GLOBAL INDUSTRIES

The increasing level of interdependance and integration between nations

  • economic
  • political
  • social
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Benefits of seeking global markets

Economies of scale

  • some production process benefit enormoulsy from techniques of mass production
  • car industry
  • some products involve ehuge expenditute on R+D to break even
  • some expeneditue can only return a profit from a global market

Spreading risk

  • decline in one market may be compensated for by growth in another
  • in recession firms with operation in india and chine

Mass market

  • some products have a global potential and exploitation of the global marker increased profit
  • few additional costs
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Benefits continued

Global branding

  • establishing a brand name which is worldwide both opens up new markets and reinforces sales in excisiting markets
  • microsoft has become the norm for computer operating systems

Flexibility

  • footloose
  • firms can location/reclocat production to take advanatage of changed costs
  • exchange rates
  • protection
  • wage
  • taxtation
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