Globalisation
Globalisation refers to the increasing integration between countries:
- Increased international trade between countries
- Increased migration of labour between countries
- Increased number of businesses investing in different countries.
Market - A place where buyers and sellers come together to exchange goods and services. Can be physical, electronic, local, national, or international.
A global market - buying and selling all over the world
A developed market - a mature market such as UK, USA where income levels are high.
A developing market - a country with low income levels and low living standards but which is growing.
Globalisation
- Business operates in lots of countries. This means they can produce, operate, buy from and sell to any country.
- Developing markets - years behind developed economies, products that appear old in a developed eco can be offered as new in developing country.
- BRIC (Brazil, Russia, India, China) - large population and above average eco growth and MINT
Factors Driving Globalisation - communication, tech/internet, free trade, costs of transportation and tasks.
- Improvements in communication technology - easier for businesses to manage worldwide locations, reduces diseconomies of scale as businesses can communicate more efficiently.
- Adverse Factors in existing markets - international opps, saturated market, competition in domestic market (PUSH FACTORS)
- Pull Factors - new/bigger market, lower cost of resources, tech expertise, finical expertise, patents, or intellectual property.
- Cost of Transport - invention of containers makes it easier and cheaper to carry goods on trains from all around the world. Made planes, trains and ships operate more quickly, meaning increase in productivity and lower transportation costs.
- Liberalisation of Trade: More free trade and fewer trade barriers imposed by countries across the world, making it easier and cheaper to buy and sell globally.
- Consumer Trades - Consumers with higher income levels now want to try goods and services from all around the world.
Effects of Globalisation:
- Fewer trade barriers
- Economies of scale
- Risk of spreading/off shoring
- Increased competition
- Employees + jobs, learn new skills
- Customers choice, lower prices, better quality
- Suppliers - source raw materials, cheaper
- Greater competition from businesses across the world and results in lower prices and increased quality.
- Greater market for business growth.
- Firms hire best employees who migrate from other countries
- Moving to cut costs to employees with rivals
- Economies of scale and diseconomies of scale for business due to growth - buying stock in bulk but communication problems between international locations.
- Greater market for business growth.