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Theme 2 - Globalisation
Key Issues
Globalisation and offshoring - the two are closely linked; one has caused the other
Changing nature of international competitiveness ­ which countries now have the
advantage ­ and why?
Globalisation is changing the way manufacturing is managed (multi-locations) and
organised (complex supply chains)
Shifting demand: from West to East
Capital flows: who is investing and where?
Key Terms and Concepts
-The process by which the world is becoming increasingly interconnected as a result
of massively increased trade…read more

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Theme 2 - Globalisation
- Whose own firms now threaten manufacturers in developed economies
- E.g.…read more

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Theme 2 - Globalisation
Supply chains are becoming much more complex
A great example of GKN which has manufacturing and distribution operations around the
The globalisation of manufacturing has been helped by widespread digitisation
"Digitisation enables collaboration across the boundaries of geography and has changed
the whole business of innovation through information sharing of design files and
manufacturing data"
Digitisation has broken down geographical barriers - making it much easier to
manufacture in multiple locations
Globalisation and manufacturing location
It is increasingly not…read more

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Theme 2 - Globalisation
The globalisation of production make managing complex supply chains more of a
The UK languishes down the league table as an exporter of manufactured goods
The decline of UK manufacturing in the face of global competition means the UK
persistently imports more goods than it exports
The UK used to be a global power in steel production
- Not anymore
Strong global demand, fuelled by rapid rise of
middle class in emerging markets
China and other emerging markets are…read more

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Theme 2 - Globalisation
Natural gas accounts for only 2% of average US manufacturing costs and electricity
represents just 1%
In most other major goods exporting countries the figures are 5-8% and 2-5% respectively
FDI into UK
- Over 2,000 UK firms acquired by overseas companies in the last decade
- Many more than UK firms acquiring business overseas
UK as a national manufacturing for overseas multinationals
- Substantial investment in UK production
- E.g.…read more

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Theme 2 - Globalisation
Tata paid £1bn in the deal to merge with Tata (Indian company)
Tata committed to following an existing five year plan to invest in and develop the car
manufacturing business
Jaguar and Land Rover require hundreds of millions in investment over the next few years
Ford will inject £300m into Jaguar and Land Rover pension funds
Jaguar and China- 2014
By this point JLR is owned by Tata Group (Indian company)
To most consumers, Jaguar and Land Rovers are quintessentially British…read more

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Theme 2 - Globalisation
This has led to outsourcing and offshoring but the UK has seen an increase in re=shoring of
manufacturing back to the UK
JCB - 2013
Has been transformed from a one-factory operation with a turnover of £43 million to a
global business with 22 plants around the world employing over 10,000 people making
over 300 different products
JCB reported a turnover of £2.…read more

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Theme 2 - Globalisation
When a developed country is threatened with cheaper imports invading the domestic
markets, it will respond by restricting the import of certain goods
Other developed countries attempt to work around quotas by opening production plants
in nearby developing countries, and then exporting the product directly from there
By placing quotas on goods, no one country can dominate the market, allowing several
smaller countries a chance to gain access
The decision for a company to produce and market globally is based…read more

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Theme 2 - Globalisation
A consequence of large firms that dominate the textile industry is that individuals and
small firms are unable to compete
Garment production and some traditional textiles are the only places where small
businesses are still seen
Large factories present the greatest challenge to the handloom industries of Indonesia
- A factory can produce in a day what a skilled worker may take many months to achieve
Lucia Incerti…read more


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