globalisation Flashcards
(7 cards)
Globalisation
Globalisation is the process of greater integration and inter-connectedness between countries
Globalisation usually includes the following features and characteristics:
Free movement of goods and services
Free movement of labour
Free movement of capital
Increased cultural exchange
The International Monetary Fund (IMF)
The International Monetary Fund (IMF) define globalisation as “The process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies.”
Factors Contributing to Increased Globalisation
Communication Technologies
Liberalisation of Trade
Cheaper cost of Transportation
Consumer Tastes changing
This leads to
ncreased competition
Forces businesses to be efficient and compete on price or by being highly differentiated
May force some domestic businesses out of the market
Greater choice for consumers
More opportunities for suppliers
Opportunities for growth
Target new markets
Global mergers or joint ventures
Shared expertise
Strategies to achieve global growth
Cost competitiveness - Michael Porter suggested that businesses can gain a competitive advantage through having the lowest cost
Differentiation - differentiate by adapting the actual product through branding and advertising
Global branding
External growth
These strategies of global growth depend on :
Choice or target market, factors depend upon:
Levels and growth of disposable income
Ease of doing business
operating in global markets (Benefits)
Larger target market
Economies of scale
Access to materials, technologies and expertise
Spread risk
Reduced seasonality
Brand recognition
Dominant business
Drawbacks of operating in global markets
Language and cultural differences
Diseconomies of scale
Risk of dilution or taking eye of core business
Potential damage to reputation/ethics
Fluctuating exchange rates
Logistics
Intellectual property
