Multiple choice

Which among the following are the key drivers of globalisation?

  1. Government action, exchange rates, competition and socio-demographic factors

  2. Market convergence, competition, exchange rates and cost advantages

  3. Cost advantages, government action, economic cycles and competition

  4. Market, cost, competition and government policies
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Following are the key drivers of globalisation:

  1. Market: The domestic markets are no longer adequately rich. It is necessary to search for international markets and to set up overseas production facilities.
  2. Low costs: Companies often set up overseas plants to reduce high transportation costs. Some companies set up plants overseas so as to be close to their raw materials supply and to the markets for their finished products.
  3. Government policies: Governments want to encourage domestic business to expand overseas (it results in a flow of profits back into the domestic economy). So, there is a lot of help available for businesses looking to expand overseas.
  4. Competition: High levels of competitive diversity, industry change and trade increase the potential for globalisation. 

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