What is globalisation?
The increased degree of integration between international economies
What is an emerging economy?
A country in the process of rapid economic growth or industrialsation
What are the causes of globalisation?
- Improved transport
- Global brands
- Trading blocs
- World Trade Organisation
- Economies of scale
- Growth of global media
- Global trade cycle
- Financial system
- Improved mobility of capital
- Increased mobility of labour
What are the features of emerging markets?
- Economies making a transition
- Rapid industrialisation
- Have potential to become developed economies
- Faster long-term economic growth than most developed economies
- Many inhabitants still in poverty
- Businesses struggle to access global markets
What are threats from emerging markets?
- Increasingly large pool of skilled, but low cost labour
- Undervalued currencies make their exports cheaper
- Inadequate protection of brand and other intellectual property
- State subsidy of industries to make them more competitve globally
What are the opportunities from emerging markets?
- Growing number of educated middle class consumers = growing consumer spending
- Cultural shifts
- Demand for infrastructure and other goods from developed economies
- Source of high skilled but low cost labour
- Great potential for joint ventures and acquisitions
What are the key risks of entering an emerging markets?
- Political instability
- Cultural differences/sensitivities
- Variable approaches to financial and legal dealings
- Corruption and bureacracy still an issue
Why do businesses increasingly operate overseas?
- Grow revenues directly (exporting)
- Moving production overseas to enable faster lead times to customers and reduce costs
What are the attractions of international markets?
- Stronger economic growth
- Market saturation and maturity in domestic markets
- Easier to reach international customers using e-commerce
- Shareholder pressure to increase revenues and profits through international expansion
What is urbanisation?
The mass movement of people from rural areas to towns and cities
What are the advantages of exporting direct?
- Using existing systems
- Online promotion makes this cost effective
- Can choose which orders to accept
- Direct customer relationship established
- Entire profit margin remains with the business
- Can choose basis of payment e.g. currency
What are the disadvantages of exporting direct?