External Influences: Global context (globalisation) — OCR A-Level Business

Globalisation refers to the increasing interconnectedness and interdependence of economies, cultures, and populations across the world, driven by trade, investment, technology, and the movement of people. In the context of OCR A-Level Business, this topic explores how globalisation creates both opportunities and threats for businesses, influencing their strategies, operations, and competitive environment. Understanding globalisation is crucial for students as it shapes modern business decisions, from supply chain management to market entry strategies, and is a key theme in the external influences section of the syllabus.

This topic covers the drivers of globalisation, such as reduced trade barriers, technological advancements, and the growth of multinational corporations (MNCs). It also examines the impact on businesses, including access to larger markets, lower production costs through global supply chains, and increased competition. Students will analyse how businesses can respond to globalisation through strategies like internationalisation, outsourcing, and adapting to cultural differences. The topic also addresses ethical and environmental considerations, such as labour standards and carbon footprints, which are increasingly important in global business.

Mastering this topic is essential for exam success as it frequently appears in case studies and essay questions. It links to other areas like marketing, operations, and finance, as globalisation affects pricing, production locations, and funding sources. By understanding globalisation, students can critically evaluate business decisions in a global context, demonstrating higher-order analytical skills that examiners reward.

• →Drivers of globalisation: Trade liberalisation (e.g., WTO agreements), technological advances (e.g., internet, containerisation), and the growth of MNCs that spread production and consumption globally.
• →Multinational corporations (MNCs): Large companies operating in multiple countries, benefiting from economies of scale, lower labour costs, and access to new markets, but facing challenges like cultural differences and political risk.
• →Global supply chains: The network of production and distribution across countries, enabling cost efficiencies but exposing businesses to risks like disruptions (e.g., COVID-19) and ethical concerns (e.g., sweatshops).
• →Internationalisation strategies: Methods for entering foreign markets, including exporting, joint ventures, franchising, and foreign direct investment (FDI), each with different levels of control, risk, and investment.
• →Impact on stakeholders: Globalisation affects employees (job losses/gains), consumers (wider choice, lower prices), suppliers (new opportunities/pressure), and the environment (increased carbon emissions from transport).

• Identification of key business functions: marketing, production, operations management, accounting and finance, customer service, sales, and support services.
• Evaluation of the impact and importance of these functions to various stakeholder groups.
• Understanding how these functions interact within a business context.

• 💡Use real-world business examples to illustrate how different functions work together.
• 💡Always consider the impact on stakeholders when evaluating the importance of a business function.
• 💡Be prepared to apply knowledge of these functions to the specific business context provided in the Resource Booklet.
• 💡Use specific real-world examples to illustrate points, such as Nike's global supply chain or Apple's manufacturing in China. This shows application and depth, which are key for high marks in evaluation.
• 💡When discussing impacts, always consider both positive and negative effects on different stakeholders (e.g., consumers, workers, environment). Examiners reward balanced analysis that acknowledges trade-offs.
• 💡Link globalisation to other business functions. For example, explain how globalisation affects marketing (standardisation vs adaptation), operations (location decisions), and finance (exchange rate risk). This demonstrates holistic understanding.

• Treating business functions as isolated silos rather than integrated components.
• Failing to link the functions to specific stakeholder impacts.
• Providing generic descriptions without evaluating the importance of the function to a specific business scenario.
• Misconception: Globalisation only benefits large MNCs. Correction: While MNCs often gain the most, small businesses can also benefit through exporting, niche markets, or accessing cheaper inputs via global supply chains. However, they may face greater competition.
• Misconception: Globalisation always leads to lower costs for businesses. Correction: While it can reduce production costs (e.g., cheaper labour), it also introduces costs like tariffs, logistics, currency exchange risks, and compliance with different regulations, which can offset savings.
• Misconception: Globalisation is irreversible. Correction: Recent trends like trade protectionism (e.g., US-China trade war), Brexit, and reshoring (bringing production back home) show that globalisation can slow or reverse, creating uncertainty for businesses.