Globalisation and UK Business

A293 OCR GCSE

So you live in 2011 and consider yourself to be a switched on connected individual – phone Internet and so on, so....

What do you think globalisation is?

By the way only the Americans spell it with a Z “globalization”

What is globalisation?

• Generally defined as the network of connections of organisations and peoples are across national, geographic and cultural borders and boundaries.

• These global networks are creating a shrinking world where local differences and national boundaries are reducing. How Globalised is the

UK compared to other countries, wiki table of globalisation

What is globalisation? cont..

• This is the trend where people are becoming more interconnected and interdependent. Information technology is driving this trend by enabling companies to move money and ideas instantly at the click of a mouse.

• The ways in which goods and information are moved between countries are becoming easier.

BBC learning clip Globalisation 4 mins

What does globalisation mean for everyone then?

• People around the globe are more connected to each other than ever before.

• Information and money flow more quickly than ever.

• Goods and services produced in one part of the world are increasingly available in all parts of the world.

• International travel is more frequent.

What is this?

Small business globalisation

• Ebay and Amazon make it easy for companies outside of UK to trade

• Customers can pay with paypal

• Good can be dispatched air mail

Globalisation sample paper question

Uk international trade

• International trade is the exchange of goods and services between different countries. UK business can compete against foreign rivals by offering better designed, higher quality products at lower prices.

Uk premier Exports

We EXPORT good to other countries

Top 50 Brands of British origin

Scroll down for Vodaphone case study

Where do we export all this stuff to then?

What are we buying and selling (mostly)

We Sell - Export

We buy - import

Carbon footprint of all these imports??

What goods do you think we import

Which country do you think we import the most from?

What do we import?

• Cocoa from Africa• Electrics from China• Cars from USA and Germany• Wine from France (UK is largest importer in the world of wine)• Oil• Wood• United Kingdom imported $636 billion worth of foreign goods

last year led by foodstuffs, fuels, machinery and manufactured goods. Leading suppliers to the UK market were Germany (13.1%), US (8.7%), China (7.5%), Netherlands (7.4%), France (6.8%), Norway (6%), Belgium (4.7%) and Italy (4.1%).

Wine article

UK trade with EU

• Trading with other European Union (EU) countries offers a number of key benefits to businesses in the UK.

• The EU's 27 member states include some of the world's wealthiest and most productive countries.

• The EU is a huge market in which to sell your goods and services - it also gives you access to a huge source of suppliers.

Globalisation generally has put pressure on many traditional job sectors in the developed world. Many of the newer members of the EU have economies with much lower costs, making them attractive sources of production for businesses in this country. And many workers from the new Member States have come to work to the UK, and some other Member States. This has benefited our economy overall.But this is only one facet of globalisation. EU enlargement should help increase the prosperity of new member states in Eastern Europe, opening new opportunities for UK businesses.

Can you name all 27 member states

You have 5 mins, one with the most wins!!!

Austria Belgium Cyprus

Czech Republic Denmark Estonia

Finland France Germany

Greece Hungary Ireland

Italy Latvia Lithuania

Luxembourg Malta Netherlands

Poland Portugal Slovakia

Slovenia Spain Sweden

United Kingdom Romania Bulgaria

Single market

• At the core of the EU is the single market - the programme of freeing up the trade of goods and services and the movement of people between EU countries.

• The aim is that doing business with other EU countries should become increasingly like doing business within your own country.

What do businesses need to consider when trading with the good ol’ EU?

• Cultural differences - what is a staple item to us may not be to another country (consider pot noodle to china)

• Language barriers – do you need a translation service?

• Legislation – EU banned export of British beef

• Transport – freightEU relaxes ban on exports of beef from Scotland

EU trade videoFor more complex analysis5 mins

Exchange rate effect on business• Money is demanded in order

for it to be used to buy and sell goods and services.

• The same applies to international currency.

• Foreigners buy pounds in order to buy British and other goods and services.

• The exchange rate is the rate at which the £1 will exchange with other currencies

Exchange rate calculation examples• We will assume that £1 initially exchanges for 2 euros.

• If Nestle sells one Kitkat for 50p in this country, it will cost 1euro in France!

• However if the £ falls in value to £1.50 euros the same Kitkat will only cost 0.75 euros in France.

• We would therefore expect Nestle to sell more chocolate bars and other goods in the European Union at the lower exchange rate.

So is a weak £ good or bad for UK exports???

Sample paper question on exchange rates

Answer to past paper question

Another sample paper exchange rate question (bit harder this time)

Note: exchange rate in 2008 was £1- $2.00

Answer