Assessing globalisation and internationalisation — AQA A-Level Business

Assessing globalisation and internationalisation involves evaluating how businesses expand operations across national borders and measuring the resulting impacts on stakeholders, competitiveness, and risk. AQA A-Level students must analyse both the drivers and the consequences of these strategies using financial and non-financial data.

This topic examines the processes of globalisation and internationalisation and how businesses assess their impacts. Globalisation refers to the growing interconnectedness of national economies, while internationalisation is the strategic response of individual firms expanding across borders. Students must understand the drivers, methods, benefits, and risks associated with both.

Assessing these concepts is vital for strategic decision-making in A-Level Business. It links to topics such as market entry strategies, competitive advantage, and external influences. AQA exam questions often require students to evaluate the extent to which internationalisation is beneficial, using case study data and real-world examples.

• →Globalisation is the integration of world economies through trade, investment, and technology, creating opportunities and threats for businesses.
• →Internationalisation is a firm-level strategy involving expansion into foreign markets via methods such as exporting, licensing, franchising, joint ventures, and foreign direct investment.
• →Drivers of internationalisation include market saturation, economies of scale, risk diversification, access to resources, and government incentives.
• →Assessment of internationalisation requires analysis of financial factors (costs, revenues, exchange rates) and non-financial factors (brand image, cultural fit, political risk).
• →The impact of globalisation on a business depends on its industry, size, and competitive position, meaning evaluation must be contextual.

• Names specific drivers, such as trade liberalisation, lower transport and communication costs, deregulation of capital markets and political change, rather than saying the world has got smaller.
• Links a driver to the named business in the case study, for example that container shipping is what makes it viable for a UK furniture retailer to source from Vietnam.
• Distinguishes drivers that lower the cost of selling abroad from drivers that lower the cost of producing abroad, because they lead to different strategic responses.
• Adds a counterweight, such as rising protectionism, tariff disputes or supply chain reshoring, so the analysis is not one directional.
• Balances a stated opportunity against a stated threat for the same named firm, not opportunities for one firm and threats for another.
• Uses a cost mechanism rather than an assertion, for example that higher volume spreads fixed costs so unit cost falls.
• Applies a model correctly, such as rising rivalry and buyer power in Porter's five forces, and says which force has actually changed.
• Reaches a judgement that depends on the firm's size, its cost base or its degree of differentiation, because globalisation is not equally important to every business.
• Distinguishes the theory (economies of scale, five forces) from the evidence in the case (a stated cost fall or market-share loss) and from the diagnosis (whether this firm is a net winner or loser).
• Defines an emerging economy by growth from a low base and rising incomes, not merely as a poor country
• Uses income elasticity of demand correctly, stating that a positive value above one means demand grows faster than income, which is why consumer durables sell into these markets first
• Names a real market or grouping, such as India, Indonesia, Brazil, Nigeria or Vietnam, and says what the firm in the case would actually sell there
• Sets the opportunity against a specific risk, such as currency depreciation cutting repatriated profit, rather than a vague reference to instability
• Gives a reason tied to the firm's position, such as a saturated domestic market or spare capacity, rather than a generic wish to grow
• Places the move in Ansoff's matrix as market development and says why that carries more risk than market penetration
• Ranks the four entry methods on control, capital required and speed, and picks one for the firm in the case
• Recognises that spreading risk across countries only works where those economies are not moving in step
• Selects criteria that matter for this product, for example that road and cold chain quality decides a chilled food launch but barely affects a software firm
• Weighs the criteria rather than listing them, saying which would rule a country out on its own
• Brings in an investment appraisal measure correctly, such as payback in years and months, or a positive net present value at a realistic discount rate
• Uses cultural distance with a named framework and acknowledges that Hofstede's national averages hide regional and generational variation
• Argues from unit cost rather than wage rate, showing that a low wage with low labour productivity can leave unit cost unchanged
• Names a non-cost reason, such as access to raw materials, skilled labour, or production inside a trade bloc to avoid tariffs
• Gives a concrete re-shoring driver, for example lead time, quality control, transport cost or protection of intellectual property
• Separates the sourcing decision, buying components abroad, from the production decision, owning plant abroad, because the risks differ
• Compares methods against stated criteria such as control, speed, capital required, risk and share of profit, rather than describing each in isolation.
• Matches the method to the firm's resources, for example recommending exporting or franchising where cash is tight and gearing is already high.
• Recognises the multinational dimension, including a value chain split across countries and the tax and transfer pricing scrutiny that follows.
• Reaches a supported recommendation and states the conditions under which the rejected method would have been better.
• Distinguishes franchising from licensing: franchising transfers a whole business format including brand and operating standards, licensing transfers rights to use intellectual property such as a patent or recipe.
• Applies the exchange rate direction correctly and follows it through to a cost, a margin or a price decision for the named firm
• Distinguishes a firm that imports from one that exports, since the same currency move helps one and hurts the other
• Names a specific barrier or regulation, such as a tariff rate, a quota, rules of origin or product standards, rather than referring to trade rules in general
• Discusses a management response, for example hedging, dual sourcing or local production, so the answer explains what the firm can do about it
• Names both pressures and explains the mechanism behind each, scale economies on one side and consumer taste, law and distribution on the other.
• Places the named firm in a strategy, global standardisation, localisation, international or transnational, and justifies the placing from the case.
• Gives a real adaptation, such as a menu, a formulation, a package size or a payment method changed for one national market.
• Evaluates the cost of adaptation, because every local variant adds stock keeping units, shortens production runs and raises unit cost.
• Explains the transnational compromise: pursuing cost reduction and local responsiveness simultaneously through shared platforms with local finishing.

• 💡For questions on this topic, developing two drivers with clear application to the case is more effective than simply listing many drivers without explanation.
• 💡Quote a figure from the case extract, such as a share of revenue earned overseas, to anchor the point in the business rather than in general knowledge.
• 💡Keep one sentence of counterargument in reserve, because even a lower tariff analysis question can be improved by acknowledging a limiting factor.
• 💡Assess and evaluate questions reward a supported conclusion, so decide early whether this firm is a winner or a loser and argue it with case evidence.
• 💡Use the case study's own numbers, such as a fall in unit costs or a loss of market share, to justify the side you come down on.
• 💡Say what would change your judgement, for example a tariff, an exchange rate move, or a shift in consumer taste towards local supply.
• 💡If a table of income and demand figures appears, expect a calculate question on income elasticity of demand before the analysis question that uses it
• 💡Show the sign and interpret it in words, because the interpretation carries the marks and a bare number rarely does
• 💡For a twenty-five mark evaluation, weigh the size of the prize against the reliability of the forecast, since emerging market projections are the weakest data in the case
• 💡Recommend and justify questions expect one method chosen and the rejected ones dismissed with a reason, so do not sit on the fence
• 💡Link the choice to the firm's finances in the case, for example its cash balance, its gearing or its access to borrowing
• 💡Use the words control, risk, return and reversibility, because those are the comparison criteria markers reward
• 💡Data response questions often give a table of two or three candidate countries, so compare them explicitly and say which criterion decided it
• 💡Watch for a payback calculation hidden inside the country choice, and set out the cumulative cash flow line by line
• 💡Qualify the forecasts, because in a twenty-five mark answer the quality of the data is itself a valid evaluative point
• 💡Expect a calculation on labour productivity or on unit cost before the question that asks whether to off-shore, and carry the number into the argument
• 💡Use the operations vocabulary of lead time, capacity utilisation and flexibility, because this topic is marked across operations as well as strategy
• 💡Bring in an ethical or reputational argument for the evaluation, since supply chain labour standards are a standard limiting factor here
• 💡Structure by criterion, not by method: take control, then capital, then risk, and compare methods under each heading.
• 💡Refer to the firm's objectives as stated in the case, since a growth objective and a profit objective point to different entry methods.
• 💡Finish by naming the single factor your recommendation depends on most, which is what lifts a conclusion into the top level.
• 💡Practise converting between currencies at a given rate, since a calculate question on the cost of imported components is common here
• 💡Write the direction of the effect, the size of the effect and the time period, because markers credit developed chains of reasoning rather than statements
• 💡Use price elasticity of demand to judge whether a cost rise can be passed on, which is the natural evaluative link on this topic
• 💡Draw or describe the two pressures as axes in rough working, then argue the position, because examiners reward a justified placing more than a drawn grid.
• 💡Use Hofstede or Handy only where the case gives you evidence about culture, and say what the framework misses.
• 💡For a top level conclusion, argue that the right balance shifts over time and name the trigger that would shift it for this firm.
• 💡Always use the case study context in your answers. Generic advantages and disadvantages without application to the specific business will limit you to Level 2 marks.
• 💡For evaluation questions, develop a clear line of argument and justify your final judgement. Do not just list points; weigh them against each other.
• 💡Use accurate terminology such as 'foreign direct investment', 'joint venture', 'economies of scale', and 'exchange rate appreciation' to demonstrate subject knowledge.

• Defining globalisation at length and then never applying it, so the answer describes a trend instead of explaining why this firm's costs or customers have changed.
• Confusing globalisation with internationalisation, and writing about one firm exporting when the question is about the integration of markets.
• Listing drivers with no ranking, when the higher marks come from arguing which driver matters most for this particular industry.
• Treating globalisation as automatically good, so the answer becomes a list of benefits with no recognition that low-cost foreign entrants can destroy a domestic producer. Correction: weigh at least one threat against each opportunity for the same firm.
• Describing all five of Porter's forces in theory instead of focusing on the one or two forces, such as competitive rivalry or buyer power, that have actually changed for the business in the case. Correction: name the force that has changed and link it to case evidence.
• Claiming economies of scale without naming a type, when purchasing, technical or financial economies each give a different argument. Correction: specify the type and the mechanism, for example purchasing economies from bulk buying inputs.
• Treating every emerging economy as identical, when a firm's product may suit urban India and be unsellable in rural Nigeria
• Calculating income elasticity of demand by dividing the wrong way round, income change over quantity change, and then misreading the sign
• Assuming rising average income reaches the firm's target customer, when income growth in these economies is often concentrated in a narrow urban middle class
• Describing licensing as if the licensor keeps control of quality, when the whole point of the trade-off is that it does not
• Confusing a strategic alliance with a merger, so the answer credits the firm with assets and profits it does not own
• Choosing direct investment for a small firm with no spare cash, ignoring the liquidity and gearing consequences of a large sunk cost
• Equating a large population with a large market, when it is income per head and the number of customers who can afford the product that matter
• Reading a high growth rate off a low base as if it guarantees volume, so the forecast revenue in the answer is unsupportable
• Ignoring exchange rate risk entirely, when a depreciation in the host currency cuts the sterling value of every future cash inflow
• Assuming lower wages always mean lower costs, with no mention of productivity, training, defect rates, freight or duty
• Forgetting the hidden costs of distance, such as working capital tied up in goods in transit and the stock buffer a long lead time forces
• Treating re-shoring as proof that off-shoring failed, when most firms run both, off-shoring volume lines and re-shoring responsive ones
• Confusing franchising with licensing, or treating a joint venture as though the firm keeps full control of the brand. Correction: franchising transfers a complete business format with ongoing support and standards, licensing transfers specified intellectual property rights; a joint venture shares control by definition.
• Assuming an acquisition gives instant market presence while ignoring culture clash and the price paid over book value. Correction: evaluate integration cost, retained key staff and the premium paid, not just the speed of entry.
• Writing about a multinational purely as an ethical problem, with no reference to the scale, sourcing and tax advantages that make firms become one. Correction: weigh advantages such as economies of scale, access to resources and tax planning against ethical and reputational risk.
• Getting the exchange rate direction the wrong way round, which usually costs every following mark because the analysis is built on it
• Ignoring that a firm may import and export at once, so a currency move partly offsets itself and the net effect needs stating
• Treating a tariff as a cost the firm simply absorbs, with no consideration of passing it on and the effect on demand given price elasticity
• Treating the two pressures as a simple choice, when the whole point of the transnational box is that strong firms are pushed by both at once. Correction: treat the pressures as simultaneous and explain how a firm might meet both.
• Confusing local responsiveness with translating the packaging, and missing changes to product, price, distribution and after sales service. Correction: define responsiveness across the whole marketing mix, not just language.
• Describing a staffing orientation such as ethnocentric staffing with no link to the pressures that made it appropriate. Correction: ethnocentric staffing is a staffing policy, not an organisational structure; connect each staffing or structural choice back to the cost or responsiveness pressure it answers.
• Students often think globalisation and internationalisation are interchangeable. Correction: Globalisation is a macro-level phenomenon; internationalisation is a micro-level firm strategy.
• Many assume internationalisation always increases profits. Correction: It can fail due to poor market research, cultural misunderstandings, or exchange rate losses, as seen with Tesco's exit from the US.
• Students frequently ignore the role of exchange rates when assessing internationalisation. Correction: Currency fluctuations can significantly affect profitability and pricing competitiveness.

1. 1Step 1: Define globalisation and internationalisation and create a comparison table of their key features and differences.
2. 2Step 2: Learn the main methods of internationalisation (exporting, licensing, franchising, joint ventures, FDI) and list one advantage and disadvantage of each.
3. 3Step 3: Study real-world examples of UK businesses that have internationalised successfully (e.g., Burberry, Dyson) and unsuccessfully (e.g., Tesco in the US) to use in exam answers.
4. 4Step 4: Practice calculation questions on the financial impact of internationalisation, including contribution and profit analysis.
5. 5Step 5: Complete at least two 9-mark evaluation questions under timed conditions and review against mark schemes to identify gaps.

• 📋Multiple-choice or short-answer questions defining globalisation and internationalisation. Advice: Learn precise definitions and be able to distinguish between them.
• 📋Data response questions requiring calculation of profit or break-even for an internationalisation decision. Advice: Show all workings and interpret the result in context.
• 📋9-mark essay questions evaluating the extent to which internationalisation is beneficial or the importance of globalisation. Advice: Use a structured argument with a clear conclusion and reference to case study evidence.
• 📋Case study analysis questions assessing the risks and rewards of a specific firm's internationalisation strategy. Advice: Apply PESTLE and financial analysis to the given context.