26. Global Business
Learning Outcomes from this chapter
On completion, you should be able to:
- Discuss why multinational companies choose to locate to Ireland
- Outline the benefits and challenges of multinational companies in Ireland for the Irish economy
- Explain reasons why Ireland should shift from relying on multinational companies and increase indigenous companies instead
- Explain the term ‘global business’
- Analyse the impact of globalisation on the Irish economy
- Illustrate different developments in technology that have allowed for globalisation
- Distinguish between a standardised and an adapted marketing mix for a global business
- Illustrate what is meant by the ‘global marketing mix’
- Discuss the different channels of distribution available to Irish businesses to sell in international
Multinational company
A business that has operations in two or more countries; operations are managed from the company’s headquarters in their home country (e.g. Apple, Google, Facebook)
Why MNCs operate in Ireland
| Corporation tax rate | Rate of 12.5% in Ireland vs rates in other EU countries (e.g. 30–33% in Germany) |
| Spin-off companies | Service providers and spin-off industries have developed to service growing industries (e.g. finance, pharmaceuticals) |
| IDA Ireland | Offer grants, advice and market research for FDI (foreign direct investment) to incentivise MNCs to set up in Ireland |
| Skilled/educated workers | MNCs want highly skilled workers; Ireland has a high third-level uptake |
| Member of the EU/EMU | Free trade within EU; common currency benefits within EU |
What is the impact of MNCs on the Irish economy?
Benefits
- Direct employment: over 230,000 people employed by MNCs (2019)
- Increased tax revenue from corporation tax, PAYE, VAT
- Positive spin-off effects for local hospitality and suppliers
- Irish employees develop and learn from the latest technologies and developments
- Improved balance of payments, as many goods are exported from Ireland
Challenges
- Ireland’s over-reliance on MNCs for corporation tax and jobs
- Many profits are repatriated out of Ireland
- MNCs benefit from tax incentives that the Irish government must continue
- Changes in trading conditions in the US and the UK (protectionism, Brexit)
- Small Irish firms can struggle to compete with lower-cost economies
Global business
A global business sees the world as one giant market and production location. It provides the same, undifferentiated product worldwide.
Globalisation
How businesses are expanding to sell worldwide and operating on an international scale
Developments in technology that have facilitated globalisation
| CAD (computer-aided design) | Faster design of products: companies can react quickly |
| CAM (computer-aided manufacture) | Equipment can be controlled globally/remotely; can be used with computer integrated manufacturing (CIM) |
| EDI (electronic data interchange) | Cloud computing, online document storage/transfer, automated stock reordering: instant and global |
| ISDN (integrated services digital network) | Telephone lines to transmit and receive digital information (modems/internet) |
| Improved global marketing | Social media sales channels, company websites, Amazon, etc. |
Global marketing
Global marketing is the idea that a global business tries to treat the world as one marketplace and that a product is marketed the same everywhere in the world
Standardised marketing mix
This is the sale of a product with an undifferentiated approach to its marketing mix – it is identical wherever it is sold in the world
Adapted marketing mix
The 4 Ps change based on where the product is sold in order to suit the relevant market
Global marketing mix
| Global product | Product adjusted for technical, legal and language requirements |
| Global price | Price adapted for tax differences, income levels, competition |
| Global place | Sold through direct export, agents, franchising, alliance |
| Global promotion | Adapted for target market, legislation, language, culture |