National CurriculumHuman and physical geography
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The process of globalisation and the role of multinational companies share a close link. In the UK, we benefit from many global trade links but what factors have encouraged these to grow? What is the potential impact of these links between countries?
Contents
Globalisation
Global trade
Impact of global trade
Globalisation
The world is now a very small, interconnected place, as a result of globalisation. This term is used in human geography and refers to physical and human processes that extend across the world.
Globalisation is not a new term. People have travelled, traded and shared ideas for thousands of years and there are many global linkages, i.e. people in one country are connected in many ways with people in other countries.
In recent years the impact of globalisation has become very clear. It can be seen in the following ways:
Transport developments:
The world is now a very small, interconnected place, as a result of globalisation. This term is used in human geography and refers to physical and human processes that extend across the world.
Globalisation is not a new term. People have travelled, traded and shared ideas for thousands of years and there are many global linkages, i.e. people in one country are connected in many ways with people in other countries.
In recent years the impact of globalisation has become very clear. It can be seen in the following ways:
- communication between people in different parts of the world can be instant
- improved transport and communication links have increased trade, the sharing of ideas and the spread of cultures
Transport developments:
- Container ships make transporting bulky goods quick and easy.
- Air transport means people and goods move quickly from one place to another. In recent years the cost of air travel has reduced.
- The internet allows people and businesses to communicate instantly.
- Satellite communications allow a global view and communications links even in very remote areas. They enable TV and telephone communications.
- Mobile phones enable people to communicate and to access the internet wherever they are.
- Social networking brings people from all around the world in contact with one another.
Global tradeGlobal trade is the result of uneven distribution of materials and resourcesacross the world. No single country has everything it needs and so countries need to trade with each other. Countries that rely on each other to trade goods and services are interdependent.
Sometimes, countries group together to help increase the volume of trade. TheEuropean Union is one example of a trading group (or trading bloc).
The global pattern of trade is uneven because: - most of the valuable trade happens between more economically developed countries (MEDCs)
- MEDCs generally import low-value goods from less economically developed countries (LEDCs)
- there is little trade between LEDCs, partly because they may trade similar products
- newly industrialised countries (NICs) are playing a larger role in world trade
- a lot of trade happens through transnational corporations (TNCs) with a head office in one country, operating in many countries
- Transnational corporationsTNCs or multinational corporations (MNCs) are companies that operate in more than one country. They often have factories in countries that are not as economically developed because labour is cheaper. Offices and headquarters tend to be located in the more developed world. Unilever, McDonalds and Apple are all examples of TNCs.
When a TNC locates within a country, there are advantages and disadvantages.
Advantages of TNCs locating in a country include: - creation of jobs
- stable income and more reliable than farming
- improved education and skills
- investment in infrastructure, eg new roads – helps locals as well as the TNC
- Disadvantages of TNCs locating in a country include:
- fewer workers employed, considering the scale of investment
- poorer working conditions
- damage to the environment by ignoring local laws
- profits going to companies overseas rather than locals
- little reinvestment in the local area
- factories are often footloose and jobs insecure. If labour costs increase, the company may move elsewhere
- natural resources being over-exploited
- The global chainA product has a series of stages, linked from design to purchase. Each link in the chain may happen all in one location, or be spread globally. Large companies often have very complex chains. A company may also outsource some of the production, paying another company to make part of the product.
For example, HP laptops are assembled for sale in Kunshan, China. Manufacture of each laptop’s printed circuit board is outsourced to a company in Penang, Malaysia - this is called the first tier of outsourcing. The PCB requires parts, such as memory chips or a cooling fan. These can be sourced from other Malaysian factories and firms - this is called the second tier of outsourcing.
Because even the wire, screws and plastics used in the manufacture of each component part will need to be sourced separately, there are additional tiers of outsourcing
Impact of global trade - Some developing countries have benefited more than others from global trade. Developing countries welcome global trade because it brings jobs and investment. The World Bank suggests that trade reforms have reduced poverty in some countries, eg China, India, Uganda and Vietnam.
In other parts of the world, there have been fewer benefits of global trade. For example, many countries in Africa have failed to benefit from globalisation because of unfair terms of trade, the actions of TNCs, poor government or unfavourable physical geography, eg landlocked countries
- Current trading arrangements mean some producers are disadvantaged when trading globally. They may not be able to receive a fair price for their products, or may be working in conditions that compromise their basic living needs. To try and develop a fairer trading system, the Fairtrade Foundation was established in the UK. When a product is marked with a FAIRTRADE Mark it means:
- a fair price is paid for their product
- there are opportunities to improve living standards
- a stronger position for the product in the global market
- opportunities to invest in their local community
- The global supply chain is complex, and it may be difficult to ensure that every layer in the production meets ethical and environmental standards.
Global trade and the environmentSome developments, such as the internet, reduce the need for travel. However producing goods on a global scale can increase the carbon footprint of these products.
Keeping to strict environmental laws, which some countries have, is expensive. A company could locate to a country that has more relaxed environmental laws but while this may increase the profit the company can make, it will cause more harm to the environment.
Starter
Activity 1
Watch this short film.
In pairs
Which countries are involved in the making of the hot chocolate?
Advantages of globalisation
MEDC's
LEDC's
Disadadvantages of globalisation
MEDC's
LEDC's
http://www.bbc.co.uk/education/guides/zrycwmn/activity
Activity 2
http://www.bbc.co.uk/education/guides/zbsg87h/activity
Globalisation and sport film
Watch this short film
In groups of four, each is 1, 2, 3 or 4.
All 1's join another table, using picture on large piece of paper write pros and cons of globalisation of sport for:
A local shop keeper.
All 2's join another table as above for a local resident.
All 3's as above for a sportswear manufacturing company
All 4's local children
Plenary globalisation bitesize test
http://www.bbc.co.uk/education/guides/zrycwmn/test