Globalization

globalization

process of greater integration and interdependence of businesses and economies throughout the world

multinational companies (MNCs)

companies that have business operations in 2 or more countries

pos impacts of globalization on business

• creates many opportunities for MNCs

• stimulates international comp

• enables businesses to benefit from more customers and economies of scale

• tends to increase job opportunities

• operations closer to customers helps reduce transpo and distribution costs

• can reduce overall risks for a business

neg impacts of globalization on business

• increases and intensifies comp

• encourages more consumption

• pressure to expand can be overwhelming

• growing interdependence can make businesses more vulnerable

reasons for growth of MNCs

• access to larger customer base

• can benefit from economies of scale

• larger scale means MNCs can spread risks

• some factors of prod are cheaper in other countries

pos impacts of MNCs on host countries

• employment opportunities

• support for workforce

• support for local businesses

• choice and quality

• efficiency gains

• tax revenues

neg impacts of MNCs on host countries

• more comp for local businesses, they could get overpowered

• exploitative business practices

• loss of cultural diversity