AQA BUSS4 Research Theme for 2015 - Manufacturing in the UK

Attend a CPD Teacher Briefing on the BUSS4 Theme  |  Order the BUSS4 Research Theme Toolkit | Book places on the BUSS4 Revision Workshops

Business Studies Resources Popular resources on the {my channel} blog Resource tags for the blog RSS Feed for the blog Twitter feed for this blog Teacher Email Resource Newsletter Category listing for this blog Business Studies Blog Home Page
Tracker Pixel for Entry

Q&A - What are the main factors driving globalisation?

Tuesday, October 27, 2009
Print Tweet This!Save to Favorites

Whilst there are many factors that have contributed to globalisation, it is the actions of businesses that have done most to accelerate the process in recent years.

Influential commentator Hamish McRae has stated that businesses are the “main driver” of globalisation. Why is this?

• Multinationals (businesses that operate in more than one country) want to increase sales, profits and shareholder value. Globalisation provides that opportunity
• The barriers to international business are lower and falling – it is much easier to expand into new territories
• Governments want to encourage domestic businesses to expand overseas (it results in a flow of profits back into the domestic economy) – so there is lots of help available for businesses looking to expand overseas

Businesses themselves though are not the only drivers of globalisation.  Consider factors such as:

Picking up on two examples from the drivers above:

Lower transport costs

• Costs of ocean shipping have come down, due to containerisation, bulk shipping, and other efficiencies
• This helps to bring prices in the country of manufacture closer to prices in the export market

Digital communication

• The Internet has dramatically lowered the cost of transmitting and communicating information
• Expressed in 2005 US dollars, the charge for a three-minute New York-London call has dwindled from $80 in 1950 to $0.23 in 2007
• Digital communication has stimulated global trade in “knowledge products” – e.g. software, outsourced services & media content

There are several alternative approaches for a business looking to expand globally – many choose to follow one or more of the following:

• Establish production sites overseas
• Licence technology & other intellectual property
• Joint ventures
• Franchising
• Offshoring / outsourcing
• Selling directly to overseas markets – either with sales agents, distribution agreements or online

The motivations for successful businesses to operate globally are strong, and growing.  For example:

• Higher profits and a stronger position and market access in global markets
• Reduced technological barriers to movement of goods, services and factors of production
• Cost considerations – a desire to shift production to countries with lower unit labour costs
• Forward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost)
• Avoidance of transportation costs and avoidance of tariff and non-tariff barriers
• Extending product life-cycles by producing and marketing products in new countries

The cameras went behind the scenes at one of tutor2u's exam coaching & revision workshops this summer...


Discover more about our intensive exam coaching & revision workshops desiged to prepare for exams in May & June 2015:

AS/A2 Economics Workshops  |  AS/A2 Business Studies  |  AS Psychology

tutor2u online store

PowerPoint Lesson Activities Teacher Conferences & CPD Courses
Exam Coaching & Revision Workshops Pre-release Case Study Toolkits
A Level Economics Teaching Support Resources for Business Studies
Digital Magazines  

Enter your Email

AQA A Level Business - CPD

Join Graham Prior and Jim Riley to fast-track your preparation for the new AQA A Level Business

Latest resources

Resource categories Blog RSS feed Blog RSS Feed
© Copyright Tutor2u Limited 2013 All Rights Reserved