Globalisation: An Introduction

Globalisation: An Introduction

• Globalisation is the economic integration of countries through increased freedom in the movement of people, goods, services, technology, and finance.
• International business expansion has seen rapid growth in the past two decades.
• Businesses trading internationally import and export goods and services.
• Imports are goods purchased in one country from another. UK's largest import in 2022 was cars (£3.25 billion).
• Exports are products sold by domestic businesses to international markets. China's largest export in 2022 was smartphone manufacturing ($21.4 billion).
• Exports boost a nation's revenue, while imports lead to money leaving the country, generating revenue for foreign businesses.

Reasons for Globalisation

• Globalisation is driven by technological advancements, saturated domestic markets, and deregulation.
• Technological advancements enable faster communication, data transfer, and online sales worldwide.
• Improved transportation networks facilitate international business travel and product distribution.
• Deregulation, including removing trade barriers and simplifying financial systems, eases international trade.
• Governments actively promote increased trade facilitating easier movement of people, products, and finance across borders.
• Domestic market saturation necessitates seeking new markets overseas for growth.
• Increased consumer familiarity with global brands through tourism and media exposure.

Opportunities of Globalisation

• Globalisation, particularly since the 1990s, has led to reduced poverty in developing countries, increased employment, and improved living standards, health, and education outcomes
• Businesses gain advantages via globalisation.
• Businesses benefit from better-qualified and more productive workforces.
• Businesses find more attractive markets and new production locations.

Main Opportunities of Globalisation for Businesses

• Large Markets: Global markets offer substantially more customers than domestic ones, increasing revenue and profitability. China's Huawei, for instance, sells electronics in over 170 countries, earning CN¥73.05 billion in 2023.
• Economies of Scale: Increased output generates higher sales and reduced costs for businesses leading to profit and improved competitiveness. Unilever, the fifth largest consumer goods company globally, sells over 400 brands in 190 countries and benefits from economies of scale.
• Labour: Globalisation helps overcome staff shortages by enabling businesses to employ workers from other countries. Businesses experiencing labour shortages or aiming for lower costs can obtain cost-effective labour in regions with lower wages. Businesses can employ high-quality specialists from anywhere in the world. Gillette, for example, largely manufactures its shaving products in China, where it owns two factories.