Impact of Increasing Globalisation
Sourcing supplies from overseas- e.g. SKA textiles buy basic fabric from Korea as the quality is just as good as that made in the UK but allows them to have enough capacity to cope with large orders from Primark and Arcadia. Without large volume they would lose their contract with the key retail stores and their existing plant cannot cope with the amount of metres of fabric required to be finished and dyed. This allows SKA to focus on the higher added value process of dyeing and finishing which can be tailored to the new fashion required(it would take too long to ship in finished fabrics from overseas as fabrics would have changed during the 6 week shipping time) BAE systems source from 25,000 suppliers overseas- more choice can increase quality and lower costs which can enable them to lower prices to governments or increase profits.
Offshoring production overseas- e.g Dyson moved production to Malaysia allowing them to be closer to key suppliers and other markets like Asia thus saving vast amounts of time and transport cost to bring materials to the UK and then ship back overseas. Clarks shoes moved production to the far east where Labour cost is lower thus allowing them to be more competitive on price in price elastic markets competing with Next and Topshop who were already sourcing their shoes from suppliers in low wage economies.
Selling goods overseas- Due to more open markets with less protectionism. Emerging markets offer more sales potential. The WTO aims to reduce tariffs and quotas and make the world one large trading area. Firms like JLR and Rolls Royce now have China as their main market as Chinese consumers seek upmarket British made goods as they become wealthier due to increased economic growth. Like JCB has seen huge sales growth overseas, setting up a new subsidiary in India as economic growth there has been much higher than in Western Economies. 75% of construction equipment sold in India is made by JCB.
Can partner with other firms around the world in order to tailor products to local cultures- JLR have partnership with Chery in China in a…