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Business Chapter 29: Business and the international economy - Coggle…
Business Chapter 29: Business and the international economy
reasons and concepts of globalisation
increase numbers of free trade agreements and economic unions between countries reduce protection for industries
improved and cheaper travel links and communication makes products transportation easier
emerging market countries are industrialising very rapidly
opportunities and threats of globalisation
opportunity
export to other countries, open up to foreign market
become multinational
import products from other countries to sell to customers in 'home country
import materials and components from other countries but produce final goods in home countries
help reduce costs
increase potential sales
threat
increased competition
have to put much effort to keep workers
expensive
quality may be different
products may need repairs or maintenance
realiability
why governments may introduce import tariffs and import quotas
import tariff
put on imported goods
imported goods price increase, making them less competitive than locally produced goods
import quota
limits the import of a good
reduces amount of these goods that can be imported
leads to increase in the price of imported goods from less availability
domestically produced goods may increase sales
multinational businesses
oil companies
Shell
BP
Exxon Mobil
tobacco companies
British American Tobacco
Philip Morris
car manufacturers
Toyota
General Motors
impacts of multinational businesses
benefits to business and impact on stakeholders
produce goods in countries with low costs
extract raw materials
produce goods near market; reduced transport costs
avoid barriers to trade
increased market share and expand to different market areas
remain competitive with rival businesses
gain government grants
potential benefits to country's economy
jobs are created
increased investment
increased exports
taxes are paid by the multinationals
increased consumer choice
impact on stakeholders of a business
shareholders likely to receive increased dividends
employees receive increased opportunities for promotion
suppliers receive increased or decreased sales
government may gain higher tax revenue
potential drawbacks to country's economy
jobs created are often unkilled tasks
reduced sales for local businesses
repatriation of profits
multinationals often use up scarce and non-renewable resources
may threaten to leave country with big job losses without large government grants
exchange rates
depreciation
exchange rate is worth less than other countries
make exports cheaper, imports are more expensive and do the opposite
appreciation
exchange rate is worth more against other currencies
raise price of exports, import prices fall and demand for them might rise