globalisation module bro last ever fucking business shite i have to do thank fuck man Flashcards
postive impact of globalisation
Access to cheaper raw materials as the cost of materials in developing countries is often less
Increases access to customers, increasing sales
The business can benefit from cost savings through bulk buying and high volume production
Provides cheaper locations as developing countries often have cheaper land.
Allows organisations to control production from start to finish helping remove the middleman and increase control over operations
New management techniques can be discovered and implemented helping improve efficiency and effectiveness,
New production techniques can be learnt, reducing waste
negative impact of globalisation
Global Business leaves a strong carbon footprint which can give mncs a bad environmental reputation
Increased travel for senior managers visiting operations abroad means time away from the office and an increase in travel costs. Technology can help but is often necessary to visit other countries.
Organisations may find it difficult to react to changes in the local market if they have no local knowledge
Increased competition as a result of the increase of global companies setting up in the uk and online
Higher consumer expectations as customers can now browse the internet and compare products very easily
Challenge of multicultural societies as businesses move into new areas of asia and america - may need different products and marketing messages,
advantages of multinational, probably wont come up as its fucking higher business not advanced why the fuck is this in the notes?
Increased market share and dominance - existing on a larger scale allows for market dominance
Take advantage of lower labour costs - developing countries don’t have minimum wage costs so wages tend to be lower - higher profit margins can be made
Take advantage of lower land and raw materials costs - much cheaper in developing countries and reduces production costs
Avoids monopoly legislation in its home country - legislation exists to ensure businesses do not grow so big that they can exploit customers - if they are restricted in the UK, most will expand into other countries to help them grow
Avoids stagnant sales in home country - when sales level off, some businesses set up in a foreign country where there is more growth potential
Benefit from government incentives - government can offer incentives to set up in their country to help generate employees.
negative impacts of multinationals on home country
Manufacturing and service jobs may be outsourced to cheaper countries, leading to job losses.
Job losses reduce spending power, lower domestic sales, decrease tax revenue, and increase benefit payments.
Redeploying workers requires more training and government support, such as additional college courses and apprenticeships.
Foreign investments can negatively impact the UK’s balance of payments.
As companies grow, they may lose control over operations and decision-making.
positive impact of multinational on home country
Foreign subsidiaries can boost employment by creating demand for home country goods.
Inward foreign earnings improve the UK’s balance of payments.
Repatriated profits increase spending power in the UK.
Company expansion can create high-income managerial jobs, encouraging people to stay in education.
postivie impact of multinationals for host country
More jobs for local people improve living standards, boost spending, and increase tax revenue.
A wider range of goods and services gives consumers more choice.
Improved infrastructure benefits the whole community, enhancing transport and communication networks.
Technology transfer increases efficiency, as expertise from the home country improves operations.
negative impact on host country for multnational bro
Job creation is often limited to low-skilled, low-paid positions.
Smaller local businesses may struggle to compete, leading to closures and job losses.
Multinationals may leave once incentives end, showing little loyalty to the host country.
Government spending on business incentives can reduce funding for public services.
advantage in Investing Directly in NEW Production Facilities
positive
Purpose-built facilities allow companies to choose any location and tailor buildings to their needs.
Standardized facilities worldwide ensure consistency and easier management.
Establishing a new site from scratch makes it easier to instill a corporate culture without existing workplace habits.
disadvantages of investing directly in new production facilities
Setting up a new facility takes time due to planning permissions and employee training.
High costs are involved in construction, technology installation, and potential infrastructure development.
advantages of Buying Over an Existing Business Abroad (Acquisition)
Existing businesses provide local market knowledge and cultural expertise, reducing expansion risks.
An established reputation and customer base can lead to immediate sales and profits.
Previous investments lower the need for additional spending on infrastructure and development.
Acquiring a competitor reduces market competition and strengthens market position.
disadvantages of Buying Over an Existing Business Abroad (Acquisition)
Purchasing a well-established business can be extremely expensive.
Employees may resist changes and struggle to adapt to a new corporate culture
advnatges of joint venture
Joint ventures allow companies to enter markets they couldn’t access alone.
Partners share expertise and resources, increasing the chances of success.
Less reliance on external finance avoids interest payments or shareholder dilution.
Risk is reduced as the financial burden is shared between companies.
disadvantages of joint venture
Finding a suitable joint venture partner requires significant time and research to align with company objectives.
Differences in management styles and organizational cultures can create conflicts, making partner selection crucial.
Partners’ objectives may change over time, leading to potential disagreements.
Unequal contributions in expertise, investment, or assets can create imbalances and disrupt operations.
transfer pricing
Transfer pricing is a technique multinationals use when declaring profit in order to reduce their tax liability.
A multinational will declare low profits in a country with high tax rates/high profits in a country with low tax rates.
Multinational companies transfer goods and services between their parent company and foreign operations.
These goods may undergo further processing before being sold, such as BP refining crude oil from Mexico in Indiana.
MNC subsidiaries often specialize in different production stages to achieve Economies of Scale.
transfer pricing effects
This has an effect of lowering profit margins in high tax countries so less tax is paid in that country
It increases profit margins in the low tax country
As the amount of tax paid in the low tax country is relatively small compared to the high tax country, the overall tax has been minimised
trading with china advantages
Cheaper raw materials and efficient production methods, like lean production, reduce costs.
China’s low wages make labor significantly cheaper than in the UK.
Advanced technology keeps production costs low and efficiency high.
With a population of 1.4 billion, China provides a vast market for UK exports.
The Belt and Road Initiative improves global trade and infrastructure.
The rise in Chinese students in UK universities boosts education exports.
Over 70% internet coverage drives growth in China’s online sales.
China is the second-largest R&D spender, providing high-quality goods for UK consumers.
costs of trading with china ling lang
UK businesses struggle to compete with China’s lower prices, risking reduced profits, downsizing, or closure.
Cheap Chinese imports can flood UK markets, making competition difficult.
UK firms are vulnerable to Chinese takeovers due to China’s strong buying power.
Cultural differences require specialist staff, Mandarin fluency, and adaptation to time zones and traditions.
China’s lenient regulations can be seen as unethical, with concerns like child labor.
High transport costs and long shipping times affect UK importers.
Environmental concerns over carbon footprint may reduce sales for UK businesses.
Intellectual property violations in China can harm UK brands and their reputations.
china manufacturing industry changes
China is shifting from low-cost manufacturing to high-tech industries like electronics and robotics.
The “Made in China 2025” initiative aims to lead in electric vehicles and AI.
Automation and robotics reduce labor dependency, increasing efficiency and productivity.
Stricter environmental regulations have led to factory closures and relocations.
Heavy investment in R&D aims to reduce reliance on foreign technology and advance green energy.
Economic growth is shifting from exports to domestic demand, driven by a growing middle class.
The U.S.-China trade war and tariffs have disrupted supply chains, pushing companies to diversify production to other Asian countries.
