Globalisation
Increased integration and independence of economic systems
Opportunity of globalisation
Access to larger markets
Threats
Threats of globalisation
Extra competition
capital
money or physical goods
International trade
buying and selling of goods and services between different countries
Trade barriers
anything that prevents or restricts trade between different countries or trade blocs
causes of globalisation (2)
improved communication
- advances in ICT mean that consumers can find out about and buy products from other countries.Producers can also source materials cheaper
Reduced transport costs ( economies of scale)
- Transport cost per unit falls because bigger containers means more storage and therefore importing and exporting and storing goods are cheaper
Trade liberalisation
The reduction of trade barriers between countries and trade blocs
trade blocs
Groups of countries that reduce trade barriers between eachother
Main types of trade blocs (3)
Free trade
customs union
common markets
free trade areas
Countries within a free trade area remove restrictions between eachother but are free to set their own individual tariffs for non members
customs union
Remove trade restrictions between each other but also agree to operate the same external tariffs
Common markets
No import restrictions
common external tariffs
permit free movement of labour and capital between members
why would a business want to trade internationally (4)
Access to larger markets (potential increase in revenue)
Average cost of production falls-
( making 10x more products)
Raw materials are cheaper (Acess to cheaper labour to produce goods)
Spreading risk ( risk of failure is less)
Spreading risk
Multinational corporation
what does this mean they have
Business that operates in more than one country ( This means that they have an established base for producing and selling products outside their home country)
key features of globalisation (4)
-increased international trade of goods and services as barriers to trade are reduced
- Greater competition from global brands
-Multi cultural society
-Economies of scale
more units of output a business produces means
lower unit costs
what’s the benefit of a business locating its production within a trade bloc
It avoids paying tariffs to those countries in the trade bloc
FDI stand for … and what is it
foreign direct investment is when a business from one country pays for land, labour and capital in another country to produce output in that country
Advantages of trading throughout the world (3)
-Larger markets
-Economies of scale
-Spread risks (downturn in one segment can be compromised by sales in another area)
Disadvantages of trading throughout the world
- Higher competition
-Exchange rate fluctuations ( sudden depreciation in currency value can increase costs)
-Tariffs
confidentiality
don’t disclose any information to third parties without proper and specific authority
merger
Two or more companies agree to come together to form one business
-
business32
-
Private sector23
-
sources of finance21
-
sectors14
-
business, economic objectives, competition48
-
entrepreneurship,market, competitive edge8
-
markets and economies52
-
franchises, conflict, tax18
-
opportunity costs and benchmarking20
-
corporate governance25
-
business structures22
-
legal and financial governance10
-
TAX21
-
Tax (2)21
-
imports/exports, exchange rates, inflation, interest rates29
-
policies,interest19
-
Pensions/ tax16
-
Globilisation24
-
Stakeholders/ Drivers of change12
