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Chapter 33 - Business And Globalisation - Edexcel GCSE Business

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Published in: Business | Business Strategy | Business Studies
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Revision summary of Chapter 33 - Business and globalisation of the Edexcel GCSE Business syllabus.

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  1. BUSINESS AND GLOBALISATION CHAPTER 33 'Ill
  2. Learning Objectives On completing this chapter, you will be able to: Explain the benefits of globalisation Explain the threats of globalisation Explain how globalisation affects businesses Explain how businesses can compete internationally
  3. GLOBALISATION WHAT IS IT? Globalisation is defined as the tendency for economies to trade increasingly with each other, creating opportunities for international and multinational companies. WHAT DOES IT MEAN FOR BUSINESSES? THE TRUTH Back in the day, British Leyland, a UK firm, had more than 50 per cent of all the car sales in the UK • Today, they find it difficult to get 10% market share Why? Because they face tough competition from around the world THE OPPORTUNITY • In the 1960s, The Beatles recorded versions of their hit songs in German and French to meet local needs Adele's album 25, launched in 2015, however, was only recorded in English but was still a worldwide hit Why? Because English increasingly became a global language
  4. THE INPACT OF GLOBALISATION ON BUSINESS Globalisation affects businesses in multiple ways IMPORTS COMPETITION FRON OVERSEAS BUYING FROM OVERSEAS EXPORTS CHANGING BUSINESS LOCATIONS
  5. INPORTS Imports are goods or services bought from overseas companies. There are GOODS THAT NAVE TO BE BOUGHT ABROAD Because a country cannot naturally grow them. For example, the UAE is a desert and therefore imports most of its food. broadly three types: GOODS THAT REOUIRE A LOT OF LABOUR TIRE Labour-intensive production is cheaper to carry out in developing countries where the labour prices are cheaper. For example, wages in Bangladesh are only 2Sp/hour. GOODS THAT REQUIRE HIGH TECH AND HIGH SKILLS Capital-intensive production is very expensive to maintain, and some countries are going to be more efficient at producing such goods. Countries that are not as efficient typically just import them
  6. CORPETITION FRON OVERSEAS Some countries have a competitive advantage in producing certain goods and services, meaning they can produce them at cheaper prices and at a higher quality This competitiveness may arise due to the fact that they experience lower costs, or simply due to hea•vy investment into R&D EXANPLE - JAPAN • Japan can produce high-quality cars and electronics more efficiently and at a lower cost than many other countries. Why? It has streamlined manufacturing processes (e.g., lean manufacturing, just-in-time production), reducing waste and increasing efficiency, which lowers production costs. • Japanese companies like Toyota, Sony, and Panasonic invest heavily in research and development, fostering innovation and enhancing product quality.
  7. BUYING FRO" OVERSEAS • It is not just consumers who buy goods and services from abroad - firms do too! The production of cars, for example, requires many different components which cannot all be sourced locally • In the production of British cars, for example, over 50% of all components are imported
  8. EXPORTS These are goods and services produced in a home country which are bought by overseas customers. In order to be successful, exports must: BE PRICE- CONPETITIVE Exports must keep costs down so that they can keep prices down as well. Prices must be low enough that exports can compete with both other exports and local production. BE INNOVATIVE & ORIGINAL Exports need to offer what local business are failing to. If there is no novelty or improvement, what's the difference between buying from a local brand or an overseas one? BE OF EXCELLENT OUALITY Excellent sales and after-sales service is also needed in order to ensure that exports stand out.
  9. CHANGING BUSINESS LOCATIONS Some countries have lower costs of production than others, and globalisation has allowed businesses to take advantage of that by moving production to lower-cost locations. For example, Burberry clothes are produced in China, many Zara clothes are produced in Turkey, and many Rimowa suitcases are manufactured in Brazil
  10. BARRIERS TO INTERNATIONAL TRADE However, globalisation also poses some threats, and govts have some toots they can use to protect their own industries from fierce international competition. Examples include: TARIFFS Tariffs are taxes imposed on imported goods. They are also known as duties, For example, China taxes luxury cars at +25%. TRADE BLOCS That is an agreement between countries to trade freely with each other behind a tariff wall that discourages outsiders. The ELI and NAFTA are examples. PROTECT NATIONAL INDUSTRIES They make imports more expensive relative to home- produced goods. INCREASE COST OF LIVING As import prices increase, Living standards falL_ Import-heavy economies suffer the most. PREVENT GLOBAUSATION As import prices increase. households switch to home goods, preventing global trade. How can businesses counter tariffs? By producing in the country imposing high taxes.
  11. HOW CAN BUSINESSES CORPETE INTERNATIONALLY? INTERNET & E-COMERCE e-commerce provides the opportunity to sell globally without the cost of setting up operating divisions worldwide ADAPTING THE MARKETING NIX The marketing mix consists of product, price, promotion and place. Take the iPhone, for example, when Apple entered the UAE: Product: no FaceTime app Price: higher, to reflect higher purchasing power Promotion: ads adapted to ensure culture and religion were respected Place: used well-known and experienced distributors
  12. 201S 2020 10 Figure E• commerce sales as a percentage Of all retail 2020 com. December 20151
  13. Revision essentials Competing internationally; finding a way to Succeed against rivals from Overseas, Free trade: trade between countries With no barriers. for example no tariffs, Globalisation: the increasing tendency for countries to trade With each Other and to buy global gt:OdS, such as Coca-Cola. or services. such as Costa Coffee. Imports: goods or services bought from overseas. Tariffs: taxes charged only on imports. Trade blocs: a group of countries that have agreed to have free trade within external tariff walls. End of chapter exercises What point is being made in the text on page 162 about The Beatles and Adele? 2 The ELI is unusual for making free movement Of a key par: Of the trade bloc. Explain why businesses may favour the free movement of labour . 3 Look at the Figure 33.1 on page 165. Compare the figures for Asia-Pacific with those for Western Europe, 4 Read the following extract, Explain how Cadbury has changed its marketing mix to compete internationally. With becoming a more popular event in countries in Europe and Asia. Cadbur•,' is thinking of launching its Screme Eggs [Creme Eggs With a filling] globally. Managers see no reason to change the packaging, labelling or advertising approach. because English text will make the products seem more American and. pricing will be higher. . however. partly because of the costs of getting the new brand established, and also because a high price gives credibility to a brand in a country such as Japan. So. instead Of a price Of in Britain. a Screme Egg will be the equivalent of El overseas. 5 Discuss whether the globalisation of Halloween/Screme Eggs is a good or bad thing for chocolate producers such as Cadbury
  14. Practice questions Jean genie Lidl magics up [599 : headline tm a last : as it supermarket chain agam undercutting rivals r he retader_ it on the : traditional SupermZ•ket giants by largeting the high ee s r t *ith jeans for an less em a similar in do it? the tine Lid' ms huge power was the answer was lust deals But us It i ' Potter so they so cheap is one of ns like are little as tor pat' they make : Still. quite an when even • - in ast-cutting field - : only managed get : they da it? n the to that firm, [kg • British high street O' ilS shopping in Bangladen the What COSt Of a pair • MatriaL zig lop. buttons 'p. Ip' label ' 9p Was h i mg 47p 2-9p per an hour and output ten jeans per hour = 2, 39 per pair) Shipphg: 80p . 13 March 1 Outline One a minimum State wage a garment 3 Outlim ore rwn why Lidl might mntto otter jeans at CS89 a pa'r uwd to S CidL enjoyed huge of its [599 but is what to do that sales slipped sees two • Option V push toget Bangladesh to • O tion 2; Jurity which on. ot cotims the management should

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