interdepence from emerging economies
globalisation advantages and disadvantages
- incoming investment brings investment, jobs + training
- news and ideas spread quikcly + easily around the world so that we know about events etc. on a world scale
- LEDC money can be used as aid to provide clean water, services, education and improve their quality of life
X - only the benefits are felt by the MEDCs
X - poor working conditions, poor envirnomental concern
X - the multinational corporation might impose its ideas, morals and ethics on local LEDC populations
X - always a fear that jobs will be lost to LEDCS
multinational benefits
- provide employment
- better infastructure
- training
- consistency
- multipler effect on LEDCS improving their standard of living with funding
- more awareness of global issues
- better lead on ethical issues and CSR
multinational problems
- exploiting resources environment, works with little control and regulation
- ‘crowding out’ local indsutry = lack of independent support
- impose their own ethics
- profits sent back not invested = repatriation of profits
- new loss of jobs in developing countries
- homogenisation as its all being the same
