Globalization

What is globalization

The process by which businesses start
operating on an international scale

Imports

An import is a product made overseas and
brought into the UK

Why do businesses import products

Other countries make products that we would like to use, try, eat and experience

A business does not have to manufacture anything it can simply import

Exports

An export is a product the UK sells to overseas
markets

The UK exports

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Pearls, gems, precious metals and coins

Machinery

Vehicles

Pharmaceutical products

Electronic equipment

Aircraft

Changing business locations

A business may decide to move the whole
business overseas and change location which is called offshoring

A multinational is a business which trades in
more than one country.

Barriers to international trade

A tariff is a tax placed on an import to increase its price and decrease its demand

Tariffs can be imposed by governments to
raise revenue and to restrict imports

Tariffs help to persuade consumers will switch
and buy UK made goods

Tariffs

Advantages

UK produced goods do not have to pay the
tariff and so are likely to be cheaper

Tariff allows UK businesses to sell more because they gain a price advantage compared to imports

It can protect new businesses from being swamped by international competition from MNEs

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It can raise important tax revenue for government which can be spent on infrastructure

Disadvantages

High import price won’t put many customers
off

Tariff may just increase prices for consumers

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Other countries may impose their tariffs in response to this on their imports

Trade Blocs

A trade bloc is a group of countries who make a trade agreement not to place tariffs on imports

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The initial aim of the EU was to create a single market for goods, services, capital and labour by getting rid of all barriers to trade

Tariffs are charged on cheap imports, such as those from china and japan

E commerce

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A business can use the Internet and sell using e commerce to trade internationally

For example even a small business can sell into international markets using a website

If they have the website translated and several versions available they can sell into more countries

Delivery firms such as UPS and FedEx makes sure the goods arrive at the international customers doors

There is no need for the business to invest in expensive shops in other countries they can sell online

Changing the marketing mix to compete internationally

Product

Place

Price

Promotion

This may need adapting to suit the local tastes,colors,symbols and the name nay need to be changed.

A business may need to find a reliable method of transporting their goods to international customers.

Prices may have to be adjusted to take in foreign wages

They will need to be the right promotion to encourage foreign customers to try the product