Reasons for globalisation
Reasons for
Technological advances have dramatically improved transport allowing raw materials, goods and people to travel much more quickly. An area that handles goods transported in large storage containers. allow greater quantities of goods and raw materials to be moved and carried on large Large vessels used to transport goods, usually in large containers..
The When the same product is manufactured many times. of goods has led to The cost advantages of operating on a larger scale, eg buying more cheaply in bulk and reducing unit costs.. This means that the cost per item can be reduced when operating on a larger scale in order to generate bigger The amount of money made after all expenses have been paid..
Organisations like the An organisation that deals with the global rules of trade between different countries. promote free trade between countries, which helps to remove barriers between countries.
The Internet and mobile technology has allowed the world to become better connected and less isolated 鈥 people around the world can communicate instantly.
Countries like India, China and Brazil have much lower labour costs and high skill levels. Labour intensive Different types of work that people do. such as clothing manufacture, can take advantage of cheaper labour costs and reduced Laws which prohibit certain activities. in developing countries.
Multi-national corporations have expanded into new markets and places for production in order to remain profitable. Companies like IKEA are able to locate outside their home country to access new markets for their goods and take advantage of local suppliers of materials.
Multi-national corporations
Globalisation has resulted in many companies setting up or buying operations in other countries. When a Industries from abroad. invests in a country, perhaps by building a factory or a shop, this is called When a foreign company invests in a country, perhaps by building a factory or a shop..
Companies that operate in several countries are called multinational corporations (MNCs) or A company that operates in many different countries.. The US fast-food chain McDonald's is a large MNC - as of 2022 it has over 38,000 restaurants in over 100 countries.
Examples of multi-national corporations
The majority of MNCs come from Countries where people have a high standard of living. such as the USA and UK. Many multinational corporations To put money into something in order to make a profit. in other developed countries.
For example, the American car company Ford makes large numbers of cars in the UK. However MNCs also invest in developing countries - for example, the British DIY chain B&Q now has stores in China.
Factors attracting MNCs to a country may include:
- cheap raw materials
- cheap labour supply
- good transport
- access to markets where the Commodities that are sold to make a profit. are sold
- friendly A law passed by the government that must be followed.