1.5 Globalisation, multinationals, exchange rate

What is globalisation?

The increase in worldwide trade and movement of people and capital between countries

Reasons of globalisation?

• Development in technology.

• Improvement in international transport networks.

• Deregulation 

• Increase in tourism 

• Some domestic markets have become saturated

What does saturated mean?

Max amount of product/service in market, no new customers

Opportunities part of globalisation

• Access to larger markets 

• Lower costs of production 

• Access to labour 

• Reduced tax

Threats part of globalisation

• Competition 

• International takeovers 

• More risk

International trade opportunity

Growth, increases competition, consumer choice

Invisible trade

Tourism, education, services

Formula: to find your currency from foreign currency

Your currency = foreign currency/exchange rate

Formula: to find foreign currency from your currency

Foreign currency = currency x exchange rate

Fall in exchange rate name and its affects

Depreciation

• Exporters will sell more 

• Importers will buy less 

• Consumers will pay more 

• Exporting will earn money 

• More tourists will visit 

• Business costs will rise 

Rise in exchange rate

Appreciation

• Importers will buy more 

• Exporters will sell less 

• Consumers will pay less 

• Country is spending more money 

• Fewer tourists 

• Business costs will fall