Week 9

Question 1

What is Globalisation?

Answer 1

 Globalisation is the term that describes the link between market, countries and regions around the world.
 Scope: It includes a wide range of factors, including trade, investment, technology, culture, and political systems.
 Impact: Globalization can lead to the spread of ideas, products, and cultural practices, but it can also result in challenges like cultural homogenisation and economic disparities.

Question 2

What is internationalization?

Answer 2

 Internationalization is the process by which organisations, businesses expand their operations or reach across national borders. It focuses on adapting products, services, and strategies to meet the needs of international markets.
 Scope: It often involves specific strategies for entering new markets, such as exporting goods, forming partnerships, or establishing subsidiaries abroad.
 Impact: Internationalization is more about the strategic decisions made by an organization to operate in different countries, often leading to increased market share and revenue.

Question 3

How is the economy a driver of globalization?

Answer 3

 In the business world the process of competition would drive firms to seek out these markets and force down prices by standardizing what was sold and how it was made in an effort to cut costs and to maintain profit.
 Firms may globalize because they have outgrown their domestic market. (e.g., IKEA, 411 stores in 49 countries in North America, Europe, Asia, and Australasia).

Question 4

How is the politics a driver of globalization?

Answer 4

Political
Political globalisation refers to the organization of different countries into trade blocs.
The development and growing influence of international organizations such as the UN or WHO means governmental action takes place at an international level.
Examples of trade blocs are the European Union, the WTO, G20 and G8.

Question 5

How is the technology a driver of globalization?

Answer 5

Technological
 Improvements in communications, and reductions
in transport costs.
 Internet and cheaper telephony make it easier not only for MNCs to control their foreign operations.

Question 6

How is the cultural a driver of globalization?

Answer 6

Cultural
refers to the interpenetration of cultures
which, as a result, means nations adopt principles, beliefs, and custom of other nations, losing their unique culture to a unique globalized supra-culture.
The globalisation of food is one of the most obvious examples of cultural globalisation such as McDonald’s, Coca

Question 7

What are main elements of globalisation?

Answer 7

International Trade
Foreign Indirect Investment and Capital Market flows
Foreign Indirect Investment

Question 8

What are international trades?

Answer 8

International trade means that countries become
more interconnected through the exchange of goods
and services; that is, through imports and exports.
Trade in services is around one-third of that in
goods.
Some economies like Germany are particularly
dependent on international trade.
UK is heavily dependent on customers in the USA
and the EU for sales of goods and services.

Question 9

What are Foreign Indirect Investment &Capital
Market flows?

Answer 9

Foreign indirect investment (FII, or portfolio investment), occurs where money is used to purchase
financial assets in another country (e.g., foreign stocks, bonds, or even currency).
UK financial institutions such as HSBC and Barclays often purchase bonds or company shares in
New York or Tokyo
Cross-border flows of money is migrant remittances.
Capital market flow is a broader term encompassing the movement of capital between countries
through various financial instruments, including stocks, bonds, derivatives, and currencies.

Question 10

Factors That Could Potentially Hinder
Globalization?

Answer 10

Government political & economic policies
Tariffs and subsidies, sanctions, shrinking trading blocks and increasing in nationalism
Foreign Aid (financial assistance to poor countries e.g., USA)
Controls on Capital (controls on inflows or on outflows of foreign direct and indirect investment).

Question 11

What are The role of multinational enterprises in the global economy?

Answer 11

 Economic Growth
 Global Trade
 Technology Transfer
 Cultural Exchange
 Market Access
 Investment Opportunities
 Regulatory Influence
 Sustainability Initiatives

Question 12

What are the Benefits and Costs of Globalization for Business?

Answer 12

The Benefits for Business:
Open markets to businesses that were previously excluded.
 Possibility of higher revenues and growth
 Give business access to cheaper supplies (e.g., raw materials, or other factors of production, such as labour).
 Allow firms to obtain previously denied natural resources (e.g., Saudi Arabia, India)

The Costs for Business:
The environment is possible to become more complex and riskier
Confronted by new sets of factors in the form of different political regimes, laws and regulations, tax systems, competition policies, and cultures.
Globalization can raise the dependence of plants and firms on foreign markets and suppliers.
 Globalization can cause the environment to become more volatile (e.g., global financial crises 2008)