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Unlock This CourseImagine being able to buy a McDonald's burger in Tokyo, wear Nike trainers made in Vietnam, or video call your friend in Australia - all in the same day. This is globalisation in action! It's the process that has made our world more connected than ever before, changing how businesses operate and how we live our daily lives.
Globalisation affects everything from the clothes we wear to the food we eat and understanding it is crucial for anyone studying business in today's interconnected world.
Key Definitions:
Four main factors drive globalisation: improved transport (faster ships, planes and trains), better communication technology (internet, mobile phones), reduced trade barriers (fewer taxes on imports) and increased foreign investment. These work together to make it easier and cheaper for businesses to operate globally.
Several key forces have pushed globalisation forward, making it easier for businesses to expand internationally and for consumers to access products from around the world.
The internet has been a game-changer for globalisation. It allows instant communication across continents, enables online shopping from international retailers and helps businesses coordinate operations worldwide. Social media platforms like Instagram and TikTok have created global trends that spread faster than ever before.
Email, video calls and instant messaging allow businesses to coordinate globally in real-time, making distance less of a barrier.
Online platforms like Amazon and eBay enable small businesses to sell worldwide, whilst consumers can buy from international sellers easily.
Cloud computing allows businesses to share information instantly across different countries and time zones.
Apple designs its products in California, but manufactures them using components from over 200 suppliers across 43 countries. The iPhone contains parts from Japan (camera), South Korea (screen), China (assembly) and many other nations. This complex global network allows Apple to access the best technology and lowest costs whilst serving customers worldwide.
Globalisation brings numerous advantages for businesses, consumers and economies. Understanding these benefits helps explain why globalisation has accelerated over recent decades.
Companies can access larger markets, reduce costs through economies of scale and source materials from the cheapest suppliers globally. They can also spread risks across different markets and learn from international competitors.
Businesses can sell to billions of customers worldwide rather than being limited to their home market. Netflix, for example, now operates in over 190 countries, dramatically increasing its potential audience and revenue.
Globalisation gives consumers access to a wider variety of products at competitive prices. We can enjoy exotic foods, international fashion brands and entertainment from different cultures. Competition between global brands often leads to better quality and lower prices.
Brands like H&M and Zara use globalisation to offer trendy clothes at low prices. They design in Europe, manufacture in Asia where labour costs are lower and sell worldwide. This global approach allows them to update their collections rapidly and keep prices affordable for consumers.
Despite its benefits, globalisation also creates challenges that businesses and governments must address. These issues affect workers, local communities and the environment.
Globalisation can lead to job losses in developed countries as companies move production to countries with lower labour costs. This creates unemployment in some regions whilst benefiting others. Local businesses may struggle to compete with large multinational corporations.
Manufacturing jobs often move from high-wage to low-wage countries, affecting employment in developed nations.
Global brands can overshadow local traditions and businesses, leading to cultural homogenisation.
Increased transport and production can lead to higher carbon emissions and environmental damage.
Multinational corporations (MNCs) are the main drivers of globalisation. These companies operate across borders, adapting their strategies to succeed in different markets whilst maintaining global coordination.
Successful MNCs balance global efficiency with local responsiveness. They might use the same brand name worldwide but adapt their products to local tastes and preferences.
McDonald's demonstrates how MNCs adapt globally. In India, they serve vegetarian burgers and avoid beef due to religious preferences. In Japan, they offer rice burgers and green tea ice cream. In France, they provide table service and higher-quality ingredients. This "glocal" approach (think global, act local) helps them succeed in diverse markets.
Globalisation continues to evolve, influenced by new technologies, changing political attitudes and global challenges like climate change and pandemics. Understanding these trends helps predict how international business might develop.
The rise of digital services, remote work and virtual reality is creating new forms of globalisation. Companies can now provide services globally without physical presence, whilst people can work for international companies from their homes.
Growing environmental awareness is pushing businesses towards more sustainable global practices. Companies are shortening supply chains, using renewable energy and considering environmental impact in their global strategies.
Globalisation has transformed how businesses operate and how we live our lives. Whilst it brings significant benefits like increased choice, lower prices and economic growth, it also creates challenges including job displacement and environmental concerns. Understanding globalisation is essential for anyone studying business, as it shapes the competitive environment that all modern companies must navigate.
As future business leaders, you'll need to understand how to harness the opportunities of globalisation whilst addressing its challenges responsibly. The companies that succeed will be those that can think globally whilst acting locally, balancing efficiency with sustainability and profit with purpose.