Topic 1: Business
Organisation and Environment
1.9 Globalisation
•
The ability of corporations to enter international markets
without encountering legal restrictions
•
Allows for corporations to trade and produce in multiple
economies, outside of its own borders.
• Multinational companies • Regional trading blocs
1.9 Globalisation
Multinational Companies
• LO1: Analyse the
role played by
multinationals in the
global business
environment.
• LO2: Evaluate the
impact of
multinational
companies on the
host country.
Multinational Companies
• When a company has
production facilities in
more that one country.
• Take advantage of
conditions in host country,
producing goods or
services at costadvantage, realising
greater profits.
Multinational Companies
•
Why?
•
Domestic market saturation
•
Closer to global customers
•
Lower labour costs
•
Lower taxes
•
Incentives from governments
(monetary and non-monetary)
•
Colonial exploitation
•
Proximity to raw materials and
energy sources
Regional Trading Blocs
• LO: Explain the impact on business of a country that is
a member of a regional economic group/bloc.
• Free trade areas
• Customs unions
• Common markets
• Economic and monetary unions
Free Trade Areas
•
Agreement where members trade without imposition of taxes or restrictions.
•
Member decide independently how to deal with non-member countries.
Customs Unions
• Similar to free trade area
• Common external barrier
for imports
– Quota
– Taxes
– Restrictions
Common Markets
• Similar to customs union
• Free movement of labour
and capital between
members
• Standardised production
Economic and Monetary Unions
• Similar to common market
• Requires single currency
• Single interest rate
• One central bank
Trading Bloc impact on Business
• Depends on...
– Type of trading bloc
– Proportion of business outside
bloc
– Number of competitors
– New opportunities for free entry
– Progression into next phase of
trading bloc
– Level of materials from outside
bloc and consequent restrictions
HW: Globalisation Debate
• Prepare to debate the following statement:
– “Globalisation is good for the world.”
• Split into four teams of three, one for globalisation and one
against.
• You must contribute to your teams argument, making at
least 3 valid points each.
• You will be assessed by both your classmates and me.
• The debate will take place on Thursday.
Work Time
• Discuss three advantages and three disadvantages of
globalisation in the last three centuries.
– You must support your answer with referenced sources.