Globalisation in Business

Globalisation is the trend for many markets to become worldwide in scope. A global strategy exists when a business produces a single product (possibly with slight variants) to meet the needs of consumers across the global market).

Why is there a trend towards globalisation? Many governments and businesses believe that increased and freer trade between nations will offer prosperity and growth for all countries and businesses. Globalisation offers a number of opportunities to businesses from any country and not just the UK:

  • Increase in sales, revenue and profits.
  • Cheaper resources.
  • Economies of scale.
  • Developing different products for different markets.
However, globalisation brings drawbacks for all businesses too:
  • Downward, pressure on prices.
  • New products.
  • Increased need for investment.
  • The threat of takeover.
Strengths of emerging economies:
  • Enormous labour resources.
  • Large markets.
  • Rapid growth rates.
  • Natural resources.

Weaknesses of emerging economies:

  • Poor transport infrastructures. 
  • Inflation.
  • Import restrictions.
  • Lack of appropriate skills.
  • Vulnerability to recession.
Strategic responses to changes in the economic environment:
  • Relocation.
  • Selling new products (product development) or entering new markets (market development).
  • Retrenchment or cost-cutting.
  • Mergers and takeovers.
  • Joint ventures and alliances.

One Response

  1. Jonathan June 16, 2014

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