Globalisation

• In business, globalisation means operating on an international scale to provide or produce goods and services
• Almost all goods are made of parts sourced globally
• Globalisation involves companies operating internationally or on a global scale, with the main elements being imports, exports, and business location
• Businesses engage in globalisation by buying and selling around the world, often due to cost, availability of products, or cheap labor
• Some products have a reputation for being from a certain part of the world, making versions of the product from that location highly desired
• The process of buying from and selling to overseas countries is known as international trade
• Globalisation in business means operating on an international scale to provide or produce goods and services
• Most goods are made of parts sourced from around the world
• Importing refers to purchasing goods or services from overseas and bringing them into another country
• Reasons for importing:

  • Products cannot easily be manufactured in the importing country due to climate, business capacity, or raw material availability
  • Cheaper to purchase products from other countries than to make them in the importing country
• Example: UK commonly imports electrical products from China and India
• Service industries also benefit from importing, e.g., many UK companies have call centres in India due to cheaper labour costs
• Globalisation in business means operating on an international scale to provide or produce goods and services
• Most goods are made of parts sourced from around the world
• Importing refers to purchasing goods or services from overseas and bringing them into another country
• Reasons for importing:

  • Some products are imported because they cannot easily be manufactured in the importing country due to climate, business capacity, or raw material availability (e.g., fruit and vegetables)
  • Other items are imported because it's cheaper to purchase them from other countries than to make them locally (e.g., UK commonly imports electrical products from China and India)
• Service industries also benefit from importing, with examples like call centres of UK companies located in India due to cheaper labor costs
• Exporting refers to a country selling products and services to other countries around the world
• When the UK sells products and services to foreign countries, money comes back into the UK economy
• One of the UK’s biggest exports is vehicles, made by some of the biggest car brands produced in the UK and then shipped abroad in return for money
• Products like Heinz Baked Beans and Harris Tweed are famous for being produced in the UK and Ireland and sold worldwide
• Two important acronyms related to exports are SPICED and WPIDEC, describing different potential states of the economy
• SPICED stands for Strong Pound Imports Cheaper Exports Dearer, while WPIDEC stands for Weak Pound Imports Dearer Exports Cheaper
• Under SPICED, businesses that import goods benefit as products are cheaper due to the exchange rate, but businesses that export goods may sell less or have lower profit margins
• WPIDEC, on the other hand, makes importing goods more expensive due to the exchange rate, potentially leading to increased sales for businesses that export goods
• Globalisation in business means operating on an international scale to provide or produce goods and services
• Almost all goods are made of parts sourced globally
• As businesses grow, operating overseas in multiple countries becomes a real possibility
• For example, a food takeaway business could open outlets in other countries to access new markets, while an online business might develop a website in a foreign language and open distribution centres abroad
• Advantages of increasing the scale of business operations include: access to more customers, potential for more sales and profit, potential to grow product range, and increased brand awareness
• Disadvantages of scaling business operations include: increased responsibility, more risk, and potential for failure
• Multinational companies (MNCs) operate in multiple countries and adapt their products to suit consumers in different countries while maintaining a recognizable brand image globally
• Globalisation in business means operating on an international scale to provide or produce goods and services sourced from around the world
• Tariffs are taxes added to the cost of imports to make them more expensive for businesses and consumers to buy, aiming to promote and protect businesses in the home country
• Protectionism is the process of protecting domestic industries by adding tariffs or taxes onto imports
• Advantages of tariffs:

  • More money for the government
  • Businesses in the home country have a better chance of competing
• Disadvantages of tariffs:

  • Imported goods and services become more expensive
  • May cause other countries to impose tariffs in response, affecting exporters
• A trading bloc is a group of countries that work together to provide special deals for trading, promoting trade between specific countries within the bloc
• The European Union (EU) is an example of a trading bloc where countries can trade freely with each other without tariffs, but tariffs are charged on goods and services imported from outside the EU
• Advantages of trading blocs:

  • Promotes free trade without tariffs
  • Creates good trading relationships with other countries in the trading bloc