Globalisation is the trend for many markets to become worldwide in scope. A global strategy exists when a business produces a single product (possibly with slight variants) to meet the needs of consumers across the global market).
Why is there a trend towards globalisation? Many governments and businesses believe that increased and freer trade between nations will offer prosperity and growth for all countries and businesses. Globalisation offers a number of opportunities to businesses from any country and not just the UK:
- Increase in sales, revenue and profits.
- Cheaper resources.
- Economies of scale.
- Developing different products for different markets.
However, globalisation brings drawbacks for all businesses too:
- Downward, pressure on prices.
- New products.
- Increased need for investment.
- The threat of takeover.
Strengths of emerging economies:
- Enormous labour resources.
- Large markets.
- Rapid growth rates.
- Natural resources.
Weaknesses of emerging economies:
- Poor transport infrastructures.
- Import restrictions.
- Lack of appropriate skills.
- Vulnerability to recession.
Strategic responses to changes in the economic environment:
- Selling new products (product development) or entering new markets (market development).
- Retrenchment or cost-cutting.
- Mergers and takeovers.
- Joint ventures and alliances.
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