Globalisation: opportunity and threat
Globalisation is the growing integration and interdependence of the world's economies, driven by freer trade, cheaper transport, better communication and multinational investment. It cuts both ways: opportunities (new larger markets abroad, cheaper overseas suppliers, producing where costs are lower) and threats (more foreign competitors at home, price pressure from low-cost rivals). Whether it helps depends on the firm.
MNCs: define, why they grow, who gains
A multinational company (MNC) produces or operates in more than one country, not just exporting. MNCs grow to reach new markets, cut costs where inputs are cheaper, get inside a trading bloc or avoid tariffs, and spread risk. Split benefits and drawbacks by WHO: to the MNC (bigger sales, lower costs, economies of scale) versus to the host country (jobs, investment, tax, skills transfer — but profits sent abroad and local firms squeezed).
Exchange rates: convert and SPICED
An exchange rate is the price of one currency in terms of another. Two skills are examined. (1) Converting a sum: multiply by the rate to convert FROM the rate's base currency, divide to convert back. (2) The effect of a rate CHANGE, via the hook SPICED — Strong Pound (home currency) -> Imports Cheaper, Exports Dearer; a weaker home currency reverses it. So a stronger home currency hurts exporters and helps importers; a weaker one does the reverse.
Drawn from real examiner reports.
Benefit to country ≠ benefit to business
A heavily penalised error is mixing up WHO benefits from an MNC's activity. Asked how expansion benefits the host COUNTRY, credit only country points — jobs, investment, tax, skills transfer. Asked about the MNC, credit only business points — sales, costs, spread risk. Profit points when asked about the country (or vice versa) earn nothing. Underline WHO is named.
Nov 2024 P2 Q1(g): asked how new hotels benefit India, about a quarter wrote about benefits to the company instead and scored zero.
Strong currency does not help exporters
Candidates reverse the effect of a rate change because they do not pin down two things: exporter or importer, and stronger or weaker home currency. A STRONGER home currency makes exports DEARER abroad (exporters lose sales) but imports CHEAPER (importers gain). A WEAKER home currency flips both. Use SPICED, then apply the rule — do not guess the direction.
An exporter is not a multinational
A multinational (MNC) produces or operates in more than one country — it has factories, offices or shops abroad. A firm that only exports makes everything at home and ships it out; selling to another country is not the same as operating in it, so an exporter is NOT automatically a multinational. Calling every firm that sells abroad an MNC loses the definition mark.
Trading bloc ≠ protectionism
A trading bloc and protectionism are opposite ideas, and candidates confuse them. A trading bloc is a group of countries that trade freely by LOWERING barriers between members. Protectionism RAISES barriers, such as tariffs and quotas, to shield home producers. Asked how a trading bloc benefits a country, explaining protectionism (the opposite) scores nothing.
Nov 2024 P2 Q2(e): weaker candidates explained protectionism (the opposite idea) when asked how a trading bloc benefits a country.
Convert: multiply or divide correctly
On an exchange-rate conversion, choosing multiply or divide wrongly reverses the answer. Convert FROM the currency the rate is quoted in by MULTIPLYING by the rate; convert BACK by DIVIDING. Decide the direction before you calculate, and sanity-check the size of the answer. Show the working so a method mark is available even if the final figure is wrong.
Globalisation is not good for every firm
A common misconception is that globalisation is good for every firm. It cuts both ways: it opens markets abroad but also lets foreign competitors into the home market. A large firm may win export customers, while a small local firm can be undercut by cheaper overseas rivals. So the effect depends on the firm: can it win customers abroad faster than it loses them at home?
AO4 needs a supported judgement
The top marks on the 9-mark Justify and 12-mark Evaluate are AO4. Below sit knowledge, application and an analytical chain. AO4 needs a decision: on a Justify say why one option wins for THIS firm; on an Evaluate conclude which side outweighs. A two-sided list stays mid-band.
Analyse builds a chain, not a verdict
Keep analyse and evaluate apart. An Analyse wants a chain — cause -> effect -> consequence — with no overall judgement. An Evaluate or Justify wants that chain PLUS a supported decision. A verdict on an Analyse adds nothing; leaving one off an Evaluate caps you mid-band.
Currency calc: direction, workings, rounding
On exchange-rate calculations decide the direction first — convert FROM the rate's base currency by multiplying, back by dividing. Show your workings so a method mark is available even if the final figure is wrong, and round to exactly the decimal places asked.
Globalisation is the growing integration and interdependence of the world's economies — goods, services, money, people and ideas move more freely across borders. It has grown because of freer trade, cheaper transport (containers), better communication (the internet) and multinational investment.
For a business it cuts both ways:
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