Globalisation

Now that the world is more connected than ever, businesses are able to work in a manner that takes full advantage of this. Through globalisation a company can increase trade as it works in a number of different countries with subsidiaries in various areas of the world. This can speed up the expansion of a business dramatically as it can enter new markets and attract customers that would otherwise not be reachable from its physical location. This results in:

• Increased international trade
• Companies that operate and make money in more than one country
• Being dependent on multiple economies
• Being able to move goods and finance throughout the world easily

Increased competition through imports and exports

With globalisation, companies can operate in lots of different markets so customers can have a wider choice of products to buy. This will dramatically increase competition in a market as people can import goods from other locations and buy things from overseas. Exporting relies on agreements between different countries and the freedom to trade being granted by governments. Organisations like the World Trade Organisation (WTO) promote this trade freedom, and transportation improvements help companies to distribute goods and services throughout the world.

Business locations

The locations of businesses can also be subject to change as a result of globalisation. It might be that a company designs products in one country and then manufactures these in another before selling them in a third. Organisations may change the location that they operate in order to keep costs down (this is seen when manufacturers move to countries with lower minimum wages) or to save money on tax.

Multinational companies

A company is deemed to be multinational if it has facilities or assets in at least one other country as well as its home country. These types of businesses are often very large and have many different subsidiaries that help the organisation manufacture and sell a wide variety of products in countries throughout the world. Some examples include large car manufacturers, banks and manufacturers of electrical goods. Other companies may have shops or outlets in a number of different countries (such as businesses like McDonalds or other fast food chains) which makes them multinational. These companies might have a head office in one country but will have directors of operations on other continents that are in charge of everything in that particular area of the world.

Many companies have developed into being multinationals by outsourcing production and manufacturing to countries like China. This enables the costs of labour to be reduced and more money to be made.