impact of globalisation on global companies

Question 1

Briefly describe the idea of ‘glocalisation’.

Answer 1

This is when businesses have the intention of distributing their goods/services on a global scale, but also ensure they meet the demands of their local consumers.

Question 2

What is ethnocentrism?

Answer 2

This is the idea of comparing other cultures with the qualities of the domestic culture.

Question 3

How would ethnocentric consumers be beneficial to domestic firms?

Answer 3

These types of consumers favour their domestic culture over any other, meaning they are less likely to buy from foreign firms thus reducing competition for domestic firms.

Question 4

What is a polycentric approach to business?

Answer 4

This is when global firms employ people from the host country in order to get a better understanding of the needs and want from consumers in that country.

Question 5

Give one cost benefit of advocating a polycentric approach?

Answer 5

It is cheaper to recruit an employee from the host country, due to low labour costs (especially if the host country is a developing one).

Question 6

Give one disadvantage of a firm operating in a different country with a different native language.

Answer 6

This increases the chances of inaccurate translation, which can lower the quality of the firm’s products and therefore adversely affect revenue.

Question 7

Describe the difference between mass markets and niche markets.

Answer 7

Mass markets address all consumers whereas niche markets focus on a small group of consumers and a specific product.

Question 8

Which market is likely to have a higher profit market: niche or mass markets? Why?

Answer 8

Niche markets because these products are specialised to a specific consumer group, and so firms will demand a higher price to compensate for this.