6.3 globalisation

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  • Created on: 27-12-20 19:24
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  • 6.3
    • globalisation: how businesses are inter-connected
      • global selling and buying: businesses sell and buy goods and services from and to each other.
      • global production: businesses may produce all or part of a product in different countries
      • global movement of people: businesses may recruit workers from other countries and send workers to work abroad.
      • global movement of capital: businesses may raise investment money from other countries by borrowing money and selling shares.
    • why has globalisation been made easier:
      • improvements to transport: development in transport has led to a decrease in transport costs.
      • better telecommunications and video-conferencing have reduced costs and made it easier to arrange international business or share plans or knowledge
      • reduced trading barriers: a reduction in tariffs and quotas as countries make trade agreements
    • impact of globalisation on business:
      • influence on business location:
        • advantages: lower production costs, more skilful workers, business can be located near customers
        • disadvantages: bad quality control, high transport costs, sales could be lost if customers want products made not abroad, productivity may be low if workers are unskilled, leading to higher production costs.
      • international branding: an image or values for a product that are communicated in countries around the world
        • legal issues: laws on what can be sold to who and how it can be advertised.
        • product promotion: it would be influences by culture, income, value in that country
        • income level: income level is different per country so different products and prices are for sale in the according countries
        • language: words mean different things in different languages
        • bribery: some countries accept bribery, so a business could decide whether they should bribe people to sell their products or not.
      • growth of multinational companies: these are examples of globaliastion they operate in different countries like coca cola or google
        • increased sales as there are more spread potential customers
        • risk is spread: sales are not dependant in one country, sales may be low in one but not in all countries where business sells.
        • lower costs: production or some part can have cheaper costs like labour or cheaper land.
        • tax avoidance: they can avoid tax by locating in low tax countries.
      • how businesses compete internationally:
        • factors include: growth, marketing, human resources, business operations, finance, exchange rate, ethical and environmental influences, economic climate


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