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Globalisation and UK Businesses

Understanding the dynamics of international trade and multinational corporations.

Core Concept: Globalisation

Definition and Impact

Globalisation refers to the growing interconnection and interdependence of countries through increased international trade, investment, and cultural exchange. It significantly affects how businesses operate and compete.

What is International Trade?

International trade is the exchange of goods and services across countries via exports and imports.
Exporting allows businesses to access new customers abroad, while importing helps reduce costs or source materials unavailable locally.

Trade Dynamics: Pros vs Cons

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The Advantages
  • Growth and market expansion
  • Spreading risk
  • Increased sales and profits
  • Access to technical knowledge
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The Disadvantages
  • Language and cultural barriers
  • Supply chain issues
  • Currency fluctuations
  • Local taxes and laws

Defining Globalisation

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How does Globalisation manifest beyond simple trade?
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Globalisation involves increased international trade, the rise of multinational companies (MNC), and freer movement of labour and capital across borders. It results in more integrated world markets and interconnected economies.

Globalisation: Opportunities & Threats

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Opportunities Access to larger markets, cheaper labour costs, global sourcing, technological sharing, and economies of scale.
❌
Threats Increased competition from foreign firms, pressure on wages, outsourcing of jobs, and vulnerability to global economic fluctuations.

UK Business & Stakeholder Impact

Globalisation brings complex changes affecting stakeholders both positively and negatively.

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Positive Impacts

Job creation, innovation.
❌

Negative Impacts

Closure of some domestic businesses.
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Consumer Gain

Increased consumer choice, and access to capital.
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MNC Issues

Environmental concerns, and profit repatriation by MNCs.

Multinational Company (MNC) Profile

A multinational company operates in multiple countries, often with production, marketing, and management spread across locations. MNCs benefit from:

1

Market Expansion

Increased market share by selling worldwide.
2

Cost Savings

Cheaper production costs in developing countries.
3

Efficiency

Economies of scale reducing unit costs.
4

Trade Strategy

Avoiding some trade barriers by producing in target markets.
5

Incentives

Accessing government grants and incentives offered to foreign investors.

MNC Impact on Wales and the UK

✅
Positive Impacts Job creation, skills transfer, new technologies, contribution to GDP, and increased consumer choices.
❌
Negative Impacts Environmental damage, exploitative labour practices, deskilling of local workers, and profits leaving the UK economy.

The European Union Framework

The EU is a political and economic union of European countries promoting free trade and common regulations.
Definition of the European Union.
The European single market allows free movement of goods, services, capital, and labour between member states, removing many trade barriers.
The key operational principle of the EU economy.

EU Relationship: Benefits & Challenges

Businesses have had to adjust their strategies based on the changing relationship with the EU to protect profitability and market access.

✅
Membership Benefits Easier access to member markets, streamlined regulation, freedom for workers to move, and trade facilitation.
❌
Non-membership Challenges Trade barriers, customs checks, regulatory divergence, and potential labour shortages.

Applying Knowledge of Globalisation

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Students should investigate examples like automotive companies sourcing parts globally, tech firms operating worldwide, or small craft businesses exporting niche products, analyzing how globalisation shapes these operations.

Globalisation and UK Businesses Deck
Term
Globalisation

What is globalisation?

Answer
Definition

The increasing interconnection and interdependence of countries through trade, investment, and cultural exchange.

Term
International Trade

What does international trade involve?

Answer
Definition

The exchange of goods and services across countries through exports and imports.

Term
Advantages of International Trade

Name two advantages of international trade for UK businesses.

Answer
Advantages

Market expansion and spreading risk.

Term
Multinational Company (MNC)

What is a multinational company (MNC)?

Answer
Definition

A business operating in multiple countries with production, marketing, and management across different locations.

Term
Opportunities & Threats of Globalisation

Mention one opportunity and one threat of globalisation for UK businesses.

Answer
Examples

Opportunity - Access to larger markets; Threat - Increased competition from foreign firms.

Term
EU Membership Benefits

How does EU membership benefit UK businesses?

Answer
Benefits

Easier access to member markets and freer movement of goods, services, capital, and labour.

Term
Currency Fluctuations

What impact can currency fluctuations have on UK businesses engaged in international trade?

Answer
Impact

They can increase costs or reduce profits.

Term
Impact of MNCs in the UK

Give one positive and one negative impact of multinational companies in the UK.

Answer
Impacts

Positive - Job creation; Negative - Environmental damage.

Term
European Single Market

What is the European Single Market?

Answer
Definition

An EU system allowing free movement of goods, services, capital, and labour between member states.

Term
Language & Cultural Barriers

How do language and cultural barriers affect international trade?

Answer
Effect

They complicate communication and marketing strategies.

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🌍 Globalisation and UK Businesses Quiz

1. What is globalisation?

Globalisation involves growing international connections via trade, capital, and labour.

2. Which of the following is an advantage of international trade for UK businesses?

Selling abroad increases potential customers and revenue streams.

3. What is one disadvantage UK businesses face due to globalisation?

Changes in exchange rates can impact costs and profits.

4. Which is NOT a characteristic of a multinational company?

MNCs work across multiple countries, not just one.

5. Membership in the EU single market allows UK businesses to:

The single market removes many trade barriers including tariffs and customs.

📊 Results

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