1. IB Business & Management
Unit 1.7
The Impact of Globalisation

2. Learning Outcomes To understand the:
Role and impact of globalization on the growth and evolution of businesses (AO3)
Reasons for the growth of multinational companies (MNCs) (AO3)
The impact of MNCs on the host countries (AO3)

3. Essential Question
IS GLOBALISATION GOOD?

4. What is Globalisation?
The process by which the world’s regional economies are becoming one integrated global unit

5. The Impact of Globalisation
Increased Competition - foreign businesses forcing domestic producers to become more efficient – what could be the impact of this?
Greater Brand Awareness – domestic producers have to compete with big brand names  the need to develop USP
Skills Transfer – foreign businesses need to use local knowledge (labour)  two way transfer of knowledge and skills  development of new skills
Closer Collaboration – perhaps through joint ventures, franchises or strategic alliances  domestic producers can create new business opportunities.

6. Reasons for Spread of Globalisation & Multinational Companies (MNC’s)?
Improved Communications – through ICT and transport and distribution networks
Dismantling of Trade Barriers – allowing easier movement of raw materials, components and finished products
Deregulation of World’s Financial markets – allowing for easier transfer of funds and also tax avoidance
Increasing Economic & Political power of the multinational companies - can benefit middle and low-income countries

7. Task
Research and compare the top 10 GDP producing countries with the top 10 global companies by sales revenue
What are the possible implications when a company is worth more than a country?

8. Task
What might the advantages be of MNC’s on Host countries?

9. Advantages? Advantage Explanation Economic Growth
MNC’s can boost the domestic economy through employment, taxes, skill development and capital investment
New Ideas
MNC’s may introduce new ways of doing business and new ways of interacting socially
Skills Transfer
MNC’s may help develop the skills of local employees  domestic businesses benefit from improved skills
More Choice of Products
The domestic market benefits from an increase in the variety of products
Short-term infrastructure projects
MNC’s can contribute to help improve infrastructure to increase productivity and efficiency

10. Disadvantages? Disadvantage Explanation Profits repatriated
Bulk of the profits leave the host country
Loss of Cultural Identity
Cultural norms and products may suffer
Brain Drain
Highly skilled employees may look to work for the MNC in another country
Loss of Market Share
Domestic producers may be squeezed out of the market
Short-Term Plans
MNC’s may only exploit benefits of host country until a cheaper/better alternative is found

11. Task – In Pairs 30 mins
For our chosen companies – research the positive and negative impacts that they are having on host countries
Feedback with a 5 minute presentation

12. Homework
Watch the globalisation video and be prepared to feedback your thoughts at the beginning of next lesson.