Global Business
The Globalisation of trade allows businesses to operate in different countries. Many global businesses known as multinational companies (MNCs) produce parts of their product in different locations. For example, Honda designs the engines for its cars in Japan, assembles the cars in Pakistan, and makes spare parts in China.
Benefits of Global Business
1. Global businesses create direct and indirect employment wherever they locate. This helps the Economy because:
- This reduces government expenditure on jobseeker benefits.
- More people are paying taxes from their salary which is given to the government.
- The standard of living rises which encourages people to shop more and buy more from businesses which means more profit, leading to more corporation tax given to the government.
- The standard of living rising will also pressure businesses into employing more people.
2. Global businesses pay taxes in the countries in which they operate.
3. Products that were previously imported by a country are made locally. This is very good because:
- It decreases the amount of money paid by the government on imports which is a positive effect on the country's balance of trade.
- It is better for the environment as there are fewer CO2 emissions from transport which is better for the environment.
4. International tastes, cultures, and influences are introduces to the country.
Negatives of Global Business
1. Global Businesses have no long-standing ties to the local population or country and if it is a footloose or light industry, they often relocate, leaving unemployment and social problems behind
2. The production and transport of products contribute to CO2 emissions, which harms the environment.
3. A downturn in the company's business in one part of the globe will have an impact on the other countries in which it operates.