PKN manufactures glass. Contributing to sustainable development is important to the business. PKN has factories in 30 countries. It has 27000 employees. The Managing Director knows PKN has benefited from globalisation. She plans to expand the business using external growth. Retained profit is one source of finance a business could use to fund expansion. Some of PKN's directors are concerned about possible diseconomies of scale as the business grows. Identify two reasons for globalisation. Reason 1: Reason 2: .......................................................................................................................................

Business

IGCSE&ALevel

CAIE

Exam No：0450_s25_qp_11 Year：2025 Question No：4(b)

Answer:

Award 1 mark for each reason (max 2).
Points might include:
- Free trade agreements / economic trading blocs / reduction in trade barriers
- Improved/cheaper transport/travel links
- Improved communication networks/technology
- Emerging/new markets are quickly expanding/rapid economic growth/rising income
- Governments allow companies from other countries to set up operations in own country

Other appropriate responses should be credited.

Knowledge points:

6.3.1.1. The concept of globalisation and the reasons for it

6.3.1.2. Opportunities and threats of globalisation for businesses

6.3.1.3. Why governments might introduce import tariffs and import quotas

6.3.2.1. Benefits to a business of becoming a multinational and the impact on its stakeholders

6.3.2.2. Potential benefits to a country and/or economy where a MNC is located, e.g. jobs, exports, increased choice, investment

6.3.2.3. Potential drawbacks to a country and/or economy where a MNC is located, e.g. reduced sales of local businesses, repatriation of profits

6.3.3.1. Depreciation and appreciation of an exchangerate

6.3.3.2. How exchange rate changes can affect businesses as importers and exporters of products, e.g. prices, competitiveness, profitability (exchange rate calculations will not be assessed)

Answer:

Knowledge points:

Solution:

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