Globalisation - BUSS4 2015 SUMMARY
- Created by: kellyg114
- Created on: 16-04-15 15:01
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- Globalisation
- Key Terms
- GLOBALISATION: process by which the world is becoming increasingly interconnected as a result of massively increased trade & cultural exchange
- SUPPLY CHAIN: system of bus, people, activities, info & resources involved in moving product from supplier to customer
- e.g. globalised supply chains in Primark (source globally)
- COMPETITIVENESS: ability to provide products & services as/more effectively & efficiently than relevant competitors.
- FOREIGN DIRECT INVESTMENT (FDI): investment by firm in one country into a firm located in a diff country with a view to long-term ownership
- the current stock of foreign direct investments in the UK is over £1 trillion, creating over 100,000 jobs
- e.g. Indian company Tata taking ownership of JLR
- over 2,000 UK firms acquired by overseas companies in last decant - many more UK firms acquiring bus overseas
- IMPACT OF GLOBALISATION
- Growth (& greater market share) of multinationals operating in both developed and emerging economies
- increasing competition for domestic firms from competitors overseas
- capital (investment) flowing into locations where manu. yields highest returns (and out of uncompetitive locations)
- location flexibility - multinationals likely to spread their manu. across many countries rather than rely on one - partly to be close to source of demand
- e.g. Jaguar Land Rover - opening base in China to be closer to customers
- economies of scale - operating at a scale across continents and serving global customer base
- Link between globalisation & offshoring
- Pace of offshoring declined
- e.g. Imperial Tobacco, Ford Transit, Caterpillar)
- OFFSHORING: the relocation of a bus. process or capacity from home country to another
- Pace of offshoring declined
- Link to technological change - digitisation of manu. makes it easier to locate production in multiple countries & operate more flexibly
- globalisation changing the way manu. is managed (multi-locations) & organised (complex supply-chains)
- BUS. MAIN DRIVER OF GLOBALISATION
- multinationals want to increase sales, profits & shareholder value
- barriers to international bus. are lower & falling
- bus. under pressure to grow, but find it hard without expanding overseas
- consumers increasingly demand same brands across the world
- Gov. want to encourage domestic bus to expand (flow of profits into domestic economy)
- why should multinationals continue global expansion
- higher profits & stronger position & market access in global markets
- reduced technological barriers to movement of goods, services & factors of production
- cost considerations - a desire to shift production to countries with lower unit labour costs
- forward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost)
- e.g. Jaguar Land Rover - opening base in China so they can offer their vehicles at lower price as no longer have cost of importing goods into country
- avoidance of transportation costs & avoidance of tariff/non-tariff barriers
- extending product life-cycles by producing & marketing products in new countries
- advantage depends on taste & fashions of consumers in each national market
- e.g. Starbucks failed in Australia since consumer preference was for local brands (same with Tesco in Japan)
- advantage depends on taste & fashions of consumers in each national market
- e.g. of brands/firms that achieved global sucess
- Apple; Sony; Starbucks; McDonalds; Google; IBM; Microsoft; Amazon; Samsung; Vodafone; Coca-Cola; Disney; L'Oreal; Gillette; HSBC; Toyotoa; American Express; VISA; Mercedes; Facebook
- EMERGING ECONOMIES
- BRIC - Brazil Russia India China
- China key example of emerging economy built on wave of globalisation now threatening manu. in developed countries
- However, rising labour costs & other supply chain issues in China have reduced China's competitiveness as manu. location
- UK manu. cant hide from globalisation
- e.g. forces of globalisation resulted in sig. decline in several UK manu. sectors such as UK textile industry that's fallen from 800,000 jobs to 100,000 in 30 years
- Other secotrs have thrived - UK aerospace industry 2nd largest globally, employs 113,000 directly (276,000 indriectly) & annual turnover of £20 billion.
- Biggest challenge - can UK manu. sectors meet glob challenge. Which ones?
- Seems to be focus on innovation and quality rather than cost in terms of globalisation competiviness
- UKs wage costs fallen relative to other competing manu. countries - makes UK labor relatively cheap compared with EU
- UK's strongest manu. already operating as multinationals & investing in UK + key international markets
- e.g. JCB - UK, India & Brazil /// AstraZeneca - UK & China
- Key Terms
- OTHER FACTORS
- rising living standards
- less protectionism
- lower transport costs
- digitial communication
- market liberalisation
- diverging consumer cultures
- Globalisation
- Key Terms
- GLOBALISATION: process by which the world is becoming increasingly interconnected as a result of massively increased trade & cultural exchange
- SUPPLY CHAIN: system of bus, people, activities, info & resources involved in moving product from supplier to customer
- e.g. globalised supply chains in Primark (source globally)
- COMPETITIVENESS: ability to provide products & services as/more effectively & efficiently than relevant competitors.
- FOREIGN DIRECT INVESTMENT (FDI): investment by firm in one country into a firm located in a diff country with a view to long-term ownership
- the current stock of foreign direct investments in the UK is over £1 trillion, creating over 100,000 jobs
- e.g. Indian company Tata taking ownership of JLR
- over 2,000 UK firms acquired by overseas companies in last decant - many more UK firms acquiring bus overseas
- IMPACT OF GLOBALISATION
- Growth (& greater market share) of multinationals operating in both developed and emerging economies
- increasing competition for domestic firms from competitors overseas
- capital (investment) flowing into locations where manu. yields highest returns (and out of uncompetitive locations)
- location flexibility - multinationals likely to spread their manu. across many countries rather than rely on one - partly to be close to source of demand
- e.g. Jaguar Land Rover - opening base in China to be closer to customers
- economies of scale - operating at a scale across continents and serving global customer base
- Link between globalisation & offshoring
- Pace of offshoring declined
- e.g. Imperial Tobacco, Ford Transit, Caterpillar)
- OFFSHORING: the relocation of a bus. process or capacity from home country to another
- Pace of offshoring declined
- Link to technological change - digitisation of manu. makes it easier to locate production in multiple countries & operate more flexibly
- globalisation changing the way manu. is managed (multi-locations) & organised (complex supply-chains)
- BUS. MAIN DRIVER OF GLOBALISATION
- multinationals want to increase sales, profits & shareholder value
- barriers to international bus. are lower & falling
- bus. under pressure to grow, but find it hard without expanding overseas
- consumers increasingly demand same brands across the world
- Gov. want to encourage domestic bus to expand (flow of profits into domestic economy)
- why should multinationals continue global expansion
- higher profits & stronger position & market access in global markets
- reduced technological barriers to movement of goods, services & factors of production
- cost considerations - a desire to shift production to countries with lower unit labour costs
- forward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost)
- e.g. Jaguar Land Rover - opening base in China so they can offer their vehicles at lower price as no longer have cost of importing goods into country
- avoidance of transportation costs & avoidance of tariff/non-tariff barriers
- extending product life-cycles by producing & marketing products in new countries
- advantage depends on taste & fashions of consumers in each national market
- e.g. Starbucks failed in Australia since consumer preference was for local brands (same with Tesco in Japan)
- advantage depends on taste & fashions of consumers in each national market
- e.g. of brands/firms that achieved global sucess
- Apple; Sony; Starbucks; McDonalds; Google; IBM; Microsoft; Amazon; Samsung; Vodafone; Coca-Cola; Disney; L'Oreal; Gillette; HSBC; Toyotoa; American Express; VISA; Mercedes; Facebook
- EMERGING ECONOMIES
- BRIC - Brazil Russia India China
- China key example of emerging economy built on wave of globalisation now threatening manu. in developed countries
- However, rising labour costs & other supply chain issues in China have reduced China's competitiveness as manu. location
- UK manu. cant hide from globalisation
- e.g. forces of globalisation resulted in sig. decline in several UK manu. sectors such as UK textile industry that's fallen from 800,000 jobs to 100,000 in 30 years
- Other secotrs have thrived - UK aerospace industry 2nd largest globally, employs 113,000 directly (276,000 indriectly) & annual turnover of £20 billion.
- Biggest challenge - can UK manu. sectors meet glob challenge. Which ones?
- Seems to be focus on innovation and quality rather than cost in terms of globalisation competiviness
- UKs wage costs fallen relative to other competing manu. countries - makes UK labor relatively cheap compared with EU
- UK's strongest manu. already operating as multinationals & investing in UK + key international markets
- e.g. JCB - UK, India & Brazil /// AstraZeneca - UK & China
- Key Terms
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