External Influences - Global Context

Question 1

Define globalisation?

Answer 1

process which countries and economies have become more interconnected OR the world coming together to trade in each other’s markets

Question 2

what are the advantages of globalisation?

Answer 2

• economies of scale
• reduction in monopolies
• reduce poverty
• spreading risk

Question 3

what are the disadvantages of globalisation?

Answer 3

• takes time and money
• language/culture barriers
• interdependency on country’s employees
• environment, ethics and economic factors
• product may not be suitable in new countries

Question 4

what factors facilitate globalisation?

Answer 4

• reduction in trade restrictions
• ease of transportation
• improvement in infrastructure
• internet/e-commerce
• communication technologies
• rise of multinationals

Question 5

define multinationals

Answer 5

a business that has operations in one or more country (must have a facility in another country)

Question 6

what is the difference between a multinational and an international business?

Answer 6

multinational operates in another country, but internationals just sell to other countries

Question 7

what are the advantages of multinationals

Answer 7

• economies of scale
• take advantages of lack of legal constraints
• enter new markets where less competition exists
• take advantages of low wages

Question 8

what are LEDCs?

Answer 8

Less Economically Developed Countries

Question 9

what are MEDCs

Answer 9

More Economically Developed Countries

Question 10

what are the positive effects of multinationals for LEDCs?

Answer 10

• provides employment opportunities
• equips local people with skills
• investment in local infrastructure
• utilisation of local resources

Question 11

what are the negative effects of multinationals for LEDCs?

Answer 11

• low wages
• low skilled jobs
• unsafe working practices
• pollution and health worries
• child labour affects education
• local businesses out of market
• profit goes back to home country

Question 12

what are the threats of globalisation to the business?

Answer 12

• lower labour costs may damage reputation
• reduced domestic efficiency as businesses in developing countries begin to produce themselves
• lack of local knowledge/culture threatens global growth

Question 13

what are the opportunities of globalisation?

Answer 13

• new markets (high income?)
• move production into countries with low labour costs
• investment opportunities