9 Globalisation

Question 1

Define globalisation

Answer 1

The growing integration of the world’s economies

Question 2

Define intellectual property

Answer 2

People’s knowledge or creative ideas that have commercial value and are protectable under different forms of copyright

Question 3

Define saturated market

Answer 3

When there are so much products for sale that there is more than what people want to buy

Question 4

Define monetary system

Answer 4

System of money in a country or the world, and the way that is controlled by governments and central banks

Question 5

List the factors that have lead to globalisation

Answer 5

1. Development in technology - improved and easier communication, gathering information about firms in other countries is easier
2. Improved international transport networks - people can travel to business meetings in other countries easily and goods can be transported more easily
3. Deregulation - countries simplified monetary system and legal system to make international trade easier
4. Increase in tourism - people willing to try goods and services produced in other countries
5. Domestic markets are saturated - sell abroad

Question 6

What are the opportunities of globalisation for businesses?

Answer 6

1. Access to larger markets (global markets are larger than domestic markets)
2. Lower costs (if businesses are able to grow by selling more output to larger markets, they may be able to lower their costs)
3. Access to labour (people are free to move around the world to find employment)
4. Reduced taxation (by locating head office in a country where business taxes are low e.g. Ireland)

Question 7

What are the threats of globalisation to businesses?

Answer 7

1. Competition (survival will be threatened since more companies around the world try to sell their goods and services in an increasing number of countries)
2. International takeovers (a business in one country can take over a business in another)
3. Increased risk of external shocks (interdependence means that evens in one economy are likely to affect others)

Question 8

Define hostile takeover

Answer 8

Takeover that the company being taken over does not want or agree to