A2 2 Business Studies — Globalisation

Globalisation means the ‘cultural, political, economic and technological interdependencies between national institutions and economies’.

International trade provides local businesses with opportunities for survival and growth.

Advantages of Globalisation

• Advances developing nations economies
• Increases wealth and efficiency
• Creates jobs in developed nations
• Declining trade barriers and increased investment facilitate greater prosperity and stimulate economic growth

Disadvantages of Globalisation

• Job losses are suffered in industries facing competition from foreign competitors
• The gap between the rich and poor nations has increased
• Economic power has moved away from national governments and into the hands of supranational organisations such as the World Trade Organisation, European Union and United Nations.

Advantages of International Marketing

• Local market may be saturated hence global market may provide more opportunities to increase market share
• Locally based business may exploit low cost opportunities in an international market, minimising costs and increasing profitability
• Tax incentives may be provided to local businesses to encourage operating within international markets

Disadvantages of International Marketing

• Need to be aware of the different cultures within each country within the global market
• Fluctuating exchange rates need to be managed properly
• Need to be aware of potential trade barriers which may exist in relation to its products

Multinational Corporations

A business that directly invests abroad in different countries.