Globalisation and multinational companies

Overview

What has driven globalisation, multinational companies and why they locate abroad, moving call centres overseas or bringing production home, and the threats and opportunities for UK businesses.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Define globalisation.

   Model answer

   Globalisation is the growing integration of the world's economies through trade, investment and communication. Goods, money, people and ideas move more freely between countries.

2. 2

   What has driven globalisation?

   Model answer

   Container shipping and air freight have cut the cost of moving goods worldwide. The internet lets businesses communicate and sell across borders instantly. Trade agreements have reduced tariffs between countries.

3. 3

   Define the term multinational company.

   Model answer

   A multinational company has its headquarters in one country and operates in several others. Unilever, Nestlé and Toyota are examples.

4. 4

   Why has globalisation led to the growth of multinational companies?

   Model answer

   Lower trade barriers and cheaper transport make it easier to produce and sell worldwide. A business can grow far beyond the size of its home market.

5. 5

   Why do multinationals set up production in other countries?

   Model answer

   Wages, land and other costs may be much lower abroad. A factory inside a market also avoids import tariffs and cuts delivery times.

6. 6

   How has globalisation widened the choice of business location?

   Model answer

   A business can now locate each activity anywhere in the world, not just in its home country. A firm may design in the UK, manufacture in Asia and sell worldwide.

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