Globalisation

Define globalisation

the process whereby the world has become more economically, politically and socially interconnected

Define the term global village

a term used to describe the breakdown of differences between nations, where almost all nations and peoples are influenced and affected by other nations

What are the 3 main aspects measured by the KOF Index

• social

• economic

• political

True or False?

The KOF index produces an annual index of globalisation scored out of 1000.

False.

The KOF index produces an annual index of globalisation scored out of 100.

What is global shift?

the process where Transnational Corporations (TNCs) have moved production to Emerging Market Economy (EME) countries to take advantage of cheaper costs of land and labour.

True or False?

Global marketing strategies are always identical in every country.

False.

While many companies use global marketing strategies, some adapt their strategies to local markets, a process known as glocalisation.

True or False?

The largest markets for manufactured goods are in Less Developed Economies (LDE).

False.

The largest markets for manufactured goods are in Highly Developed Economies (HDE).

What are the 5 main types of flows in globalisation?

• labour

• information

• capital

• products

• services

What does EME stand for?

EME stands for Emerging Market Economy.

Define economies of scale.

Economies of scale are when companies are able to reduce costs by expanding production.

What is time-space compression?

refers to the shrinking world effect caused by technological developments that enable faster communication and travel over long distances.

Define financial deregulation.

the reduction of barriers to capital flows, which facilitates quicker and easier flows of money, goods and services between countries.

What was the main cause of the Global Financial Crisis of 2008?

a fall in the US housing market.

True or False?

Containerisation has decreased the rate of globalisation.

False.

Containerisation has significantly increased the rate of globalisation by allowing larger volumes of goods to be transported more quickly and easily.

What is the North Atlantic Treaty Organisation (NATO)?

a political and military alliance founded after World War II to promote peace and cooperation in Europe.

What is the primary aim of the Organisation for Economic Cooperation and Development (OECD)?

The primary aim of the OECD is to improve the economic and social well-being of people around the world, thereby increasing economic stability and security.

Define trade bloc.

a group of countries that work together to increase trade and boost economic growth by removing or reducing barriers to trade between them.

True or False?

Trade agreements always increase trade with countries outside the trade bloc.

False.

Trade agreements often create external barriers or restrictions which may reduce trade with countries that are not part of the trade bloc.

What is Brexit an example of?

Brexit is an example of a backlash against loss of sovereignty, resulting in a member leaving a trade bloc.

What are tariffs and quotas in the context of trade?

are barriers to trade that trade blocs aim to remove or reduce between member nations to facilitate free trade.

Define a global system

Systems put in place to help the world work together.

e.g.

• world trade systems

  • laws regulating the movement of people

Dimensions of globalisation

The outcomes or expressions of the processes factors in globalisation including the flows of capital, labour, products, services and information, as well as global marketing strategies and changing patterns of production, distribution and consumption.

Dimensions are the ‘What?’

Dimensions are what actually moves and changes as a result of factors.

Flows of Capital

• Capital flows are the movement of money for the purpose of investment, trade of business production.

Labour

• The movement of people who move to work in another country

Products

• Flows of physical goods from one country to another

Services

• Services are ‘footloose’ industries, meaning they can locate anywhere without constraints from resources or other obstacles.

• Services flow as they can be produced in a different country to where they are received.

• e.g.

  • international call centuries

Information

• Any type of information can flow from one place to another via the internet, SMS, phone calls etc

• e.g.

  • International news

Global marketing

Dimensions that have allowed this to happen:

• Flows of services

• Flows of products

• Flows of labour

• Flows of capital

In general

• The process of promoting, advertising, and selling products or services worldwide. It involves standardising products to suit global markets, building brand recognition, and using global media and distribution networks. Key to the spread of consumer culture and the influence of TNCs.

Trademarks

A trademark is a legally registered representation of a company recognised globally, such as a logo.

• Easily recognised by consumers, as a familiar brand it more likely to sell.

Marketing strategies

• It is more beneficial for a product to be marketed globally using the same strategies, rather than changing the strategy for each country.

• Just need to change the language of the campaign in order to promote a product

Glocalisation

The concept of altering business practices for local interests and tastes.

• KitKat has now created hundreds of other flavours that appeal to Japan and is the only place to sell hundreds of unusual flavoured varieties.

• The logo is still the same but the brand has adapted its marketing strategies to appeal to the Japanese collectibles culture as well as the unique products popular in Japan.

Patterns of production, distribution and consumption

Division of Labour

• Globalisation has brought about a new international division of labour.

  • Occupations that are unskilled and poorly paid assembly roles tend to be located in emerging economies, often developing or low income countries based on low labour costs.

  • Occupations that are highly skilled, highly paid and involve research and development, decision making and managerial roles are largely concentrated in developed or high income countries..

• This division has undergone radical changes in the last 50 years as many countries that were classified as developing have become NEEs.

Developed countries = consumption

Developing countries = production and shipping

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Production

• China is now outsourcing products from Africa. Africa is becoming China’s China

These patterns show how economic activity is spread across the globe. Production has shifted from HICs to LICs/NEEs where labour and resources are cheaper. Goods are often manufactured in LICs, distributed through global transport networks, and consumed in HICs with higher purchasing power. TNCs play a key role by managing supply chains across multiple countries, reinforcing global economic interdependence.

Factors in globalisation

The underlying drivers and enablers that make global connections possible such as developments in technology, transport, communications, security systems, management practices, and trade agreements.

They are mechanisms that allow global flows and interactions to happen efficiently across boarders.

Factors are the ‘How?’

Factors create the conditions

The development of technologies

• Technological developments refer to innovations in machinery, software, infrastructure, and tools that enable faster, more efficient connections between people, goods and capital across borders.

Systems and relationships

• Finance

• Transport

  • Involve infrastructure and vehicles that move people and goods - including roads, shipping, air travel and rail networks

• Security

  • Refer to mechanisms (laws, regulations, protocols) and technologies ensuring safety in global operations - including cyber security, border controls and financial regulation

• Communications

  • Include satellites, internet infrastructure, mobile networks, and software platforms that facilitate the instant exchange of information worldwide.

• Management and information systems

  • Refers to software and organisational strategies that allow global businesses to manage operations, supply chains, and personnel efficiently

• Trade agreements

  • Formal arrangements between countries to reduce or eliminate tariffs, quotas and restrictions on trade