Students should be able to demonstrate knowledge and understanding of…

The idea

Globalisation is the growing integration of world economies, shown by more international trade, investment, communication and movement of people. For UK businesses it brings benefits: access to larger markets, cheaper inputs from overseas, new sources of labour and ideas, and opportunities to build global brands. It also brings drawbacks: more competition from foreign rivals, greater exposure to exchange-rate movements and overseas economic problems, pressure on costs, and risks in international supply chains.

For example: A UK manufacturer may export more easily and buy components more cheaply, but may also face lower-priced imports and disruption if a foreign supplier fails.

What earns the marks

• Globalisation can be defined as the increasing integration of economies through trade, investment, technology and migration, which creates both opportunities and threats for UK businesses.
• A benefit is access to larger international markets, which can increase sales, spread risk across countries and allow UK businesses to grow beyond the size of the domestic market.
• A benefit is access to cheaper or more specialised inputs, such as raw materials, components or labour, which can lower costs and improve competitiveness.
• A drawback is increased competition from overseas businesses, which can reduce UK sales, put downward pressure on prices and force businesses to cut costs or improve their offer.
• A drawback is greater exposure to external risks, such as exchange-rate fluctuations, overseas economic downturns or supply-chain disruption, which can raise costs or reduce revenue.

Common mistakes and how to put them right

• Defining globalisation only as selling abroad.

  Put it right: Globalisation also includes buying, investing, communicating and moving people across borders.

• Giving only benefits or only drawbacks when the question asks for both.

  Put it right: Plan the answer to include at least one benefit and one drawback, each with an explanation.

• Writing about globalisation in general without linking it to UK businesses.

  Put it right: Apply each point to how a UK business is affected, for example through costs, sales or competition.

Exam tips

• For knowledge questions, give a clear definition or feature of globalisation; for understanding questions, add a consequence for a UK business.
• Use a named UK business or a realistic example to make benefits and drawbacks concrete and to show application.
• When evaluating, weigh the benefits against the drawbacks for the specific business and context, and reach a supported judgement.