In this document I am analysing benefits and challenges of globalisation for 2 contrasting businesses (M&S and Innocent Drinks). I am also talking about the barriers to two contrasting businesses of operating internationally and the role of trading blocs on international trade, such as World Trade...
Explain the main features of globalisation that affect two contrasting businesses
One of the main features of globalisation is countries working together. Countries in a same
geographical area get together and create trading blocs. Trading blocs protect themselves from
countries outside their group, working together to make goods or services move more easily and
restricting the number of goods or services being brought into the area.
Another feature of globalisation is international mobility of labour and capital. The mobility of labour
makes it easier for people to work in other countries. Which means, citizens of the UK may require
permits to work outside the EU and citizens of member states of the EU are able to move and work
where they wish within the EU. In this case globalisation effects both economical and social aspects.
A further feature of globalisation is payment systems being worldwide. Businesses are aware of the
different ways to trade and the currencies that can be used. There are more than 150 different
currencies, but the most common currencies chosen for trading are dollars, euro or sterling.
One benefit has been an easy access to foreign culture. This has been good for the business because
M&S continue localise their ranges for the market. This led to M&S being popular not only in the UK,
but also in India. This has increased the number of stores in India to 77. The impact of this has been
a substantial increase to around 15% of locally designed clothing range.
Another benefit has been the advantage of freer movement of labour between countries. This has
been good for the business because this made it easier to hire workers from other countries
(especially the EU, because citizens of member states of the EU are able to move and work where
they wish). This led to different professional and well-educated people from other countries work for
M&S. This has increased the number of employees. The impact of this has been the increase in
progress due to wider skilled labour market.
Challenges of globalisation for M&S
One challenge for M&S has been a lack of understanding of customers needs and wants. This has
been bad for the business because as they opened their store in China, the company was providing
customers with clothes that was not appealing to the customers and did not fit local body shapes.
This has led to dissatisfied customers and they stopped purchasing products, especially clothes from
M&S, therefore giving an advantage to the competitors. That has decreased sales revenue of the
company. The impact of this has been failure of operation in China.
A second challenge for M&S has been cultural identity. This has been bad for the business because
they had to create new advertising campaign in India. Due to the fact that India is a religious
country, it is hard to create an appropriate advertisement. This has led to more professional people,
who know how to target customers in India, being hired. This has increased M&S expanses, leading
to increase in total costs.
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