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Chapter 29 - Mindmap - Coggle Diagram
Chapter 29 - Mindmap
reasons for increase of globalisation
increasing numbers of free trade agreements and economic unions between countries have reduced protection for industries
improved and cheaper travel links and communications between all parts of the world have made it easier to transport products globally
many 'emerging market countries' are industrializing very rapidly
opportunities and threats to globalisation
opportunities
start selling exports to other countries - opening up foreign markets
become a multinational
import products from other countries to sell to customers in 'home' country
import materials and components from other countries - but still produce final goods in 'home' country
threats
increasing imports into home market from foreign competitors
increasing investment from multinationals to set up operations in home country
employees may leave businesses that cannot pay the same or more than international competitors
why governments might introduce import tariffs and import quotas
they are forms of protectionism - protect domestic industries from competition that might otherwise close them down
benefits to a business of becoming a multinational
produce goods in countries with low costs, such as low wages
extract raw materials which the company may need for production or refining
produce goods nearer the market to reduct transport costs
avoid barriers to trade put up by countries to reduce the imports of goods
increase market share and expand into different market areas to spread risks
remain competitive with rival businesses which may be expanding abroad
gain government grants given to the business to set up operations in particular countries
impact on shareholders of a business becoming multinational
shareholders are likely to receive increased dividends from higher profts
employees may have increased opportunities to gain promotion as the business gets larger and has operations across many countries
suppliers may have increased or decreased sales to the multinational depending where it operates and is locates
government may gain higher tax revenue if profits from operations abroad are repatriated or it may lose tax revenue if the multinational locates its head office elsewhere
potential benefits to a country's economy where a multinational operates
jobs are created
increase investment
increased exports
taxes are paid by the multinationals
increased consumer choice
potential drawbacks to a country's economy where a multinational operates
jobs created are often unskilled assembly-lined tasks
reduced sales for local businesses
repatriation of profits
multinationals often use up scarce and non-renewable primary resources in the host country
could have a lot of influence on both the government and the economy of the host country