The Core Concept
Globalisation creates both massive opportunities and serious challenges for businesses. To succeed internationally, you need to understand why trade happens, what barriers governments use to protect local businesses, how multinational companies operate across borders, and how currency fluctuations instantly change who wins and who loses.
Chapter Overview
🌍 Globalisation
Why trade between countries has exploded, and the opportunities and threats it creates for businesses.
🚧 Tariffs & Quotas
How governments protect domestic industries by making imports more expensive or limiting quantities.
🏢 Multinational Companies
How giant businesses operate in dozens of countries simultaneously and the impacts they have.
💱 Exchange Rates
How currency values change and why this instantly affects whether exporters or importers win.
1. The Importance of Globalisation
What is Globalisation?
Globalisation is the economic integration of different countries through increasing freedoms in cross-border movement of people, goods, services, technology, and finance. In simple terms: the world is becoming one massive market instead of separate national markets.
Globalisation
The process by which national economies become linked into one global economy. Businesses can now sell to anyone, anywhere, using instant communication and relatively low shipping costs.
Real Example
Starbucks is headquartered in Seattle, USA, but operates 32,000 stores across 80 countries. You can buy the same coffee in Tokyo, London, or Dubai. That's globalisation in action.
Imports and Exports
Two key flows make global trade work:
| Term |
Definition |
UK Example |
| Imports |
Goods and services bought from another country |
UK imports ~£3.25bn of cars from other countries annually |
| Exports |
Goods and services sold to another country |
China exports ~$21.4bn of smartphones to other countries |
Why does this matter to businesses? Exporting generates extra revenue (opens new markets). But it also means money leaves the country, benefiting foreign companies. Importing gives customers more choice and lower prices, but domestic producers face tougher competition.
Why Has Globalisation Accelerated?
The Five Main Drivers of Globalisation
- Technology advances: The internet, smartphones, and instant communication have made it trivially easy to connect across borders. Businesses can coordinate supply chains in real time.
- Trade liberalisation: Governments have signed trade agreements and removed tariffs/quotas on many goods, making cross-border trade smoother.
- Transportation improvements: Containerisation, cheaper air freight, and mega-ships mean shipping goods globally is now cost-effective even for low-margin items.
- Political and economic reforms: Countries like Laos have opened their markets to foreign investment, creating new opportunities for MNCs to operate.
- Cultural awareness: Through media and education, people now crave diverse global brands. A teenager in Jordan wants Nike shoes and can buy them online instantly.
Business Opportunities from Globalisation
| Opportunity |
How It Helps a Business |
|---|