Globalisation

Globalisation: The growing integration of the world's economies.

Goods and services are traded throughout the world.

Many people are able to live and work in the country of their choice.

There is a high level of interdependence between countries.

The US financial crisis of 2008 had an impact on many economies around the world.

Capital flows freely between many countries.

Increasingly global recognition of intellectual property.

However.....

Barriers to trade such as tariffs still exist.

Free movement of people is limited to certain areas such as the EU.

Globalisation quickly developed from the 1980's.

Reasons:

 

1. Reduction of international trade barriers (trade liberalisation). 

There have been a number of trade agreements between countries to encourage trade.

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The WTO (World Trade Organisation) encourages such agreements.

2. Political change.

In 1991 communist rule ended in the Soviet Union and the old soviet bloc of nations dissolved.

China has embraced economic reforms and welcomed foreign investment into the country.

3. Reduced cost of transport and communications.

Containerisation has revolutionised transportation.

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Air travel has also become cheaper.

http://www.spicejet.com/ 

The internet has allowed for the fast and cost effective transfer of data around the world.

Outsourced nursing. Details here.

4. Increased significance of transnational / multinational companies.

These companies make significant contributions to world GDP.

They are responsible for two thirds of global exports.

They spend considerable amounts on R & D.

5. Increased investment flows.

FDI spreads business activity, job creation and wealth all over the world.

FDI makes a huge contribution to globalisation.

FDI allows businesses to operate where trade barriers exist.

6. Migration

The UK has seen net migration into the UK running into hundreds of thousands per year.

How does this contribute to globalisation?

- Importation of goods from migrants home countries.

- Migrants often provide a source of low cost labour.

This could give some industries a competitive advantage.

- Some migrants are highly skilled people who can fill gaps in the labour market.

Migration can also occur within a country.

China has seen the largest movement of people from rural to urban areas in the history of the world.

7.Growth of the global labour force.

1980: global labour force was 1.7 billion.

2010: 2.9 billion.

A large number of these extra workers were from China and India.

More workers means more global demand.

Pleantiful supplies of labour keeps costs down which is good for global businesses.

8. Structural change.

A decline of traditional industries in the west has led to a huge growth in the tertiary sector. 

Many of these businesses can operate anywhere in the world.

The growth of export oriented knowledge industries has also increased globalisation.

Globalisation: good or bad?

Will globalisation take your job? Details here.

External Influences: Globalisation

Impact of globalisation on UK supermarkets:

The ability to source food and other products globally.

Changing patterns of demand as consumer tastes become more global.

The ability to operate in overseas markets.

The possibility of increased competition from overseas retailers.

The ability to hire a wider range of people because of migration.

The need to stock ‘world foods’ because of migration.
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External Influences: Ethics

Supermarkets and ethical issues.

We will not be considering environmental issues as they are covered by the next bullet point.

Animal welfare:

The issues explained here.

Why does it matter to supermarket chains?

A number of consumers are very concerned about animal welfare issues.

If they take their business elsewhere then the supermarkets will lose financially.

They could also suffer from negative publicity.

How the supermarkets have responded: look for the CSR report from the company. An example is here.

What financial impact may these policies cause?

Dealing with suppliers:

Supermarkets have been accused of treating their suppliers in an unethical way.

What do you think they did?

The supermarkets respond:

How might this financially impact on the supermarkets?

Fair Trade:

What is it?



Why do you think it matters to supermarkets?
Is there a financial cost to supermarkets?

External Influences: Ethics

Business Ethics

Business ethics are moral principles that guide the way a business behaves. 

The same principles that determine an individuals actions also apply to business.

What is the 'morally' correct way for an individual to live their life?

The wallet challenge:

What would you consider to be 'unethical' business behaviour?

Using child labour

Using forced labour

Damaging the environment

Having unsafe working conditions

Paying bribes

Anything else?

Examples of unethical business activity.

The deadly cost of fashion:The Rana Plaza factory collapse.

The accident left 1334 dead and hundreds more injured. More here.

Corruption: what does it mean?




Paying bribes - how corrupt is the UK?
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External Influences: Environmental Issues

Identify and analyse costs and benefits to the environment caused by your organisations activities.

Methods of production and distribution:

Costs:

Improper use of pesticides, antibiotics and other chemicals.

High transport costs and therefore unnecessary carbon emissions. This is commonly called 'food miles'.

Food miles calculator. Details here.

Other environmental concerns:

A responsible approach to the use of genetically modified food.

Reductions in carbon emissions caused by the organisations operations.

Bio-diversity.

Awareness of the problems of producing unwanted foodstuffs and consequent waste products.

Excessive packaging and the use of plastics in retailing.

Benefits:

Does your supermarket chain make any claims about the environmental impact of its operations?

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External Influences: Markets and Competition

Understand how markets and competition affects business activity.

Perfect competition:

Buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

Monopolistic competition

Many buyers and sellers of differentiated products.

Relatively easy to join the market.

Large number of independent firms.

Firms are price makers and profit maximisers.

Examples: restaurants, hairdressers.

A state of limited competition, in which a market is shared by a small number of producers or sellers.

Monopoly:

The exclusive possession or control of the supply of or trade in a commodity or service.

UK supermarket sector: nice link here.



Market share figures for 2016 here. Find more up-to-date information and reference it appropriately according to the Harvard style.

UK supermarkets:

Impact of competing in a competitive market:

Price

In a highly competitive market, businesses have less control over the prices they charge.

Profits

These have to be shared with a number of businesses in a competitive market.

Communication with customers
Do firms in a competitive market try to engage with their customers?

Why?

Innovation
In highly competitive markets innovation will be encouraged.

Product range

The failure to match a rivals's extensive product range might result in lost customers.

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Marketing

A competitive market is likely to have high levels of marketing spending.