Year 10 GCSE Economics
3.4 Globalisation / FDI (p59)
Objectives:
Understand why foreign firms choose to
operate in the UK.
Understand the consequences for the UK
economy when overseas firms relocate.
Apply understanding to Kraft takeover of
Cadburys
Key terms
• Foreign Direct Investment (FDI): When a
business from one country builds a factory
in another.
Reasons why foreign firms locate in the UK
• Access to highly skilled labour workforce
• Instant access to EU without trade barriers
(500 million + consumers)
• Access to British brands and distribution
networks. Example Cadburys retailers for
Kraft.
• English language accepted international
language for business, science and
technology.
Problems when foreign firms exit
UK market
• Jobs lost directly in local economy
• Government lose taxation
• UK firms that supply the business lose
revenue and may make job cuts
• Government may need to spend money on
education and retraining in the region
affected.
Example successful FDI in UK:
Cadbury’s / Kraft
case study
• Create a timeline display of the Kraft takeover of
Cadburys
• Identify the reasons ‘for’ (Kraft’s) decision to
takeover Cadburys.
• Identify the arguments “against” the takeover.
• Analyse the consequences on at least three
different stakeholders of the takeover. Please
include actual evidence from the media to
support your analysis.
• Your findings should be reported in a ppt
presentation
Web links for research:
• http://www.ft.com/indepth/cadbury-kraft
• http://news.bbc.co.uk/2/hi/8467007.stm
• http://www.marketingweek.co.uk/news/kraft-completestakeover-of-cadbury/3009469.article
• http://www.mirror.co.uk/news/top-stories/2010/01/20/wecan-t-sell-out-to-kraft-a-plastic-cheese-company-11587521980876/
• http://www.southwestbusiness.co.uk/news/concern-Krafttakeover-Cadbury/article-3583350-detail/article.html
• http://video.ft.com/v/750928659001/Kraft-Cadbury-oneyear-on