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What is Globalization and what does it include?
Globalization is growth to a global or worldwide scale. Includes:
- Trade- Buying and selling goods and services.
- Investment- Investing money for profit or material result.
- Technology
- Capital- A valuable resource of a particular kind.
- Labour- Interaction of workers and employers.
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Positives of Globalisation:
Creates employment and increases revenue for Government.International relations for fair trade, environmental protection and human rights.Promotes competition and lowers prices.Improves standard of living.
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Negatives for Globalisation:
Vulnerable countries, no worker protection.Widens the gap between rich and poor.Exploit the lack of environmental protection.Encourages materialism and individualism.
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Impact on employment -
Lack of government support to grow domestic business and employment. Developed countries have lost jobs due to labour. Labour shortages could be solved with the flow of capital.
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Spread of skills and technology-
Globalisation spreads new inventions, shops available online. Globalisation also takes place in education- specialised school such as John Curtin for sport.
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International Cooperation and understand-
Societies have become richer as they have welcomed people of other cultures. International marketing depends upon understanding culture.
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Tax Havens and transfer pricing:
Countries with secretive tax and finance. Can be classified if:
Ø Lack of transparency- Difficult to access public records.
Ø Lack of information exchange- Resistant to sharing information.
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Transfer Pricing-
Pricing of assets, servicesand supplies within an organisation. Example; when a parent company sells supplies.
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Global business ethics-
Expect businesses to act ethically. Use economic and social influence to raise living standards.
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Labour Standards-
As free trade agreements deregulate to labour markets workers can be more vulnerable to exploitation. Example; Sweatshops are used to increase profit because workers are paid little for their work.
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Ecological sustainability-
- Aims to meet the needs of stakeholders whilst
- seeking to protect the environment.
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Reduced Costs-
Being more efficient with resources and reducing waste resulting in reduction of costs.
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Staff loyalty-
Sustainable businesses improve staff moral, productivity.
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Publication relations and Public Image-
Used to show business in a positive light.
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Fair Trade-
- Business commit to providing decent working conditions. Aim is to improve and protect rights of workers.
- Example; Cadbury.
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Dumping-
- Selling products that are considered unsafe in countries that do not have the same product laws.
- Example; Halcion was banned
in UK but sold later in the US.
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Corporate Social responsibility (CSR) -
Strategic commitment by companies to ethical conduct. CSR aims to make business operations sustainable.
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Financial activity regulation-
Regulate financial activity to protect rights of consumers and encourage healthy competition.
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Reseal Price Maintaince-
Wholesaler controls the retail price of its good and services. Anti-completive because consumers pay a higher price and retailers do not set a discount price.
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Collusion-
Managers of competing businesses agree to work together to exploit a market. When two or more business colludes they form a cartel. A cartel is an illegal anti-completive arrangement between two more competing businesses.
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Forms of cartel conduct include:
Ø Market Sharing- Competitors agree to divide their market and to not compete with each other.
Ø Markets Size Fixing- Businesses agree on an amount of produce produced and manipulate prices through price and demand.
Ø Bid Rigging- Two or more competitors agree on bids they will make when tending for contracts.
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Price Fixing-
Form of collusion between competitors to fix prices. Illegal under the Trade Practices Act 1974. Instead of businesses competing on prices, a high price is set.
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Intellectual Property-
Refers to creations of the mind, inventions. Values intellectual property based on cost of creating and values income on the intellectual property that has been generated.
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Free Trade Agreements-
- Government supports business growth and expansion overseas; increases GDP (Gross Domestic Product). Government collects more taxes, nation’s wealth increases.
- Example; Tariffs
on agriculture products like wheat.
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Government Policy and Global Innovation-
- To encourage innovation and
- support business confidence government gives business grants and incentives.
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Global expansion and technology-
Technology has created new industries and business opportunities for global expansion. Such as online companies.
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