paper 3 globalisation

eduqas a level business

Explain what is meant by globalisation and Explain the nature of globalisation and global markets, including developing markets

globalisation: Increasing integration and interdependence of national economies→ businesses increasingly operate across borders and compete in global markets .

• Nature: Ongoing process of greater connectedness – trade, investment, production and consumption span borders.

• Global markets: Homogenised consumer wants; brands/standards roll out worldwide; economies of scale possible.

• Developing markets: Fast-growing economies (e.g. BRICS, MINT) – rising middle class, lower labour costs, growing demand, less saturated; higher growth potential but higher risk.

Explain the factors that have contributed to globalisation including communication technologies, liberalisation of trade, Internet, cost of transportation and consumer tastes

Factor	Detail
Communication technologies	Instant, low-cost data transfer; remote management; global coordination of supply chains
Trade liberalisation	Reduced tariffs, quotas, barriers; WTO agreements; free-trade blocs → easier market access
Internet	Borderless commerce; digital marketing; global reach from one location; lower entry cost
Transport costs	Containerisation, efficient shipping, air freight → falling real cost; just-in-time global supply feasible
Consumer tastes	Converging preferences – global brands, similar lifestyles; demand for same products across nations

Explain the effect of globalisation on businesses and their stakeholders including increased competition and opportunities for growth

• Opportunities: Larger markets → higher sales; economies of scale; access to cheaper inputs; spread risk across markets; source innovation abroad.

• Increased competition: Domestic firms face overseas rivals; price pressure; reduced margins; must improve efficiency/quality.

• Stakeholders:

  • Owners: Higher profit potential; greater risk.

  • Workers: More jobs / export growth; job losses / relocation to low-wage economies.

  • Consumers: Lower prices, wider choice; less product differentiation.

  • Governments: Higher growth; tax base shifts; balance of payments pressure.

Explain the different strategies that businesses might use in order to achieve global growth including global branding, external growth and choice of target markets

Strategy	Explanation
Global branding	Standardised brand identity worldwide – consistent messaging, logos; builds recognition; lowers marketing cost; may lack local appeal
External growth	Mergers / acquisitions / joint ventures with overseas firms – rapid entry; local knowledge gained; cultural clash risk; high cost
Target markets	Choose by income, growth rate, competition, regulation, culture – niche vs mass; developed vs developing; affects risk/reward

Evaluate the strategies that businesses use to achieve global growth

• Global branding: ✅ Scale economies, strong brand equity, consistent image ❌ Ignores local differences; cultural insensitivity; vulnerable to local competitors

• External growth: ✅ Fast market entry, shared resources, existing distribution ❌ Integration issues, loss of control, high upfront cost, regulatory hurdles

• Target market choice: ✅ Matches product to demand, resource-efficient ❌ Data gaps, political/economic instability, changing conditions; over-reliance on single market

Explain the benefits and difficulties for UK businesses of operating in global markets

• Benefits: Expanded customer base; lower production/sourcing costs; spread risk; access talent/tech; economies of scale; extended product life cycles

• Difficulties: Intense competition; exchange rate volatility; cultural/ language barriers; differing legal/regulatory regimes; logistics complexity; ethical/reputational risks; political instability

Explain how businesses adapt their products, marketing activities and working practices to reflect the local needs (glocalisation)

• Definition: Tailoring products, marketing and operations to local markets while retaining global brand identity.

• Product adaptation: Spec, features, ingredients, sizing – meets local laws/tastes/standards

• Marketing adaptation: Language, messaging, media, pricing, distribution channels – cultural sensitivity

• Working practices: Management style, employment terms, supply chain norms – complies with local expectations/law

• Balance: Too standardised → fails to connect; too adapted → loses scale/brand identity

Evaluate the impact of globalisation on UK businesses and their stakeholders

• Businesses: ✅ Lower costs, bigger markets, faster growth ❌ Disrupted markets, price squeeze, offshoring capability lost

• Employees: ✅ Export-sector jobs, higher-skill roles ❌ Manufacturing decline, wage pressure, job insecurity

• Consumers: ✅ Lower prices, wider choice ❌ Loss of local distinctiveness, ethical concerns

• UK Economy: ✅ GDP growth, inward investment, international influence ❌ Trade deficits, regional inequality, over-reliance on foreign supply

Explain what is meant by a multinational company and Explain the reasons for the existence of multinational companies

mnc: Business with headquarters in one country and production/operations/branches in several others.

Reasons for Existence of MNCs

• Market-seeking: Access larger/growing markets; avoid trade barriers

• Efficiency-seeking: Lower labour/resource costs; economies of scale

• Resource-seeking: Secure raw materials, energy, skilled labour

• Strategic: Gain first-mover advantage; access tech/innovation; spread risk

Evaluate the decision of a business to operate as a multinational company

• Pros: Global reach, cost advantages, tax optimisation, diversified revenue, learning across markets

• Cons: Complex management, coordination costs, reputation risk, political/legal exposure, exchange rate exposure, cultural friction

• Judgement: Depends on industry, scale, resources, political stability, long-term strategic goals

Evaluate the impact of multinational companies on the countries in which they operate

• Positive: Job creation; capital investment; tax revenue; tech/skills transfer; improved infrastructure; export growth; competition raises local standards

• Negative: Profits repatriated; exploitation of labour/resources; environmental harm; weak local firms outcompeted; political influence; tax avoidance; cultural homogenisation

• Overall: Net benefit depends on host regulation, MNC behaviour, sector, and whether gains are shared locally.