Advanced Higher Business week 1.pptx
Advanced Higher Business
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Advanced Higher Business
Week 1
Exam info
Globalisation
MNCs
Past paper
External business environment:
Global business
current issues
Internal business environment:
Management
Leadership
Team
Managing change
diversity
Evaluating business information:
Research
Analytical techniques
Evaluating financial and other information
General Marks available
Discuss- advantages or disadvantages
Explore- (the reasons) (the impact) (the measures) (the theories)
Analyse- force field
Evaluate- judging the effectiveness
Explain- This means that…
Describe
General Marks available
Exam: 2hr 45 min
Section1- max 8 marks
Section 2- max 10 marks (always 2)
Question paper 80 marks and worth 67%
Assignment 40 marks and worth 33%
General marks in section 1
Globalisation
MNC’s
MNC definition
MNC reason for growth
Host vs home country
Effects of MNC on host country (advantages/ disadvantages)
Effects of MNC on home country (advantages/ disadvantages)
Definition
Effect of globalisation on UK business
Effect of globalisation on Governments
Effect of globalisation on consumers
Globalisation
Globalisation:
Worldwide trade
The opening up of markets across countries which allows MNCs to operate internationally
As a result of globalisation, some corporations, or large companies, now operate in more than one country.
Globalisation is the process by which countries and people are becoming more connected. Improvements in transport and communications enable people, goods, capital and information to move between countries.
Effects of globalisation on business
Effects of globalisation on UK Business- Positive
Economies of scale (the more that’s produced, the cheaper it gets per unit)- operating internationally allows for a business to make cost savings e.g. Through marketing and lowering production costs
Control of Production- operating internationally allows businesses the opportunity to control supply, production and distribution from start to finish, meaning they can lower costs and run efficiently
Transfer pricing- businesses can lower their tax payments by moving goods between international branches and charging themselves a favourable price
Choice of cheaper locations- Most MNCs have manufacturing in low wage countries or where raw materials are cheapest
New production techniques and technology- New processes and technology may be learned from operating in different countries
New Management techniques- can be learned from other countries e.g. JIT from Japan
Effects of globalisation on UK Business- negative
Dealing with Multicultural societies- businesses have to cater to local taste
Increased competition- New MNC’s may move into the UK increasing competition
Anti- global sentiment- Pressure groups and some consumers distrust MNCs and also raised awareness of profit-raising and tax avoidance schemes
Effects of globalisation on governments
Increased tax revenue from businesses- allows better investment in the country's infrastructure or public services, also increases the wealth of a nation
Improves GNP- the value of all finished goods and services produced by the labour and property of country's citizens in a year which is a sign of a healthy national economy
Can be put under pressure to favour large MNCs- Powerful businesses may try to influence Governments into providing tax breaks, favourable legislations and policies
Effects of globalisation on consumers
Increased choice- more businesses means consumers have a lot of options on almost all products and services
Lower prices- due to increased competition between large companies
Less individuality- similar brands, marketing and product designs means less specificity to local markets and personal preference
Consumers
Government
UK business
Economies of scale
Control of production
Transfer pricing
Choice of cheaper locations
New production techniques and
New Management techniques
Dealing with Multicultural societies
Increased
Anti- global sentiment
Increased tax revenue
Improved GNP
Can be put under pressure to favour large MNCs
Increased choice
Lower prices
Less individuality
MNC
Multinational corporations
Multi-National Corporations (MNCs) are very large businesses that operate in more than one country
Reason for growth of MNCs
Reason for growth of MNCs
Removal of global trade barriers
Increased political co-operation between nations
Removal or lowering of tariffs (import/export taxes on goods)
EU & ASEAN single markets
This has led to…
More goods being available worldwide
Opportunities to move into new markets i.e. China
Increased profits for MNCs
Increased tax revenue for Governments
Reason for growth of MNCs
Advances in Communications & Technology
E-commerce
E-mail, video conferencing
Cloud and data sharing tech
This has led to…
International customer base
Easy contact with customers, colleagues, suppliers at home and abroad
Global strategies in marketing, branding, service
Reason for growth of MNCs
Freedom of movement
Increased and cheaper air travel
Less political barriers to moving between countries
This has led to…
Easier movement of employees between locations
Changing consumer demand patterns
Similar marketing strategies being useful in several countries
Reason for growth of MNCs
Technological developments in transport
Larger ships, containers
Varied storage and shipping solutions
More countries with large ports and cargo airports
This has led to…
Easier and cheaper to ship a large number of goods internationally
More countries being able to receive large ships and cargo airplanes directly, e.g. Prestwick Airport
Reason for growth of MNCs
Rise in global media
Social media, TV and streaming services
More content offered to international audiences
This has led to…
Similar marketing and branding being used between countries
Products or services being available to global markets
Less variation in consumer demand from country to country
Reason for growth of MNC
Rise in Global media
Removal of global trade barriers
Advances in communication and technology
Technological developments in transport
Freedom of movement
Effect of MNC on host/ home country
Original country – Home country
Other countries – Host countries
Operations in host countries can be:
Stores
Factories
Call Centres/Offices
Effects of MNC on Host country – Advantages
Competition
Incoming MNCs can increase competition
This can lead to:
Domestic businesses becoming more efficient to compete
Cut costs
Increase quality and output
Other MINCs can be attracted into the host country
Greater consumer choice
Increased tax collection
More jobs
Improved economy
Effects of MNC on Host country – Advantages
Training
MNCs provide high level of training for employees
This can lead to:
Higher quality goods and services
Skilled employees bringing skills to domestic businesses
Higher wages - more disposable income for workers
Effects of MNC on Host country – Advantages
Technology transfer
MNCs bring knowledge of new production techniques, which can be learned by host country businesses. This can lead to:
Better efficiency
Higher quality
Increased output
Effects of MNC on Host country – Advantages
Infrastructure
MNCs may improve roads, rail networks and communications facilities. This can lead to:
Better transport links
Better standard of living for local communities
Effects of MNC on Host country – Advantages
Increased tax payments
The host nation benefits from increased tax collection on the profits of the MNC.
Job creation
MNCs employ thousands of people, creating more wealth (disposable income and purchasing power) for the population.
Jobs are created in the local area as workers in the company spend their wages in shops etc.
Effects of MNC on Host country – disadvantages
Job losses
MNCs can cause job losses by:
Causing smaller businesses to close
Suddenly moving operations to a different country
Limited Job Opportunities
MNCs can limit host country job opportunities through retained management:
Management roles are given to people from home nation who move to host country
Local labour are offered for low-skilled jobs only
Lowers MNCs wage costs
Restricts power of local workers
Effects of MNC on Host country – disadvantages
Exploitation
MNCs can:
Pressure governments to change legislation and taxes
Use up or monopolise natural resources
Exploit local workers and conditions
Competition
MNCs can damage competition by:
Causing smaller, local businesses to close
Creating price wars with competitors
The host country will collect reduced VAT payments as a result of any price war
Aldi and Lidl in the UK caused a supermarket price war
Transfer pricing
MNCs may move profits and declare them in low tax countries to avoid paying higher taxes.
This could reduce the tax collected by host country government.
Effect of MNC on host advantages
training
competition
Technology transfer
Increased tax payment
infrastructure
Job creation
Effect of MNC on host disadvantages
Limited job opportunities
Job loss
exploitation
Transfer pricing
competition
Effects of MNC on Home country – advantages
Upskilling
MNCs can improve the skills and qualifications in a home country by:
Requiring qualified, skilled staff
More people require higher education and receive better training
Results in skilled, highly paid workers
Improved balance of payment
The balance of payments benefits from the inward flow of foreign earnings and also from the demands created for home-country exports.
Effects of MNC on Home country – advantages
Increased employment
More jobs can be created by the MNC’s expansion into foreign nations.
Increase in skills
MNC can bring skills and techniques learned from operating abroad back to home country operations
Increases efficiency, profitability and output
.
Effects of MNC on Home country – disadvantages
Moving Operations Abroad
MNCs may cause home nation job losses by:
Moving all or most operations abroad to low wage nations
Education Pressure
MNCs’ demand for qualified staff puts pressure on the Government to provide access to higher education for most of the population.
Increases costs
Regular updating of education systems
Loss of control
MNC can demand incentives to stay in home nation
Puts pressure on home Government to keep them happy
Effect of MNC on home advantages
Improved balance of payment
upskilling
Increased employment
Increase in skills
Effect of MNC on home disadvantages
Education pressure
Moving operations abroad
Loss of government control
2024 Q8. Discuss the possible benefits of a multinational organisation expanding its global operations to the: • home country • host country (10)
2024 Q8. Discuss the possible benefits of a multinational organisation expanding its global operations to the: • home country • host country (10)
Benefit to host/ home country not to MNC
2024 Q8. Discuss the possible benefits of a multinational organisation expanding its global operations to the: • home country • host country (10)
Discuss the effects on the US of Apple’s profit repatriation (6) Q2 2025
