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Explain the term globalisation - Leaving Cert Business - Question 3 (B) - 2021
Question 3 (B)
Explain the term globalisation. Analyse how changes in the international economy are impacting Irish businesses.
Worked Solution & Example Answer:Explain the term globalisation - Leaving Cert Business - Question 3 (B) - 2021
Step 1
Explain the term globalisation.
Answer
Globalisation refers to the process through which the world becomes increasingly interconnected, treating it as one single marketplace. This encompasses various dimensions, such as economic, cultural, and technological exchanges. As a result of globalisation, there has been a significant increase in trade, enabling businesses to expand their markets beyond national borders. Companies are no longer restricted to their home markets but can operate and establish subsidiaries in various countries, facilitating the production and distribution of goods and services on a global scale.
Step 2
Analyse how changes in the international economy are impacting Irish businesses.
Answer
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Currency fluctuations: The value of the euro has experienced significant changes, impacting Irish businesses that export goods. A decrease in the value of the euro leads to lower earnings for exporters, as the return received from international customers is diminished.
Impact: This has resulted in reduced profit margins for Irish export-led firms.
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Slowdown in world economies due to Covid-19: The pandemic has caused a global economic slowdown, which has restricted the number of countries that can import Irish goods and services.
Impact: Irish businesses have seen a decrease in demand and subsequent profit margins due to this global downturn.
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Brexit-increased regulations for Irish businesses: With the UK leaving the EU, Irish businesses now face new tariffs and increased documentation requirements when exporting to the UK.
Impact: This has led to higher operational costs and instabilities for Irish companies reliant on the UK market, increasing their competitive challenges.