Globalisation

Globalisation

1. DEFINITION

   • Economies coming together to form a world economy.
     • E.G. we can see brands that are sold worldwide, like McDonalds or Coca-Cola.

2. FACTORS ALLOWING GLOBALISATION

   • Trade liberalisation.
   • Structural Change.
   • Political Change.
   • Growth of the labour force.
   • Increased communication, e.g. Skype
   • Decreased cost of transportation.
   • Migration

3. BENEFITS TO THE FIRM

   • More choice of raw materials.
   • Cheaper raw materials.
   • Easier access to more markets.
   • More choice of capital and labour.
   • Firm can expand and reap economies of scale.
   • Corporate Expansion
     • MNCs can be expand, this allows them to have lower costs - EoS, control key suppliers.

4. BENEFITS TO COUNTRY/CUSTOMERS

   • Increased FDI flows
   • More choice of goods
   • Cheaper goods
   • Increased tax revenue
   • Greater potential for growth for developing economies.
   • Better infrastructure
   • Transfer of tech and skills.

5. DRAWBACKS TO COUNTRY/CUSTOMERS

   • Increased gap between rich and poor.
   • Richer nothern hemisphere may dominate.
   • Can drive indiginous industries away.
   • MNC may exploit workers and resources.
   • May evade tax
   • May put small firms out of business.
   • Lack of culture
   • Lack of opportunities for the poor.