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Analysis of the Impact of Globalisation - Coggle Diagram
Analysis of the Impact of Globalisation
Tax minimisation
tax havens
Countries with secretive tax and financial systems for non-residents and foreign owned companies
Singapore
Bermuda
Switzerland
There is a lack of transparency in laws relating to business transactions, making tracking tracking money and earnings hard
Companies set up parent companies in the tax haven to transfer earnings from their subsidiary companies to that country and thus pay little to no tax
Transfer pricing
Selling items cheaply to their subsidiaries in tax havens so that they don't pay large tax and all profits go to the multinational owner of both
Example: there are two businesses that are owned by the same company. One owns wood, the other paper. Paper company buys the wood at a very low price to avoid paying a high GST and taxes on profits earned
Reducing income and corporate taxes in high tax countries by overpricing goods
Global spread of skills and technology
By investing money and expertise in foreign countries, multinationals companies have the support of the local gov
Govs will often spend their own money to help educate and train local workers so that businesses can take advantage of local knowledge and understanding with regard to language and culture
Globalisation in education leads to the upskilling and training of people in developing countries who then go back and teach other.
IT can help developing countries by assessing information, e-learning and having an infrastructure that can support business
The digital divide between countries is the difference between Internet infrastructure, access to the Internet and Internet speed and stability
International cooperation
Multinational societies have brought about diverse lifestyles, music, food, art and ideas
International marketing is important because it increased travel and migration and exposure to diversity
FTA's have led to increased gov cooperation because trade agencies and govs have to work together and negotiate to reach agreements about improving trade between nations
Countries and businesses are brought together by accessing labour, technology, capital and distributing channels in other countries
Technology has made global cooperation easier via emails, video conferencing, the ability to transmit large files easily and securely, virtual work spaces, etc
Domestic market
Domestic businesses compete with each other and also with imported goods
Online shopping and secure online payments give consumers access to businesses from around the globe
Deregulation of financial market and FTA's have led to lower prices and higher quality because domestic businesses have to compete with the lower prices of the international businesses
Aus businesses operating globally will be affected by changes in the exchange rate and level of demand because if the levels of demand are high, Aus businesses will earn more income. Likewise for the opposite, income will reduce
Globalisation creates opportunities for domestic businesses via access to suppliers and products to expand their product line, manage costs and offer customers more choice
Employment levels in developing countries and in developed countries
Developing countries generally have lower wages and production costs of developed countries
Employment levels in some industries have dropped in developed countries because companies have used the labour in developing countries to produce goods at a lower cost and become more competitive in the market
This creates more jobs in developing countries
Large corporations invest their own money into the building of roads and infrastructure that create more jobs
Developed countries have also experienced labour shortages from the movement of skilled workers chasing jobs in the developing world
Offshoring labour leads to decreased employment locally and isn't always ethically sound. It also leads to increased employment overseas and cuts costs for the business, therefore increasing profit and productivity