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Operating in a global market place has a number of opportunities and threats to both businesses and stakeholders.

Opportunities

Opportunities offered to businesses from operating in a global market place include:

• Lower costs – some countries have much cheaper production, premises and wages. This allows businesses to operate with lower overall costs and increase their profit margins. Businesses may also be able to gain economies of scale. This would benefit shareholders, who will gain increased dividends.
• Larger target market – operating on a global scale gives businesses a much larger potential target market. A larger potential target market is likely to increase the potential profit for shareholders.
• Quicker expansion – businesses are able to quickly expand by opening overseas business locations. Consumers are often likely to welcome new businesses to operate in their country, as this will increase their options to purchase products. Suppliers are also likely to benefit from business expansion, as when businesses grow they will receive more orders.
• Investment in the UK economy – more businesses operating into and out of the UK will lead to businesses investing in the UK economy, providing more money in tax revenue for the government and increasing employment opportunities.

Threats

• Increased competition – operating in a global market provides a huge amount of competition for a business. If they chose to operate in another country, they may enter a crowded marketplace. Other businesses may also enter the UK market, making it difficult for UK businesses to achieve success. This may limit opportunities for employees and reduce the potential profit for shareholders.
• Risk of takeovers – as businesses are able to operate on a global scale, larger businesses may make a hostile takeover of smaller UK businesses to reduce their level of competition. This could risk jobs for employees, and lead to large MNCs (multinational companies) controlling prices for consumers.
• Increased risk of exploitation – some of the world’s largest businesses have huge amounts of power over their suppliers and governments. These businesses can force suppliers to lower prices. They may also have leverage over governments in relation to taxes and business costs. Consumers may benefit from lower prices, but this threatens other, smaller UK-based businesses as they struggle to compete. In addition to this, large foreign businesses may also pay poor employee wages and have poor conditions.