What is Globalisation?
Start here. Get the basics locked in before moving on.
Globalisation is the process by which the world's economies have become more integrated and interconnected β enabling businesses to buy, sell, produce and communicate across national borders more freely than ever before.
Imports Β· Exports Β· International Trade
π Why Has Globalisation Grown?
- Technology: The internet & faster transport make global trade far cheaper and quicker.
- Deregulation: Governments have removed trade barriers, cut tariffs, and made it easier for foreign businesses to operate.
- Saturated domestic markets: When a home market is full, businesses must look abroad for growth.
- Trade blocs: Groups of countries (e.g. the EU) that lower barriers between member states, encouraging trade.
π Real-World Anchor
Think about pizza. It originated in Italy β so Italian pizza brands command a premium worldwide because of where they're from. That origin reputation is a globalisation advantage.
Or think about your iPhone. Designed in the USA, components sourced from 43 countries, assembled in China. Almost nothing you own is made in one single country.
π The Three Core Elements β Memorise These!
Goods or services bought from another country and brought into the UK.
e.g. The UK imports cars from Germany.
Goods or services sold to another country and sent out of the UK.
e.g. The UK exports Scotch whisky worldwide.
The buying AND selling of goods and services between different countries. This is the engine of globalisation.
π¦ Imports, Exports & Trade
Understand why businesses choose to import and export β the exam loves asking for specific reasons.
π€ Why Do Businesses Import?
- To get cheaper raw materials or components than they could source domestically.
- Access goods that can't be produced at home (e.g. tropical fruit in the UK).
- Take advantage of specialist skills in other countries.
- To offer consumers greater variety and choice.
π° Why Do Businesses Export?
- More customers = more revenue and profit.
- Spread business risk β if the domestic market slows, overseas markets may still grow.
- Achieve economies of scale β produce more, reduce cost per unit.
- Exploit a product's country-of-origin reputation (e.g. Italian fashion, Swiss watches).
- Access emerging markets (e.g. India, China) with growing middle classes.
π Why Set Up Production Overseas?
Businesses don't just sell abroad β they also produce abroad. Factors they consider:
- Lower labour costs (e.g. factories in Vietnam, Bangladesh)
- Cheaper land and premises
- Government incentives (tax breaks, grants)
- Access to natural resources
- Infrastructure (ports, roads, broadband)
- Political stability of the country
- Location in a trade bloc (reducing tariff costs)
- Skill level of the workforce
π’ Multinational Corporations (MNCs)
MNCs are businesses that operate in more than one country. They're a major force in globalisation.
A Multinational Corporation (MNC) is a business that has operations (factories, offices, stores) in more than one country. They choose locations to minimise costs and maximise access to markets.
π·οΈ Case Study: Nike
Nike is headquartered in the USA β but here's the twist:
- 50% of its manufacturing happens in China, Vietnam and Indonesia
- Why? Lower production costs β cheaper labour and materials
- Meanwhile, Nike markets and sells its products across 190+ countries
- This is classic MNC behaviour: produce where it's cheapest, sell where demand is highest
π« Case Study: Cadbury's Takeover
A classic exam example of globalisation risk:
- In 2009, UK chocolate company Cadbury's was bought by US company Kraft in a hostile takeover
- This happened because global financial systems are interconnected β foreign companies can buy domestic ones
- Risk to UK workers: possible factory closures, job losses
β Benefits of MNCs (for host countries)
- Creates local jobs
- Brings investment and money into the economy
- Transfer of technology and skills
- Increased tax revenue for the government
- Infrastructure development
β οΈ Concerns About MNCs
- Profits are often sent back to the home country
- Poor working conditions or low wages in factories
- Can undercut local businesses, closing them down
- Environmental damage from large-scale production
- Tax avoidance using complex global structures
βοΈ Opportunities & Risks of Globalisation
The exam often asks you to evaluate β so you need BOTH sides confidently.
π Opportunities for Businesses
- New markets β sell to millions more customers globally
- Lower costs β cheaper labour and materials overseas
- Economies of scale β produce more, reduce unit costs
- Access to skilled labour in other countries
- Brand recognition can be built globally
- Businesses can spread risk across multiple markets
π Risks for Businesses
- Increased competition from foreign rivals entering domestic markets
- Currency fluctuations can affect profits
- Supply chain disruptions (natural disasters, terrorism, pandemics)
- Economic problems spread globally through interconnected systems
- Risk of hostile takeover by a foreign company
- Cultural differences can cause marketing failures
π‘ Exam Evaluator: Who Benefits From Globalisation?
The exam may ask for benefits to different groups β make sure you know who benefits and how:
𧩠Term Match-Up
Click a term on the left, then click its matching definition on the right. Match all 6 pairs!
Terms
Definitions
π― Quick-Fire Quiz
10 questions. Read carefully β some are tricky, just like the real exam!
βοΈ Exam Tips & Mark-Scheme Gold
This is how you turn a 3 into a 6. Study these carefully.
β οΈ Common Mistakes Students Made in the Mock
- Confusing imports and exports β always ask: is money coming IN or going OUT?
- Saying "MNCs are good because they make money" β too vague! Say where the money goes and who benefits.
- Forgetting to apply to the context of the question's case study business.
- One-sided answers on "evaluate" questions β you MUST give both sides.
- Not using the word "because" β always develop your point further.
Point β Evidence β Explain β Link back. For example: "Globalisation gives businesses access to new markets (Point), such as selling to India's growing middle class (Evidence), which increases revenue and profit (Explain), helping the business grow beyond its saturated domestic market (Link)."
Check if the question says "for the business", "for workers" or "for consumers." Each group benefits differently. Don't just write a generic answer β target it to who the question asks about.
Examiners award marks for applying knowledge. Mention Nike (MNC, global production), Cadbury's (hostile takeover), or the business in the case study. Even saying "a UK car manufacturer" is better than saying nothing.
If the question uses the word "evaluate" or "to what extent", you MUST argue both for and against, then make a final justified conclusion. A one-sided answer will be capped at the lower mark band.
π Model Answer Paragraph
Question: "Explain one benefit of globalisation for a UK business." (3 marks)
"Globalisation gives UK businesses access to overseas markets (1), which means the business can sell its products to a much larger number of customers than are available in the UK alone (1), which could result in a significant increase in sales revenue and help the business to grow. (1)"
β Point β Explanation β Business consequence β Linked development = Full marks!
π° See This Topic in the Real World
Find a business news article and use our News Connector to see exactly how it links to this spec topic β and how it could appear in your exam.
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