Globalisation
Overview
Open the back of a phone and you are holding a map of the world. The design was done in one country, the screen made in another, the memory chips in a third, the metal cases pressed in a fourth, and the whole thing assembled in a fifth before being sold in a hundred and fifty more. No single country could make that phone as cheaply, and no single country tries.
That is globalisation, and this lesson is about what it means for a business rather than for a country. You will learn the forms globalisation takes, from countries specialising in what they do relatively cheaply to labour and firms moving across borders. You will weigh the benefits and drawbacks for businesses in developed and in developing economies, which are not the same. And you will learn the single most examinable piece of arithmetic-free reasoning in the whole specification: what happens to a business that imports or exports when the exchange rate moves, and why a currency that swings wildly is a problem even when it ends up back where it started.
Objectives
- Forms of globalisation.
- Benefits and drawbacks of globalisation.
- Exchange rates.
- How exchange rates influence businesses.
Mind map
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Globalisation. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which one of the following is a form of globalisation named in the specification? A. Government borrowing B. Movement of labour between countries C. Rising interest rates D. The introduction of a minimum wage Answer: B
- A country's currency becomes stronger. Which one of the following is most likely? A. Its businesses find imported materials cheaper B. Its businesses find imported materials dearer C. Its exports become cheaper for foreign buyers D. Its exporters sell more abroad Answer: A
- A business manufactures in its own country and exports almost all of its output. Its home currency weakens. What is the most likely effect? A. Its exports become dearer abroad and sales fall B. Its exports become cheaper abroad and sales rise C. Its wage costs rise immediately D. It pays less tax Answer: B
- Which one of the following is a drawback of globalisation for a business in a developed country? A. Access to larger markets overseas B. Cheaper components bought from abroad C. Competition from lower cost producers in other countries D. The ability to recruit skilled workers internationally Answer: C
- Why do severe fluctuations in an exchange rate cause problems for an exporter even if the rate returns to its original level? A. Because the business must pay a tax on each movement B. Because it becomes impossible to export at all C. Because pricing, planning and cash flow all become uncertain in the meantime D. Because wages must be renegotiated each time Answer: C
Work through these questions in the app
Work through these questions in the app
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