2.1.3 business and globalisation

Globalisation

The increasing tendency for countries to trade eachitger to buy goods

Multinational

A business that has production in several countries

Benefits of globalisation

Increased markets

E-commerce and better distribution

Cheaper raw materials opportunities

Can specialise and sell cheaper

Increased cooperation of skills

Drawbacks of globalisation

- fierce competition

- new competitors

- threat of takeover

economic theory

All countries can benefit in the long run if there is free trade between them. This means imports and exports with no barriers to trade.

Barriers to trade

Tariffs, quotas, subsidies,trading blocs

Tariffs

Taxes on imported goods

Benefit of tariffs

To create revenue for the Goverment

Disadvantages of tariffs

- Imported goods and services become more expensive

- May cause other countries to impose tariffs in response, affecting exporters

trading bloc

a group of countries that have reduced or even eliminated tariffs, allowing for the free flow of goods among the member nations

Trading bloc examples

USMCA and EU and ASEAN

EU trading bloc

27 countries in Europe

ASEAN trading bloc

10 member states operating in Asia dominated by the economic success of china, japan and south korea

- phillipines

- thailand

- indonesia

USMCA trading bloc

US, Mexico and Canada

Four main methods of selling into international markets

Exporting direct

Using overseas distributors

Setting up business unit overseas

Buying a business overseas

How do businesses compete internationally

-using e-commerce and the internet

-changing the marketing mix to fit that country's culture

Using e-commerce internationally

Allowed businesses to expand worldwide

Even small businesses can promote, sell and distribute their products using digital communication and e-commerce

changing the product

May need adapting to suit locals tastes and culture

changing price

Income levels may be different as foreign wages are different

Changing promotion

Advertisement and packaging will require translation

Media needs to be understood in different countries

Changing place

Distribution will need to be looked at in terms of cost and speed

I.e trade restrictions like tariffs