Global Systems and Global Governance

What is globalisation?

The process of the world's economies, political systems and cultures becoming more strongly connected to each other.

Impacts of complete and no globalisation?

• no interaction between different countries

• complete globalisation: whole world acts like a single community.

What is globalisation caused by?

• flows of information

• flows of capital

• flows of products

• flows of services

• flows of labour

How does flows of information promote globalisation?

• information can be spread across the world very quickly.

• development and rapid spread of email, internet and social media mean large amounts of information can be exchanged across the globe.

• increasing flows of information are making the world more interconnected.

How does flows of capital (money that’s been invested) promote globalisation?

• improvements in information and communications technology have encouraged flows of capital around the world - can be instantly moved around the world via the internet

Increasing flows of capital are making the world more interconnected, e.g most countries' economics are now depended on flows of investment to and from other countries.

• The amount of capital invested in foreign countries has increased over time FDI (400 BIL 1996 TO 1500 BIL 2016)

How does flows of products promote globalisation?

• Manufacturing has decreased in more developed countries

• Low labour costs overseas caused many companies to relocate the production side of their business abroad- they the products to the countries where they're sold.

• As a result, international trade in manufacturing goods is increasing.

• Changing flows of products are making the world more interconnected.

How does flows of services promote globalisation?

• High level services are usually concentrated in higher income countries, are are increasingly locating to global hubs within cities.

• In contrast, low level services are offshoring in order to take advantage of lower labour costs.

• Those in higher income countries can utilise these services at home by simply calling up a customer service centre based in India, which has developed global connections and accelerated globalisation.

How does flows of labour promote globalisation?

•Some migrant are highly-skilled workers moving to more developed countries where wages and working conditions are better.

• Unskilled workers who move to developed countries to look for work because of unemployment or poor wages in their own countries.

• Increasing flows of people between different countries are making the world more interconnected.

How is marketing becoming more global?

• Global Marketing involves treating the world as one single market and using one marketing strategy to advise a product to customers all over the world.

• GM gives economies of sale.

• GM can create a global brand awareness.

• Marketing needs to be adapted to regional markets (different countries, different laws, different cultural attitudes.

How has the development of new systems, technology and relationships caused globalisation?

• Systems include ways of working, procedures and methods of organisation that allows a particular function to be carried out

• technology used for information, communications and transport have advanced rapidly.

• Relations are based on trade and common rules

List three factors that have led to increased financial globalisation?

• Information technology, such as the Internet, allowed investors greater access to information. Investors and investment banks could find out whether a company was doing well or struggling, and make a decision about whether to invest.

• Governments took financial deregulation, where they relaxed rules about what banks were allowed to do.
  Financial deregulation included allowing banks to charge people more for their services, as well as letting banks invest in a greater range of businesses.

• Investment banks created new financial products that made foreign investment less risky

How do trade agreements remove barriers to trade?

1. Trade is primarily regulated by countries' governments, who control which products they let into the country and at what price. Controls include tariffs and non-tariff barriers and the banning of certain products

2. Multilateral trade agreements are trade agreements between several countries - all of the countries involved agree to remove tariffs and other controls. Multilateral and bilateral agreements together make up the global trade system.

3. The global trade system is governed by the World Trade Organisation. Established in 1995, the WTO sets rules on how countries can trade with each other. 

How has transport and communication systems improved global businesses?

• Optic fibre cables use signals of light to transmit more information than any other cable. They allow fast communication between two devices, allowing almost-instant communication between two people or companies.

• Uniform metal containers were introduced in the 1950s this allowed more goods to be loaded onto ships at once and transferred straight onto other forms of transport making it easier for goods to be moved quickly and cheaply around the world.

• Communications satellites allow relatively cheap wireless communication between two devices, regardless of where they are. This means even people and companies based in rural or remote areas can access the Internet and communicate with others.

How has management and information systems increases companies efficiency?

• Global supply chains enable cost reduction for companies as suppliers, factories, departments can be in different countries.

• Large firms benefit from economies of scale by reducing production costs through specialized equipment, bulk raw material purchases, and efficient production lines.

• Outsourcing, often abroad, is chosen by companies to save costs as they pay another company to perform work previously done in-house

How have countries worked together to prevent security threats?

• Globalisation creates new trading relationships between countries. By forming trade agreements, countries become interdependent if two countries need each other to buy and sell their products, thus means trade makes war less likely.

• By working together, countries are able to improve security. E.g. the North Atlantic Treaty Organisation (NATO) was founded by several countries in 1949, with the aim of providing security during the Cold War - by grouping together, they were able to deter common threats.

• However, globalisation can also make a conflict more likely. Eg developed countries have intervened in conflicts in developing countries to secure resources like oil.