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Year 10 GCSE Economics

Year 10 GCSE Economics. 3.4 Globalisation / Operating Overseas (p58) Objectives: Understand why UK firms choose to operate overseas. Understand the consequences for UK firms of operating overseas. Apply understanding to Dyson case study. Key terms.

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Year 10 GCSE Economics

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  1. Year 10 GCSE Economics 3.4 Globalisation / Operating Overseas (p58) Objectives: Understand why UK firms choose to operate overseas. Understand the consequences for UK firms of operating overseas. Apply understanding to Dyson case study

  2. Key terms • Labour costs: Costs of employing workers (wages, salaries taxes on labour) and also training and recruitment costs. • Foreign Direct Investment (FDI): When a business from one country builds a factory in another.

  3. Benefits of globalisation for UK firms operating in overseas markets • Lower operating costs • Lower labour costs • Increases firms international competitiveness • Exchange rates (ER) if ER falls it lowers X prices • Firms are nearer to raw materials reducing costs • Firms are closer to emerging markets which is beneficial for growth.

  4. Drawbacks of globalisation for firms operating in overseas markets • UK jobs lost can create structural unemployment • Negative publicity in UK media • Possibly increase distribution costs • Face competition from domestic firms • Exchange rate fluctuations can effect business planning • Overcome language cultural barriers

  5. Wipeout Challenge! Operating Overseas

  6. Opportunity for growth in new markets Possible Cultural barriers Possible language barriers Increases number of consumers Values 1 10 2 20 Consumer back lash domestically Reduces wage inflation Reduces effects of economic downturn Increases competitive-ness 3 30 4 40 5 50 6 60 Availability of labour Domestic competition Possibly lower corporation tax No NMW therefore lower labour costs 7 70 8 80 9 90 May need to invest in training Closer to suppliers Cheaper property costs Less Government regulation 10 100 11 110 Next Which are the POSITIVES of operating overseas

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