Business and Globalisation Fundamentals
Globalisation is making the world more connected through increased trade and cultural exchange - think about how easily you can buy products from Japan or watch films from America. This process has revolutionised how businesses operate and compete.
When businesses engage in imports, they're bringing products made overseas into the UK. This strategy works brilliantly because other countries often produce items that British consumers want to try, and it saves businesses from having to manufacture everything themselves. On the flip side, exports involve selling UK-made products or raw materials to overseas markets.
Some companies take globalisation even further by becoming multinationals - businesses that operate in multiple countries. They might relocate entirely overseas, often because labour costs are significantly lower than in the UK.
However, international trade isn't always smooth sailing. Tariffs act as barriers - these are taxes governments place on imports to make them more expensive and less attractive to consumers. Whilst tariffs can protect UK businesses from foreign competition and generate government revenue, they also increase prices for consumers and can trigger retaliatory tariffs from other countries. Trade blocs offer a solution by creating agreements between countries to eliminate tariffs on each other's products.
Quick Tip: Remember that tariffs work like a tax that makes foreign products more expensive, giving domestic businesses a price advantage.