EnglandBusinessSyllabus dot point

How does trading across borders change the opportunities and threats a business faces?

Globalisation and international trade: the meaning of globalisation, imports and exports, the opportunities and threats globalisation brings, the role of multinationals, and how businesses respond to international competition.

A focused answer to the Eduqas GCSE Business C510 content on globalisation and international trade, covering imports and exports, the opportunities and threats of globalisation, multinationals, and how businesses respond to international competition.

Generated by Claude Opus 4.811 min answerUpdated 2026-06-02

Reviewed by: AI editorial process; not yet individually human-reviewed

Have a quick question? Jump to the Q&A page

Quick answer

Globalisation is the growing interconnection of the world's economies, so that businesses increasingly trade, source materials, produce and sell across national borders as if the world were a single market. Imports are goods and services a country buys from abroad; exports are goods and services it sells abroad. Globalisation brings opportunities: access to much larger markets to sell in, cheaper materials and labour from abroad, and the chance to grow into a multinational. It also brings threats: tougher competition from cheaper foreign producers, exposure to exchange-rate swings, and pressure on domestic firms that cannot match overseas costs. A multinational is a business that operates in more than one country, gaining huge scale but facing complex management and ethical scrutiny. Businesses respond to international competition by competing on quality, design and service rather than price, cutting costs, finding a niche, sourcing globally themselves, or exporting to new markets. The marks come from weighing these responses for the specific business, not just defining globalisation.

Jump to a section

What this topic is asking
What globalisation means
Imports and exports
The opportunities globalisation brings
The threats globalisation brings
Multinationals
Responding to international competition
Try this

What this topic is asking

Eduqas C510 wants you to explain globalisation and international trade: what globalisation means, the difference between imports and exports, the opportunities and threats it brings, the role of multinationals, and how a business responds to international competition. The exam often gives a domestic firm facing cheaper imports and asks how it should react.

What globalisation means

Globalisation has been driven by cheaper transport (container shipping, air freight), better communications (the internet), fewer trade barriers (trade agreements), and the rise of multinationals. For a business, it means the relevant market and the relevant competitors are increasingly global, not just local.

Imports and exports

A weak pound makes a UK firm's exports cheaper abroad and its imported materials dearer; a strong pound does the reverse (the SPICED rule from the economic climate). So exchange rates and international trade are closely linked.

The opportunities globalisation brings

The threats globalisation brings

Multinationals

Multinationals gain enormous economies of scale, global brands and access to cheap production, but they face complex management, exposure to many economies, and ethical scrutiny over pay and conditions in low-cost countries and over the tax they pay. They can bring jobs and investment to host countries but can also dominate local firms.

Responding to international competition

A domestic firm facing cheaper imports has several responses: compete on quality, design and service rather than price (the usual choice for a higher-cost producer), cut costs through efficiency or global sourcing, differentiate through branding or customisation, find a niche (handmade, local, sustainable), or export to markets that value its strengths. Trying to win a price war against low-cost importers is usually a losing strategy, so the best response normally plays to what the domestic firm does better, not cheaper.

Comparing a domestic and an imported product on cost

Set out the figures

A UK chair maker has a unit cost of $70$ per chair and sells at $120$ . An importer lands a similar chair from abroad at a cost of $45$ and sells at $90$ .

Profit margin on each chair

\text{UK maker margin} = \frac{120 - 70}{120} \times 100 \approx 41.7\%.

\text{Importer margin} = \frac{90 - 45}{90} \times 100 = 50\%.

The price gap

\text{Price gap} = 120 - 90 = 30 \text{ per chair, about } \frac{30}{120} \times 100 = 25\% \text{ cheaper for the importer}.

Interpret the result

The importer can sell $25\%$ cheaper and still earn a fatter margin ( $50\%$ versus about $42\%$ ), because its unit cost is far lower. That is the squeeze globalisation puts on a higher-cost domestic maker: it cannot match the import price without wrecking its own margin. The numbers show why fighting on price is futile and why the UK maker should instead justify its $120$ price through quality, design, service or sustainability, the things the cheap import cannot offer.

Try this

Q1. State one opportunity and one threat globalisation brings to a UK business. [2 marks]

Cue. Opportunity: larger markets / cheaper inputs. Threat: cheaper foreign competition / exchange-rate risk.

Q2. A firm sells a product for $80$ that costs $50$ to make. Calculate its profit margin as a percentage of the selling price. [2 marks]

Cue. $\frac{80 - 50}{80} \times 100 = 37.5\%$ .

Exam-style practice questions

Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

Eduqas 20192 marksExplain the term 'globalisation'. (Component 2)

Show worked answer →

A 2-mark AO1 question. Globalisation is the growing connection and integration of economies around the world, so that businesses increasingly trade, source materials, produce and sell across national borders as if the world were a single market. One mark for the idea of the world becoming more interconnected and trading as one market, the second for a consequence such as businesses sourcing or selling internationally. A common error is to describe it only as "selling abroad"; globalisation also covers sourcing, production and the free flow of money and ideas across borders.

Eduqas 20219 marksA UK furniture manufacturer faces growing competition from cheaper imported furniture. Evaluate the ways it could respond to this international competition. (Component 2)

Show worked answer →

A 9-mark Evaluate question needing several responses, their trade-offs and a judgement applied to the manufacturer. Possible responses: compete on quality and design rather than price (build a premium brand imports cannot match); cut costs (perhaps by sourcing some materials abroad itself or improving efficiency) to narrow the price gap; differentiate through service, customisation or fast delivery; target a niche (handmade or sustainable furniture); or export to markets where its quality is valued. Trade-offs: competing on price against low-cost importers is usually a losing battle for a UK maker, while a premium strategy needs strong marketing and risks a smaller market; cost-cutting can harm the quality that is its advantage. Judgement: the strongest response for a higher-cost UK firm is usually to differentiate on quality, design and service rather than fight on price, though it should also pursue efficiency to stay competitive. Markers reward several responses analysed with their drawbacks and a supported conclusion that fits a higher-cost domestic producer.

Related dot points

Sources & how we know this

WJEC Eduqas GCSE Business specification (C510) — WJEC Eduqas (2017)