Business and Globalisation

Your competitor is four thousand miles away 🌐

Globalisation is the increasing connection between the world's economies, and for a business it cuts both ways at once. **A UK firm can now sell to customers anywhere.** A website and a courier account reach markets that once needed an office abroad. **And anyone anywhere can now sell to its customers.** The workshop that used to compete with three local rivals competes with the world. This module is about what businesses actually DO about that: importing and exporting, moving production, becoming multinational, dealing with the barriers governments put up, and changing what they sell so that it works somewhere else.

Six words that carry the topic 🗂️

Get these precise and the evaluation questions become much easier to write:

Match each term to what it means

What a barrier actually does 🚧

Governments do not always want trade to be easy, and the two barriers you need are simple mechanisms rather than lists to memorise. **A tariff is a tax on imports.** It does not change what the foreign business charges. It adds to what the buyer pays, so the imported good becomes more expensive **relative to** the home-produced one. Domestic producers are protected, the government collects revenue, and customers pay more. All three happen together. **A trade bloc is an agreement between a group of countries to lower the barriers between themselves.** Inside the bloc, trading is easier and cheaper. Outside it, you face whatever barriers the bloc applies to everyone else - which is one of the strongest reasons a firm chooses to produce INSIDE a bloc rather than exporting into it. You are about to see exactly what a tariff does to a price.

What does the tariff cost? 🔢

An interactive activity.

So what has the tariff done? ❓

A UK-made version of that same machine sells for 4,500 pounds, and its price has not changed. What has the tariff achieved?

• The UK machine is now the cheaper option, even though it costs what it always did
• The overseas supplier now earns less on each machine it sells
• Nothing much: the imported machine is still the better value at 4,000 pounds
• The imported machine is still cheaper, so the tariff has failed

The same change, from two sides ⚖️

An evaluation answer that only sees one side of globalisation cannot reach the top band. For any UK business, the same set of changes offers both of these at once.

Why become a multinational? ✅

Select the TWO strongest business reasons for producing in another country rather than exporting to it.

• Producing inside a trade bloc avoids the barriers that apply to goods brought in from outside it
• Production costs such as wages, land or energy may be lower in the other country
• A business that produces abroad no longer has to obey any UK law
• Moving production abroad removes competition from the home market

Find the moment it goes multinational 🔍

An interactive activity.

Say it back 📝

A good that a business buys in from another country is an _____, and one it sells abroad is an _____. A tax charged on goods entering a country is a _____, and it works by making the imported good more expensive than the one made at home. A group of countries that lowers the barriers between themselves is a _____, which is one reason a firm may choose to produce inside it rather than exporting into it. A business with operations in more than one country is a _____.

Launching in another country 🪜

An interactive activity.

Advising Northgate Tools 🧭

An interactive activity.

Your turn ✍️

An interactive activity.