1. What does this map show?

2. Key Enquiry Question 1: What are the causes of globalisation and why has it accelerated in recent decades?
Lesson 6
LO: To be able to explain how and why globalisation has affected some places and organisations more than others.
Concept Checker:
3.2a. Degree of globalisation varies by country and can be measured using indicators and indices (AT Kearney index, KOF index).
3.2b. TNCs are important in globalisation (P: role of TNCs) both contributing to its spread (global production networks, glocalisation and the development of new markets) and taking advantage of economic liberalisation (outsourcing and offshoring)
3.2c. There are physical, political, economic and environmental reasons why some locations remain largely ‘switched off’ from globalisation (North Korea, Sahel countries)
Key terms:
Offshoring
Outsourcing
Global production network

3. TNCs
TNCs are important agents of global change. Along with trade blocs, they can be described as ‘architects’ of globalisation, helping to ‘build bridges’ between nations.

4. How many TNCs can you name?

5. What is the distribution of the world’s largest companies?
Big questions to ask – why don’t we see more of these companies all over the world? Tease out that: 1) not all places are suitable sites of production for goods, for a range of physical and human reasons (including accessibility, natural resources, government policies and levels of education. 2) not all places have enough market potential to attract large retailers [due to low incomes, or culture].

6. The uneven geography of TNCs

7. The role of Transnational Corporations
Transnational corporations (TNCs) are agents of global change. They link together groups of countries through the production of goods.
e.g. Large assembly industries use parts sourced from many countries to contribute to the finished product – cars, computers etc.
TNCs also forge connections between people in different countries by shaping common patterns of consumption .
e.g. Global entertainment brands like Disney or food retailers such as McDonalds.
TNCs are sophisticated and complex. They invest in internationally (Foreign Direct Investment -FDI). They expand through acquisitions (buying and taking over other companies) and mergers (joining with rival companies). They also use sub-contractors to manufacture products (e.g. Disney does not produce it’s own toys/clothes etc.) Many household names are now owned by larger companies (e.g. Disney owns Marvel Comics and Lucas Arts).
TNCs are helped and hindered by trade blocs who can either make it simpler for TNCs to invest/imported or can complicate the process.

8. But how do they work?
Some globalise via FDI (we covered this in lesson 3) and offshoring. But for others, can instead forge business partnerships with existing companies in other countries. Many of the world’s biggest brands do not, in fact, make their own products. Instead, they use outsourcing as their strategy, which has resulted in a series of arrangements called a global production network. Still others may choose to maximise profits by adapting their products to suit local tastes – this is called glocalisation.
Using the resources around the room, pupils will fill in a summary sheet on the influence of outsourcing, global production networks and glocalisation as methods used by TNCs to globalise.

9. Can you justify the cartoonist’s perspective on TNCs?

10. Key Enquiry Question 1: What are the causes of globalisation and why has it accelerated in recent decades?
Lesson 6
LO: To be able to explain how and why globalisation has affected some places and organisations more than others.
Concept Checker:
3.2a. Degree of globalisation varies by country and can be measured using indicators and indices (AT Kearney index, KOF index).
3.2b. TNCs are important in globalisation (P: role of TNCs) both contributing to its spread (global production networks, glocalisation and the development of new markets) and taking advantage of economic liberalisation (outsourcing and offshoring)
3.2c. There are physical, political, economic and environmental reasons why some locations remain largely ‘switched off’ from globalisation (North Korea, Sahel countries)
Key terms:
Offshoring
Outsourcing
Global production network

11. Resources for the Summary Sheet

12. Outsourcing can be defined as follows:
Definition: “The delegation of one or more business processes to an external provider, who then owns, manages and administers the selected processes to an agreed standard” 
Most businesses have always outsourced some of their activities.  For example, businesses of all sizes have used the services of professionals like;
Management consultants,
Accountants, Auditors, and
Lawyers - rather than having
them employed on the payroll
The main reason for increased outsourcing is normally as a way of reducing costs.  However, there can also be other advantages in the quality and flexibility of the service or product offered.
The decision is really a ‘business’ decision:
- What should a business do itself? - What should a business buy in from others?

13. Early Outsourcing Highlights
Early US History: manufacturing of covered wagon covers and ship sails were outsourced to Scotland, and raw materials from India.
1830s England’ textile industry grew to the point India could not compete. Most textile work was outsourced to England.
1830s-1850s First wave of outsourcing during the industrial revolution fostered large-scale growth of domestic outsourced services such as;
insurance services,
architecture and
engineering services.
1970s-1980s Outsourcing payroll and accounting was fairly common practice for US services companies and India emerged as one of the first international providers of these business services, a predecessor of the 1980’s IT outsourcing entrance.
By the late 1980’s international outsourcing, had become a viable alternative for many large companies to consider.

14. The Growth of OUTSOURCING.
Concept: 1st introduced in 1970’s
1970s/80s - mainly manufacturing that outsourced jobs & activities to other countries.
1990s onwards – increasingly service activities & IT that are outsourced.

15. The leading Global outsourcing centres.
Ireland
Top 5 outsourcing destination countries:
India,
Philippines
China,
Ireland, and
Brazil.

16. Benefits of Outsourcing
Cost savings
The lowering of the overall cost of the service to the business, generated by the lower wages (wage gap) in developing nations.
Tax Benefit
Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.
Access to Talent
Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.

17. Different countries have different REGULATIONs & rules.
AstraZeneca is one of the worlds largest pharmaceutical companies, employing more than 50,000 people in over 100 countries across six continents. 
Different countries have different REGULATIONs & rules.
Different time-zones – they’re open for business when we’re in bed asleep.
Access to different markets, with different language, customs and requirements
India, a country with a highly qualified & yet relatively cheap work force.

18. Problems for the company.
Dis-advantages of Outsourcing
These can be considered at two levels;
Problems for the company, and
Societal problems, or employees back home.
Problems for the company.
Cross-Cultural Differences People from different cultures have different ways of viewing the same problem and often this is a cause for misunderstanding.
Communication Problems Often located in a different time zone, the time difference may cause problems in communicating in real time. In addition, there is often a chance of misunderstanding s or understanding messages due to poor language skills. 
Cost Vs. Value Reduced costs may reduce customer service.

19. Problems for the company.
Offshore outsourcing Cost In the short term wage costs may be far lower however hidden costs, such as integrating the new provider, resolving customer disputes, travel, legal costs, etc. may in fact make it more expensive.
Retention of Key Personnel Frequent turnover of key personnel in the offshore team can lead to increase in time and effort required to transfer knowledge and train new employees.
Noncompliance with Government Regulations Government rules and laws will be different in both countries, creating another level of complexity and potential for mistakes.

20. Global production network (GPN)
Need to show video on a laptop, link to information on pages

21. Glocalisation
Use page 177 – Key Concept insert: Glocalisation