The impact of globalisation on businesses

Multinational companies (MNCs)

The ultimate goal for a growing business that wants to increase the scale of its operations is to compete abroad. Multinational companies or MNCs (also known as transnational corporations or TNCs) are companies that operate in a number of countries around the world.

Some of the biggest retail, technology, food, coffee and soft drinks brands operate in many different countries. These companies often adapt their products to suit consumers in the different countries while keeping their brand image recognisable around the world. For example, a fast food chain might sell beef burgers in the UK or the USA but develop a spicy taco to sell in Mexico. This is often also known as ‘glocalisation’.

Changing business locations and multinationals

As businesses grow and increase the scale of their operations, operating overseas in several countries becomes a real possibility. For example, for a food takeaway business, this could mean opening outlets in other countries in order to access new markets of customers. Alternatively, for an online business, this could mean developing a website in a foreign language and opening in a foreign country.

There are a number of advantages and disadvantages to a business increasing the scale of its operations:

Advantages	Disadvantages
Access to more customers	Increased responsibility
Potential for more sales and profit as selling in several countries increases the market share for the business	More risk - potential for failure as local businesses may find it difficult to compete with larger companies for price and quality and could be forced out of business
Potential to grow product range with increased sales
Increased brand awareness

Advantages	Access to more customers
Disadvantages	Increased responsibility

Advantages	Potential for more sales and profit as selling in several countries increases the market share for the business
Disadvantages	More risk - potential for failure as local businesses may find it difficult to compete with larger companies for price and quality and could be forced out of business

Advantages	Potential to grow product range with increased sales
Disadvantages

Advantages	Increased brand awareness
Disadvantages

Ethical and environmental considerations - OCRThe impact of globalisation on businesses