Business IGCSE (0450)
Business and the international economy
Concept of globalisation
The world is becoming one large market rather than separate
national markets. The same goods and services can be found
across the world. Reasons for the increase in global trade and
movement of products, people and capital:
• Increased free trade agreements and economic unions
this means that consumers can buy goods and services
from other countries with very little import duties or tariffs
• Improved and cheaper transportation systems as well as
improved communication with better internet allows buying
goods globally easier
• Many emerging market are industrialising very rapidly.
Opportunities and threats of globalization
Þ Increasing free trade and the mobility of labour and capital
have effects on the business, some of these effects are
positive and some negative
Opportunity Impact on business
Selling to other countries – opens a Increases sales in faster growing
whole new foreign market markets
It can be expensive to sell overseas
Become multinational Can be cheaper to make the goods
overseas
Quality might not be as good
, Import products With little to no trade restrictions it
becomes profitable to buy imported
goods
Goods will need maintence
Import raw goods but finish the product
at their home country
Threats Impact on business
Increased imports Sales of local businesses could fall
The increased competition may force
other businesses to become more
efficient
Increased investments from This creates further competition –
multinationals to set up businesses business could have economies of scale
Some local firms may supply the
multinationals and increase profits
Employees may leave the business for
the international competitors
Globalisation has led to increased choices and lower prices for
consumers. Has allowed other businesses to look for ways of
increasing efficiency. Many firms have merged with foreign
businesses to make it easier to sell in foreign markets.
Why governments might introduce import tariffs and import
quotas
import tariffs are a form of taxes that governments uses to raise
revenue. They are also forms of protection – to protect
domestic industries from international competition that might
close them down. Foreign competitors could be able to produce
products cheaper and if they were allowed to import without
any restriction they would make more profit.
Business and the international economy
Concept of globalisation
The world is becoming one large market rather than separate
national markets. The same goods and services can be found
across the world. Reasons for the increase in global trade and
movement of products, people and capital:
• Increased free trade agreements and economic unions
this means that consumers can buy goods and services
from other countries with very little import duties or tariffs
• Improved and cheaper transportation systems as well as
improved communication with better internet allows buying
goods globally easier
• Many emerging market are industrialising very rapidly.
Opportunities and threats of globalization
Þ Increasing free trade and the mobility of labour and capital
have effects on the business, some of these effects are
positive and some negative
Opportunity Impact on business
Selling to other countries – opens a Increases sales in faster growing
whole new foreign market markets
It can be expensive to sell overseas
Become multinational Can be cheaper to make the goods
overseas
Quality might not be as good
, Import products With little to no trade restrictions it
becomes profitable to buy imported
goods
Goods will need maintence
Import raw goods but finish the product
at their home country
Threats Impact on business
Increased imports Sales of local businesses could fall
The increased competition may force
other businesses to become more
efficient
Increased investments from This creates further competition –
multinationals to set up businesses business could have economies of scale
Some local firms may supply the
multinationals and increase profits
Employees may leave the business for
the international competitors
Globalisation has led to increased choices and lower prices for
consumers. Has allowed other businesses to look for ways of
increasing efficiency. Many firms have merged with foreign
businesses to make it easier to sell in foreign markets.
Why governments might introduce import tariffs and import
quotas
import tariffs are a form of taxes that governments uses to raise
revenue. They are also forms of protection – to protect
domestic industries from international competition that might
close them down. Foreign competitors could be able to produce
products cheaper and if they were allowed to import without
any restriction they would make more profit.
