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