A1 Globalisation
Globalisation refers to the increased connections between people, organisations and countries around the world. This has been supported through removal of trade barriers, easier travel and improved communication networks. Globalisation has allowed businesses to trade on an international scale.
Features of Globalisation
The growth of trade blocs has made it easier for businesses to trade overseas due to the removal or reduction of trade restrictions.
The growth of international transport systems such as container shipping, rail, road and flight has made it more and more possible for goods to be bought and sold across different countries.
International mobility of labour has increased both due to governments easing restrictions, skills being transferrable across borders and ease of travel and communication making a relocation an easier experience for the individual.
International currency exchanges allow organisations and individuals to easily access foreign currency. Globalisation has increased the availability and speed of international currencies.
Communication technology is improving at an exponential rate which allows businesses to easily communicate with different branches and customers.
Challenges of Globalisation
The economic influence of international business can include the income inequality that can result from specialisation of labour requiring less skills and lower wages in comparison to high profits received by shareholders and senior level staff. Another influence is the impact of international trade on the balance of payments, increased imports has a negative impact on the current account.
The political influence of international business can include the issues around tax avoidance, environmental policy and standards of living. Large organisations that operate in emerging economies may be able to put pressure on the government to deregulate certain practices that have a negative impact on society. This is referred to as the ‘race to the bottom’.
Population movements as a result of international job opportunities may leave some communities and economies with a shortage of skilled labour.
Increase in protectionist economic policies may be put in place to protect local businesses. This can make it difficult to trade.
