1: Global Business

What is Globalisation

The growing interdependence amongst nations

What are the elements of globalisation

Global Trade

Global Migration

Global Culture

Communication

Global Drivers

Benefits of Globalisation

Raises the Standard of living

Creates employment and growth in developing countries

Promotes competition

Disadvantages

Countries with weak laws can be easily taken advantage of

Widens the class gap between rich and poor

Factors Driving Global Business

WTO

Financial Deregulation

Patterns of Consumption

Technology

WTO

By enforcing trade agreements and providing international arbitration, resolving disputes.

Financial Deregulation

Removing the barriers to trade, such as Tariffs and quotas

Technology

Giving people a platform for easier access to international trade

Such as online websites and international shipping

Patterns of Consumption

How consumers want their products, and shop for their products, has driven globalisation, as life is becoming predominantly online

Multinational vs Transnational

Multinational

• Centralised with one home country and international outlets

Transnational

• Multiple small outlets with no real “home company“ or centralised structure

Impacts of Globalisation

Domestic Market

International Cooperation

Spread of Skills and Technology

Employment Levels

Tax Minimisation

Domestic Market

Australian companies will face far more competition in their domestic market, with international companies having easier access to the market

International Cooperation

Countries become more economically dependent on each other and culturally intertwined as a result of the increased global trade and spread of culture

Spread of Skills and Technology

As countries expand, they bring across their skills and technology, helping educate and enrich developing nations

Employment Levels

As it is cheaper to manufacture and purchase from developing nations, Australia’s employment levels will fall as their levels rise

Skilled workers may also leave, seeking job opportunities in those countries

Two Forms of Tax Minimisation

Tax Havens

Transfer Pricing

Tax Haven

Countries with lower tax rates and less transparent laws, often making it difficult for other countries to access their financial information

Such as the Cayman Islands or Switzerland

Transfer Pricing

When a company sells products to other branches of itself in a lower tax country, manipulating the price to minimise the tax paid.