hello and welcome to since business YouTube channel today we will be covering six point three business and the international economy so today's lessons outcome is that we will understand the importance of globalization we will understand and know the reasons for the importance and growth of multinational companies we will also cover the impact of exchange rate changes okay before I start this listen I want to say thank you so much for watching this video please make sure that you like share and subscribe to this channel so you get updated with the latest business topics and watch this video till the end and I guarantee you will get the highest possible grade in your I GCC business topic this is the final video in this series because now I have covered all topics of IGCC business so make sure you watch them all to get that a star you really deserve okay so let's begin our listen to begin our listen I want to talk about globalization is important so globalization is the free movement of goods services and people across the world in a singing less and integrated manner so globalization can be thought of to be the result of opening all of the global economy and the concomitant increase in trade between nations so key factors of globalization are increasing number of free trade agreements so these are agreements between countries that allow them to import and export goods and services with no tariffs or quotas so improve improved and cheaper transport water land air and communication Internet infrastructure so the Internet allows easy price compressions between goods from money countries online in e-commerce is allowing orders to be placed from anywhere in the world so developing in emerging countries such as China in India of becoming rapidly industrialized so they can export large volumes of goods and services this has caused that increased in output in opportunities in international trade allowing for globalisation now like everything else there is advantages and disadvantages to globalisation so the advantages are allows businesses to start selling in new foreign markets or increasing sales and increasing profit can open factories and production units in other countries possibly at a cheaper rate because it is cheaper materials and labor that is available in other countries import products from other countries and sell it to customers in the domestic market this could be more profitable than producing and selling the goods themselves another advantage can be the import material and components for production from foreign countries at a cheaper rate now the disadvantages is that increasing important to country from foreign competitors will mean that firms compete in all the countries a puts up much competition for domestic firms if these domestic firms cannot compete with the foreign goods cheap price and high quality they may be forced to close down their operation domestic firms are your local and national businesses Meilin local businesses increasing investment by multinationals in home country this could further add to competition in the domestic market although small local firms can become suppliers to the large multinational firms and employees may leave domestic firms if they don't pay as well as the foreign multinationals in the country so businesses will have to increase pay and conditions to recruit and retain employees so these are the advantages and disadvantages of globalization and now we are going to talk about the potential opportunities and impact on business so I've listed all opportunities here and the impacts on businesses here so I'm gonna talk about an opportunity and then we'll discuss the impact on business so an opportunity for business can be start selling exports to other countries opening or to foreign markets the impact on business will this will have is that this increases potential sales perhaps in countries with fast-growing markets so online selling allows orders for goods to be sent and from abroad but what you need to remember is that it can be expensive to sell abroad in it will and well foreign consumers buy products even if they were popular at home so for example a product that's famous in England will it be famous in India or China so you need to remember that another opportunity for business can be that open factories operations in all the countries meaning become a multinational business the impact on business can be it would be cheaper to make some goods in other countries than it would be to make them at home but what you need to remember is well the quality be as good will there be any ethical issues like over working conditions child labor and so on and it is expensive to say of operations in all the countries it's not always the cheapest option another opportu is imported from all the countries to sell customers in home countries so for example importing things from India or China or Malaysia to England so that's an opportunity for a business boat the impact on the business would be with no trade restriction is possible now to import goods and services from countries in seldom domestically but well the product need maintenance and repairs well the parts and support be available from producers in the foreign country so if these products have been brought in from China Malaysia or India will they be willing to provide support to consumers here in the United Kingdom UK so these are things that you need to remember for this opportunity so another opportunity is important aerials in components from all the countries but still produce final goods in home country so it could be cheaper to produce these supplies from all the countries now but there is free now that there is free trade this will help to reduce cost these supplies could be purchased online but well the suppliers be reliable well they get the things on time for you will they not change your prices will the greater distance add too much transport cost so these are some impact on businesses that you will need to consider now this bring me to a summary that I will tell you now so when when looking from an economy's point of view globalization brings consumers more choices and lower prices and forces domestic firms to be more efficient in order to remain competitive however competition from foreign producers kind of forced domestic firms to close down and jobs will be lost so you need to remember that okay and that's where the protectionism comes in so protectionism is a way of government protecting domestic industries from competition that my result enclosure so foreign competitors might be able to produce products much more cheaply and if they were allowed to import without any restrictions then local firms might be forced out of business this would reduce unemployment and in incomes so that's a big problem and that's why businesses have protectionism so the government will introduce the following two to stop these foreign goods coming import being imported to the country and to stop and to stop domestic businesses closures so they will the government will introduce import quota a restriction on the quantity of goods that can be imported into the country and they will introduce tariffs or taxes on imported goods so America has recently done that I don't know if you're watching the news or not but Donald Trump has done some tariffs on Canada's steel so if Canada wants to send some steel to America they have to pay taxes and in court the tariffs and so on so that's all in news so if the offered about Terra import tariffs that's what they are talking about so imposing these two measures will reduce the number of foreign goods in the domestic market and make them expensive to buy respectfully this will reduce the competitiveness of the foreign goods and make it easy for domestic firms to produced in sell their goods however it reduces free trade and globalization so now we are going to talk about multinational businesses so you understand what they are a multinational cooperation also known as MNC has facilities in other assets in at least one country other than its home country such companies have offices and/or facilities in different countries and usually have a centralized head office where they coordinate global management so multinational businesses are some of the largest in the world they include oil companies like shell BP Exxon tobacco companies like British American Tobacco Phillip Murray's car manufacturers like nice and Honda to Utah in General Motors these are all multinational businesses so what are the benefits of multinational businesses you might be thinking so to produce goods but lower cost cheaper material and lobha maybe labor may be available in other countries to extract raw materials for production available in a few other countries for example crude oil in Middle East to produce goods near to the markets to avoid transport cost to avoid trade barriers on imports if they produce the goods in foreign countries the firm's will not have to pay import tariffs or be forced with a quota restructure so another benefit of multinationals is to expand into different markets and spread their risks another advantage is sorry another benefit is to remain competitive with rival firms which may also be expanding abroad so these are all the benefits of national multinational businesses so now let's talk about the advantages of a multinational business to a country so what advantages could a multinational business and bring to a country first of all you guessed that right more jobs so multinational businesses will create lots of jobs so it will increase GDP of the country the technology that the multinational brings in kind of bringing new AI Diaz and Moffitt's into the country as more as more goods are being produced in the country the import will be reduced and some output can even be exported so multinationals will also pay taxes so our multinational businesses will also pay taxes thereby increasing the government's tax revenue so that government will be taking huge amount of tax from these businesses more products choices for the consumers now like everything else there's disadvantages to multinational businesses moving into a country and these are the jobs created are often for unskilled tasks so the more skilled job will be done by workers that come from the firms home country so the unskilled workers may be also exploited with very low wages and unhygenic working condition since multinationals benefit from economic of scale local firms may be forced out of business unable to survive the competition so multinational can use all the sir skaar scarce non-renewable renewable resources in the country so rapid the repatriation of profit can okay the profit earned by multinational could be sent back to their country and the government will not be able to live a tax on it as multinationals are la are very large they can influence the government and economy so they could threaten the government that they will closed down and make workers unemployed if they are not given financial grants and so on so these are some of the disadvantages of multinational businesses to our country and now let's talk about the impact of exchange rate changes okay so exchange rate basically means the value of one see for the purpose of conversions to another that's what it basically means so on for example on July 16 2010 they exchange rate between the dollar and the euro was one point twenty three dollars to Europe so this means that to obtain one euro you would need one point twenty three dollars conversely if you were about to take a vacation to Europe you could take one thousand dollars to the bank and receive only eight hundred and thirteen euros so this is what exchange rate basically means so exchange rates can be fixed or floating you need to remember that if a country fixes its currency to that of another country the exchange rate between those two countries will not change if a country has a floating exchange rate the rate between its currency and any other currency will adjust to the market conditions so now we are going to talk about depreciation and appreciations so currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies typically in a floating exchange rate system in which no official currency value is maintained so that's what depreciation is when the value of money falls so if pound is England money pound is the appreciated that means it's fallen the values and currency appreciation in the same context is an increase in the value of the currency so if the pound is appreciated that means the against dollar that means the value of pound has gone over increased above dollar so for instance if the Canadian dollar depreciates relatively to the Euro the exchange rate the Canadian dollar price of euros rises it takes more Canadian dollars to purchase of one euro so one euro equals one point five dollar one euro egos two one zero equals one point seven Canadian dollar do you get what the concept is and that's what it basically means okay in summary an appreciation is good for importance but for exporters a depreciation is good for importance and exporters and bad for importers and I bring goes to end of this video thank you so much for watching this video but please please please make sure that you answer these five questions to help you remember things for example so why is globalization important I want you to explain that to me why government my introduced import tariffs and import quarters what is a multinational business what are the benefits of multinational businesses to a country explain what we mean by depreciation and appreciation of an exchange rate could you please make sure that you like share and subscribe and write these answers in the comment section below so this was the final video for this topic and I hope you success in your I to CC business studies very well-done for staying with me and learning with me I will see you in the future hopefully so take care for now and I hope you get that a star you deserve and make sure you do as much study as possible to get the highest grade because that's the end of the day I know you can get the best grades so go and grab them watch all these videos answer all the questions and then go to that exam and pass it that's a simple as that take care for now and very good luck with your exam goodbye