Chapter 1: Globalisation

• Aardrijkskunde
• Middelbare school
• havo, vwo
• Leerjaar 3

Chapter 1:

1.1. What is globalisation?

Learning goals:

1. Describe what globalisation is and recognise everyday examples

2. Explain how globalisation has developed historically.

In what way is your daily life influenced by globalisation?

What are positive effects of globalisation?

What are negative effects of globalisation?

Globalisation = 

the process by which the world is becoming increasingly interconnected.

Interconnectedness: a connection that links one party to a broader network of connections 

Types of globalisation:

• Economical
• Political
• Cultural

Think about an example of every type of globalisation

Give an example of globalisation

So globalisation is about connections between people / countries / products.

It started with the
Age of Discovery

Why?

After the Industrial Revolution the globalisation was triggered; people moved to cities (=urbanisation), factories started and communication made it possible.

1.2. How globalisation was made possible

Learning goals:

• Describe what is meant by the term ‘shrinking world’
  
• Explain which three main developments made globalisation possible 
• Describe the importance of the port of Rotterdam
  

Globalisation was made possible by new transportation and communication technology. 

Because of these new technologies the relative distances in the world became smaller, in geography we call this time-space convergence

Today the majority of the goods (excluding liquids and gasses) are transported by containers. 

Why did containers made it easier to transport goods?

The port of Rotterdam is the largest port of Europe (for 20 years ago it was even the largest of the world) and this mainport is well known for its intermodal transportation.

What other reasons explain the success of Rotterdam?

Within the EU we don't have trade barriers (e.g. import duties) since the Schengen Treaty was effected in 1995. 

Free trade boosts the globalisation of economies worldwide.

1.3. International division of labour

Learning goals:

• Describe the different stages of a supply chain of a transnational corporation
  
• Explain what sort of country usually is responsible for each part of the supply chain
  
• Describe how offshoring of services works in LEDCs en MEDCs
  

World economies are dominated by large companies who have branches in more than one country, examples of these transnational corporations or TNC's are Philips, Unilever, ING and Shell.

Supply chain

The production of goods can be split up in different steps:

- R&D (research and development)

- Manufacturing

- Distribution and sales

TNC's often choose to do some parts of the manufacturing process in other parts of the world e.g. Asia

Why do some TNC's choose to do the manufacturing in Asia?

Different types of goods

Next to the supply chain we can also divide goods in different types:

- Raw materials: agricultural, mining, forestry or fishing.

- Intermediate goods: raw materials changed into a product usable for production.

- Final goods: products used by consumers

Which of these goods are the cheapest?

1. Raw materials
2. Intermediate goods
3. Final goods

Globalised supply chains

Revenue - costs = profit

TNC's want to maximize the profit, they can do this by lowering the costs or higher the revenue.

Why is it easier for TNC's to lower to costs instead of higher the revenues?

Type of industries

People can work in different industries:

- Primary or agriculture: take raw materials from nature

- Secondary or industry: change raw materials in intermediate or final goods.

- Tertiary or services: offer services to the other and the own industry

International divison of labour

Different types of countries focus on different parts of production, this is called the international division of labour.

- LEDC's: focus on raw materials; most people work in agriculture.

- NIC's: manufacture products often assemblage. They also have a large sale market.

- MEDC's: headquarters of TNC's and R&D

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1.4. Case study: the supply chain of Nike footwear

Learning goals:

• Describe whether stage of a supply chain are knowledge, capital or labour intensive 
• Explain why different stages of Nike’s supply chain can be found in different countries

Supply Chain

- R&D (research and development)

- Manufacturing

- Distribution and sales

Intensive

If products require a lot of skills, money, labour or machines we call them intensive.

- Knowledge intensive

- Capital intensive

- Labour intensive

What part of the supply chain is most knowledge intensive?

1. R&D
2. Manufacturing
3. Distribution and sales

What part of the supply chain is most labour intensive?

1. R&D
2. Manufacturing
3. Distribution and sales

Outsourcing

TNC's sometimes decide to leave parts of the production to other companies or manufactories, this is called outsourcing E.g. Foxconn manufactures  iPhones for Apple. 

Why? 
It makes TNC's more flexible and they can choose the cheapest supplier.

1.5. Winners and losers of globalisation

Learning goals:

• Describe the main economic, environmental and cultural impacts of globalisation 
• Discuss the advantages and disadvantages of globalisation O
  
• Describe the influence of the ILO and the UN on globalisation 

Make a list with positive and negative effects of globalisation.

What are positive effects of globalisation?

What are negative effects of globalisation?

1.6. Flying geese model

Learning goals:

• Describe the offshoring pattern TNCs demonstrate, according to the flying geese model 
• Discuss the advantages and disadvantages of this offshoring pattern 

The flying geese model gives an impression on the different stages of offshoring in SE-Asia.