Globalisation and UK Business
A293 OCR GCSE
So you live in 2011 and consider
yourself to be a switched on
connected individual – phone
Internet and so on, so....
What do you think globalisation
is?
By the way only the Americans
spell it with a Z “globalization”
What is globalisation?
• Generally defined as the
network of connections
of organisations and
peoples are across
national, geographic and
cultural borders and
boundaries.
• These global networks are
creating a shrinking world
where local differences
and national boundaries
are reducing.
How Globalised is the
UK compared to other
countries, wiki table of
globalisation
What is globalisation? cont..
• This is the trend where
people are becoming
more interconnected and
interdependent.
Information technology is
driving this trend by
enabling companies to
move money and ideas
instantly at the click of a
mouse.
• The ways in which goods
and information are
moved between countries
are becoming easier.
BBC learning
clip
Globalisation 4
mins
What does globalisation mean for
everyone then?
• People around the globe are
more connected to each
other than ever before.
• Information and money
flow more quickly than ever.
• Goods and services
produced in one part of the
world are increasingly
available in all parts of the
world.
• International travel is more
frequent.
What is this?
Small business globalisation
• Ebay and Amazon
make it easy for
companies outside of
UK to trade
• Customers can pay
with paypal
• Good can be
dispatched air mail
Globalisation sample paper question
Uk international trade
• International trade is
the exchange of goods
and services between
different countries. UK
business can compete
against foreign rivals by
offering better
designed, higher quality
products at lower
prices.
Uk premier Exports
We EXPORT good to other countries
Top 50 Brands
of British
origin
Scroll down
for
Vodaphone
case study
Where do we export all this stuff to
then?
What are we buying and selling
(mostly)
We buy - import
We Sell - Export
Carbon footprint of all these imports??
What goods do you
think we import
Which country do you
think we import the
most from?
What do we import?
•
•
•
•
Cocoa from Africa
Electrics from China
Cars from USA and Germany
Wine from France (UK is largest importer in the world of
wine)
• Oil
Wine article
• Wood
• United Kingdom imported $636 billion worth of foreign
goods last year led by foodstuffs, fuels, machinery and
manufactured goods. Leading suppliers to the UK market
were Germany (13.1%), US (8.7%), China (7.5%),
Netherlands (7.4%), France (6.8%), Norway (6%), Belgium
(4.7%) and Italy (4.1%).
UK trade with EU
• Trading with other European Union (EU)
countries offers a number of key benefits to
businesses in the UK.
• The EU's 27 member states include some of
the world's wealthiest and most productive
countries.
• The EU is a huge market in which to sell your
goods and services - it also gives you access
to a huge source of suppliers.
Globalisation generally has put pressure on
many traditional job sectors in the developed
world. Many of the newer members of the EU
have economies with much lower costs,
making them attractive sources of production
for businesses in this country. And many
workers from the new Member States have
come to work to the UK, and some other
Member States. This has benefited our
economy overall.
But this is only one facet of globalisation. EU
enlargement should help increase the
prosperity of new member states in Eastern
Europe, opening new opportunities for UK
businesses.
Can you name all 27
member states
You have 5 mins, one
with the most wins!!!
Austria
Belgium
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Romania
Bulgaria
Single market
• At the core of the EU is the single market the programme of freeing up the trade of
goods and services and the movement of
people between EU countries.
• The aim is that doing business with other EU
countries should become increasingly like
doing business within your own country.
What do businesses need to consider
when trading with the good ol’ EU?
• Cultural differences what is a staple item to us
may not be to another
country (consider pot
noodle to china)
• Language barriers – do
you need a translation
service?
• Legislation – EU banned
export of British beef
• Transport – freight
EU trade video
For more complex analysis
5 mins
EU relaxes ban on
exports of beef from
Scotland
Exchange rate effect on business
• Money is demanded in
order for it to be used to
buy and sell goods and
services.
• The same applies to
international currency.
• Foreigners buy pounds in
order to buy British and
other goods and services.
• The exchange rate is the
rate at which the £1 will
exchange with other
currencies
Exchange rate calculation examples
• We will assume that £1 initially exchanges for 2 euros.
• If Nestle sells one Kitkat for 50p in this country, it will cost 1euro in
France!
• However if the £ falls in value to £1.50 euros the same Kitkat will
only cost 0.75 euros in France.
• We would therefore expect Nestle to sell more chocolate bars and
other goods in the European Union at the lower exchange rate.
So is a weak £ good or bad for UK exports???
Sample paper question on exchange
rates
Answer to past paper question
Another sample paper exchange rate
question (bit harder this time)
Note: exchange rate in 2008 was £1- $2.00
Answer