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GLOBALISATION AND UK BUSINESSES

Core Definitions

Globalisation refers to the increasing integration and interconnection of economies, cultures, and markets worldwide through flows of goods, services, capital, information, and people.

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Globalisation

Increasing integration and interconnection of economies, cultures, and markets worldwide.
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Exporting

Selling products abroad.
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Importing

Sourcing materials and components from other countries.
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Exchange Rates

The values at which one currency can be exchanged for another.

International Competition Drivers

One key effect of globalisation is that UK businesses compete internationally. This competition encourages innovation and efficiency.

1

Better Designs

UK car manufacturers might need to improve product features to match or outperform foreign competitors.
2

Higher Quality Products

To match or outperform foreign competitors.
3

Lower Prices

To reduce production costs to remain price competitive.

Global Operations and Risks

Profitability = Global Trade - Exchange Rate Fluctuations
Globalisation allows UK businesses to operate globally but exposes firms to risks like fluctuating exchange rates, which affect the cost of imports and the profitability of exports.

Pound Value Impact

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A Weaker PoundMakes UK exports cheaper and more competitive abroad, potentially increasing sales.
*But it also makes imported raw materials or goods more expensive, raising costs.
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A Stronger PoundCan reduce export competitiveness.
*While lowering the cost of imports.

Risk Management Strategy

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Handling Fluctuations: Businesses involved heavily in international trade must manage exchange rate risks through strategies such as forward contracts or pricing adjustments. They also need to adapt marketing and product standards to suit different countries’ norms and regulations.

Benefits and Drawbacks

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The BenefitsAccess to larger markets, increased sales potential, economies of scale, exposure to new ideas, and sometimes cheaper materials or labour.
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The DrawbacksExposure to global economic fluctuations, intensified competition from multinational corporations, supply chain risks (such as disruptions caused by political instability or pandemics), and ethical challenges related to sourcing products.

The Conclusion

Overall Impact

Overall, globalisation forces UK businesses to be more flexible, innovative, and internationally minded to survive and thrive in an interconnected world.
Globalisation and UK Businesses Deck
Term
Globalisation

What is globalisation?

Answer
Definition

Increasing integration and interconnection of economies, cultures, and markets worldwide.

Term
Impact on UK Businesses

How does globalisation impact UK businesses?

Answer
Effect

Expands market opportunities and exposes them to international competition.

Term
Effect of International Competition

What is a key effect of international competition on UK businesses?

Answer
Outcome

Encourages innovation, better quality, and lower prices.

Term
Exchange Rates

How do exchange rates affect UK businesses?

Answer
Effect

They influence the cost of imports and the profitability of exports.

Term
Pound Weakening

What happens when the pound weakens?

Answer
Impact

UK exports become cheaper and more competitive abroad, but imports cost more.

Term
Exchange Rate Risk Strategy

Name one strategy UK businesses use to manage exchange rate risks.

Answer
Strategy

Forward contracts or pricing adjustments.

Term
Benefits of Globalisation

What are some benefits of globalisation for UK businesses?

Answer
Benefits

Larger markets, economies of scale, exposure to new ideas, cheaper materials or labour.

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Drawbacks of Globalisation

What are some drawbacks of globalisation for UK businesses?

Answer
Drawbacks

Global economic fluctuations, tougher competition, supply chain risks, ethical challenges.

Term
International Marketing & Standards

Why must UK businesses adapt marketing and product standards internationally?

Answer
Reason

To meet different countries’ norms and regulations.

Term
Response to Globalisation

Overall, how must UK businesses respond to globalisation to thrive?

Answer
Approach

By being flexible, innovative, and internationally minded.

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🌍 Globalisation and UK Businesses Quiz

1. What does globalisation primarily involve?

Globalisation connects economies and markets worldwide, promoting interdependence.

2. How does a weaker pound affect UK exporters?

A weaker pound lowers export prices when converted to foreign currencies, boosting competitiveness.

3. Which of the following is NOT typically a benefit of globalisation for UK businesses?

Increased competition is considered a drawback, not a benefit.

4. How can UK businesses manage risks caused by exchange rate fluctuations?

These strategies help mitigate the financial risks of currency changes.

5. Why must UK businesses adapt their marketing and product standards internationally?

Different markets have unique demands and legal requirements.

📊 Results

  • Notes and Quiz
  • Business
  • GCSE
  • External Influences
  • AQA