4.7 Globalisation

Question 0

Disadvatanges of multinational [6]

Answer 0

• Poorer communication with headquarter
• Difference in language/culture
• Legal differences - product safety of cigarettes
• Exchange rates
• Storage, transportation and distribution costs
• Infrastructure
• Political/economical conditions - terrorism, tax rate

Question 1

Advatanges of multinational [6]

Answer 1

• Closer to main market
• Lower costs of production + transportation cost
• Avoid import restrictions (eg. tax)
• Access to local natural resources
• Expand markets for more profit
• Spread risks

Question 2

Effects of multinationals in host countries [6]

Answer 2

• Create jobs
• Increase GDP
• Technology transfer
• Create competition
• Social responsibility
• Unemployment

Question 3

Multinational company

Answer 3

• Operates in two or more countries

* Headquarter often in developed country

Question 4

Trading bloc

Answer 4

A group of countries agree to trade freely with each other

Question 5

Advatanges of trade bloc [4]

Answer 5

• Access to greater size of market for export
• Competition –> efficiency + productivity
• More variety with lower price
• Greater political stability

Question 6

Disadvatanges of trade bloc

Answer 6

• The role of World Trade Org is undermined

* Impede trade liberalisation

Question 7

Common markets

Answer 7

• Allow investment in each country

Question 8

Free trade area

Answer 8

• NAFTA (US, Canada, Mexico)

* No tariffs&quotas between themselves

Question 9

Economic and monetary unions

Answer 9

• Euro-zone (not UK, Denmark b/c they do not use Euro astheir currency)
• to create the economic conditions that exist in just one country

Question 10

Ansoff’s matrix

Answer 10

Market peneration, product development, market development, diversification