CCEA · A2 2 · The Competitive Business Environment

Globalisation, global entry and trade

Why firms trade and invest internationally, how entry modes trade control for commitment, and how Bartlett and Ghoshal frame global integration and local responsiveness.

2 hours · six compulsory questions · 90 marksAO1–AO410 practice questions

Specification coverage

What you need to know

Global context and reasons for globalisation
Global business strategies
Foreign direct investment and Bartlett and Ghoshal model
Franchising, joint ventures, licensing and direct investment
Reasons, effects, opportunities and threats of global trade including e-business
Global marketing, regulations and assistance
Analysis of global financial and non-financial data, trends, forecasts, percentage change and government statistics

01Know

Understand the business idea

International entry trades control, speed, resource commitment and local knowledge. Bartlett and Ghoshal help frame global integration and local responsiveness.

In an examination response, the idea only becomes useful when it is connected to the organisation's objective, resources and market. A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.

Can you define the central concept precisely?
Can you identify evidence that makes the concept relevant to this business?
Can you distinguish a possible outcome from a guaranteed outcome?

02Apply

Apply and analyse

Strong analysis explains a mechanism: an action changes a cost, behaviour or constraint; that change affects performance; and the final effect matters because it advances or obstructs an objective. Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.

In globalisation, global entry and trade, build the chain from the constraint in this decision: Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality. A company name or copied number is not developed application unless it changes that reasoning.

Use a case fact inside each major analytical chain.
Explain at least two linked consequences rather than asserting an outcome.
Test whether the same evidence could support a competing interpretation.

03Evaluate

Evaluate and decide

Evaluation of globalisation, global entry and trade should run through the response. Weigh timescale, stakeholder effects, finance, objectives, scale, uncertainty and the limits of the evidence before deciding whether this claim holds: Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.

Do not assume there is one correct conclusion in globalisation, global entry and trade. Test the judgement against this recurring error: Globalisation does not make national differences irrelevant.

Which factor is most important in this context, and why?
What assumption is your conclusion relying on?
What new evidence could change the judgement?

Control and commitment

Exporting, licensing, franchising, joint venture and direct investment trade control, learning, capital and exposure.

Applied example

Licensing reduces investment but places quality and IP use in another firm's hands.

Integration and response

Bartlett and Ghoshal frame global integration against local responsiveness. Efficiency and fit must be weighed rather than assumed.

Applied example

A global recipe lowers cost while local flavour adaptation may improve acceptance.

Quantitative skills

Interpret relevant numerical evidence and explain what it means for the decision.

Application challenge

Use two distinct facts from this context in one developed argument: A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.

Analysis challenge

Construct a three-link chain explaining how globalisation, global entry and trade could affect a stated business objective.

Common misconceptions

Globalisation does not eliminate national differences.
Exporting and FDI are not the same.
Licensing and franchising transfer different bundles of rights.
The lowest-capital entry mode is not automatically lowest risk.
Transnational strategy is not simply partial standardisation.

Teach it from first principles

Understand the mechanism, then apply it

Each lesson moves from the underlying idea to a contextual decision, its limits and the assessment objectives.

01Core lesson

Drivers, opportunities and threats

Falling communication cost, trade arrangements, logistics, capital mobility and market growth enable global activity, but distance creates currency, regulatory, cultural, supply and political risk.

Build the idea

Firms seek demand growth, scale, resources, capability, diversification and proximity to customers.
Customers may gain choice and lower price; workers and suppliers face both opportunity and adjustment.
Long supply chains can lower cost while increasing dependency and visibility risk.
E-business reduces some market-access costs but not tax, fulfilment, regulation or trust requirements.
Global data must be dated, comparable and interpreted rather than copied.

Cause-and-effect mechanism

A global driver changes accessible demand, cost or capability.
The business chooses a geography, value proposition and operating model.
Cross-border distance creates adaptation and coordination requirements.
Customer, competitor, regulator and partner responses affect performance.
Learning, resilience and exposure change over time.

When this may not apply

Headline market growth can conceal segment, currency and access differences.
Diversification benefits disappear when markets share the same shock.
Low labour cost can be offset by productivity, logistics, quality and ethical risk.

How this could appear in the exam

Commands: analyse, evaluate

AO1: Know reasons and threats with precise mechanisms.

AO2: Use dated market, cost, regulation and capability evidence.

AO3: Trace entry through resources and response to return and risk.

AO4: Judge strategic fit and resilience, not market size alone.

02Core lesson

Choosing an entry mode

Exporting, licensing, franchising, joint ventures and direct investment offer different combinations of speed, control, capital, knowledge and exposure.

Build the idea

Exporting keeps production control but adds logistics and distance.
Licensing is asset-light but risks intellectual property and quality control.
Franchising transfers a fuller format and depends on monitoring and partner incentives.
Joint ventures add local knowledge and shared risk but create governance conflict.
Direct investment gives control and learning but requires capital and creates high exposure.

Cause-and-effect mechanism

Entry mode determines ownership and decision rights.
This changes resource commitment, local knowledge and control.
Those characteristics affect quality, speed, risk and return.
Partner and institutional conditions alter the trade-off.
The firm can sequence modes as knowledge and commitment grow.

When this may not apply

Entry modes are not fixed bundles; contracts can alter control.
A partner's local knowledge can be overestimated.
Direct ownership does not remove cultural or regulatory distance.
Reversing a high-commitment mode can be costly.

How this could appear in the exam

Commands: evaluate, recommend

AO1: Distinguish each mode and its control/resource characteristics.

AO2: Use IP, quality, finance, regulation and local knowledge.

AO3: Develop the ownership-incentive-performance chain.

AO4: Choose conditionally and consider staged entry or exit.

03Core lesson

Global integration and local responsiveness

Bartlett and Ghoshal compare pressure for global integration with pressure for local responsiveness, producing international, multinational, global and transnational approaches.

Build the idea

International strategy transfers home capability with limited local adaptation.
Multinational strategy gives country units autonomy to adapt.
Global strategy centralises and standardises for integration and efficiency.
Transnational strategy seeks both integration and responsiveness while sharing knowledge across the network.
The transnational approach is demanding because authority, knowledge and incentives must cross boundaries.

Cause-and-effect mechanism

Industry economics and customer/institutional differences create integration and response pressures.
The chosen strategy allocates assets, authority and knowledge.
That design changes cost, learning, speed and local fit.
Tensions appear between standardisation and adaptation.
Governance and capability determine whether the intended advantage is realised.

When this may not apply

The four categories simplify hybrids and change over time.
Different functions can face different pressures.
Transnational coordination is costly and conflict-prone.
The model diagnoses strategic pressure but does not specify entry mode or structure completely.

How this could appear in the exam

Commands: analyse, evaluate

AO1: Define integration and responsiveness and all four approaches.

AO2: Use case evidence on cost, customers, regulation and knowledge.

AO3: Explain how authority and standardisation affect performance.

AO4: Judge feasibility and the capability cost of the preferred approach.

Named models and theorists

Use models as lenses, not labels

Learn every component, apply evidence to it and then test what the model leaves out.

Bartlett and Ghoshal global strategy model

Originator: Christopher Bartlett and Sumantra Ghoshal

Compares the pressures for global integration and local responsiveness to frame four broad international strategies.

International

Lower integration and lower local-responsiveness pressure; home-developed capability is transferred abroad.

Characteristics

Core capability centred at home
Limited adaptation

Business implications

Reuses knowledge
May miss local needs and reverse learning

Original example: A specialist service exports home methods through small foreign offices.

Multinational

Lower integration and high local-responsiveness pressure; country units adapt substantially.

Characteristics

Decentralised country operations
Local products and decisions

Business implications

Strong local fit
Duplication and weak global learning

Original example: Consumer brands vary offers and campaigns country by country.

Global

High integration and lower local-responsiveness pressure; operations are standardised and coordinated centrally.

Characteristics

Concentrated assets
Standard product and systems

Business implications

Scale and consistency
Weak fit where institutions or tastes differ

Original example: A component maker uses one global platform and central factories.

Transnational

High pressures for both integration and responsiveness; dispersed units share knowledge while combining global efficiency with local adaptation.

Characteristics

Networked capability
Differentiated roles and shared learning

Business implications

Can combine efficiency, adaptation and innovation
Very demanding governance and culture

Original example: A food group shares procurement and technology while local units adapt recipes and channels.

How to apply it

Assess integration pressures.
Assess responsiveness pressures.
Identify the closest strategy and evidence.
Test whether structure and capability can deliver it.

Usefulness

Clarifies the central global strategy trade-off
Links strategy to authority and knowledge
Supports contextual rather than universal choice

Limitations

Real firms and functions are hybrids
Pressures change
Transnational is easier to name than implement
Does not by itself choose market or entry mode

Exam relevance: Apply both pressures and evaluate organisational feasibility; do not merely name a quadrant.

Connections: entry modes; organisational design; culture; economies of scale

Key-term workshop

Know the term. Use the term.

A definition earns limited credit on its own. Open each term to connect it to context, nearby concepts and exam reasoning.

GlobalisationIncreasing cross-border integration of markets, production, finance, technology and information.

In plain English

Think of globalisation as increasing cross-border integration of markets, production, finance, technology and information. In an answer, move beyond the label by explaining what it changes and why.

Context

A Belfast producer sources components in Asia, sells through European platforms and raises international finance.

Do not confuse it with…

International trade is part of globalisation but does not capture every cross-border connection.

Use it in the exam

Define globalisation briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Foreign direct investmentInvestment that gives an organisation lasting ownership or control of productive activity in another economy.

In plain English

Think of foreign direct investment as investment that gives an organisation lasting ownership or control of productive activity in another economy. In an answer, move beyond the label by explaining what it changes and why.

Context

A manufacturer builds and controls a plant abroad.

Do not confuse it with…

Buying a small portfolio share without control is normally portfolio investment.

Use it in the exam

Define foreign direct investment briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

ExportingSelling domestically produced goods or services to customers in another country.

In plain English

Think of exporting as selling domestically produced goods or services to customers in another country. In an answer, move beyond the label by explaining what it changes and why.

Context

A food brand ships finished products through a local distributor.

Do not confuse it with…

Exporting does not require ownership of foreign productive assets.

Use it in the exam

Define exporting briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

LicensingGranting another business rights to use intellectual property under agreed conditions.

In plain English

Think of licensing as granting another business rights to use intellectual property under agreed conditions. In an answer, move beyond the label by explaining what it changes and why.

Context

A software owner licenses technology to a local operator.

Do not confuse it with…

Licensing grants rights; franchising usually transfers a broader business format and support system.

Use it in the exam

Define licensing briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

FranchisingAllowing a franchisee to trade using a brand and operating format in return for fees and compliance.

In plain English

Think of franchising as allowing a franchisee to trade using a brand and operating format in return for fees and compliance. In an answer, move beyond the label by explaining what it changes and why.

Context

A service brand expands through locally owned outlets.

Do not confuse it with…

The franchisee owns the local operation; it is not a branch managed by the franchisor.

Use it in the exam

Define franchising briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Joint ventureA jointly owned operation created by partners that share resources, control, return and risk.

In plain English

Think of joint venture as a jointly owned operation created by partners that share resources, control, return and risk. In an answer, move beyond the label by explaining what it changes and why.

Context

A UK engineering firm and local manufacturer form a new company.

Do not confuse it with…

It differs from a contractual alliance without joint ownership.

Use it in the exam

Define joint venture briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Global integrationCo-ordination and standardisation across countries to gain efficiency, consistency or shared learning.

In plain English

Think of global integration as co-ordination and standardisation across countries to gain efficiency, consistency or shared learning. In an answer, move beyond the label by explaining what it changes and why.

Context

A company uses one global product platform and procurement system.

Do not confuse it with…

Integration does not require identical customer-facing execution everywhere.

Use it in the exam

Define global integration briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Local responsivenessAdaptation to local customers, institutions, channels and operating conditions.

In plain English

Think of local responsiveness as adaptation to local customers, institutions, channels and operating conditions. In an answer, move beyond the label by explaining what it changes and why.

Context

A food brand changes flavour, labelling and retail channel by country.

Do not confuse it with…

Responsiveness is not uncontrolled local variation; it should serve evidence-based differences.

Use it in the exam

Define local responsiveness briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

TariffA customs duty on imported goods.

In plain English

Think of tariff as a customs duty on imported goods. In an answer, move beyond the label by explaining what it changes and why.

Context

A tariff raises the landed cost of a component.

Do not confuse it with…

A quota restricts quantity rather than applying a tax per unit or value.

Use it in the exam

Define tariff briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Non-tariff barrierA rule, standard, procedure or restriction that affects trade without being a tariff.

In plain English

Think of non-tariff barrier as a rule, standard, procedure or restriction that affects trade without being a tariff. In an answer, move beyond the label by explaining what it changes and why.

Context

Product certification and labelling requirements delay entry.

Do not confuse it with…

Legitimate safety rules can still create trade cost; not every barrier is protectionist.

Use it in the exam

Define non-tariff barrier briefly, identify the case evidence that makes it relevant, develop the consequence and then qualify the argument.

Worked reasoning

Follow the thinking, not just the answer

Move from a case fact to a developed, contextual business decision.

Work from evidence to a decision

Starting point: A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.

Identify the decisionLow-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.
Select the theoryInternational entry trades control, speed, resource commitment and local knowledge. Bartlett and Ghoshal help frame global integration and local responsiveness.
Apply the evidenceChoose the case fact that changes cost, behaviour, capacity, demand or risk. Explain why that fact matters instead of merely repeating it.
Develop the chainWrite the immediate effect, the next operational or financial consequence, and the resulting effect on the stated objective.
Test the conclusionCheck the chain against this limitation: Globalisation does not make national differences irrelevant.

Result: A defensible answer chooses between realistic alternatives and states the condition that would make the judgement change.

Turn a weak assertion into analysis

Starting point: Weak assertion: “The proposal will improve the business.”

PointName the relevant globalisation, global entry and trade effect rather than saying only that performance will improve.
WhyExplain the behavioural, operational or financial mechanism that creates the first effect.
ConsequenceCarry the reasoning to cost, revenue, cash flow, people, market position or another relevant objective.
ContextA Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.
LimitationThe lowest-cost entry method is not automatically lowest risk.

Result: POINT → WHY → CONSEQUENCE → CONTEXT → LIMITATION earns more than a long list because every sentence advances the decision.

Organise the argument before writing
Skill	Stronger approach	Weaker approach
Knowledge	Select the part of globalisation, global entry and trade that answers the decision.	Write every definition remembered from the topic.
Application	Use this case constraint because it changes the likely effect or risk: A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.	Mention licensing without showing where it appears in the case.
Analysis	Develop at least two credible links between licensing and the stated objective.	Jump from the proposal straight to higher profit or success.
Judgement	Compare the proposal in “Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.” with a feasible alternative and identify a decisive condition.	Choose whichever side has the longest list of points.

Differentiated knowledge check

Recall, apply, analyse and judge

Choose the best answer, then use the explanation to improve your reasoning.

Recall1. Which statement most accurately describes Licensing?

Recall2. Which distinction is most important when using globalisation, global entry and trade in an exam answer?

Application3. A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour. Which response uses the context most effectively?

Analysis4. Which chain best analyses the decision in this globalisation, global entry and trade context?

Reasoning5. Before judging this proposal—Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.—which additional information would most improve the decision?

Reasoning6. Which conclusion is strongest given that low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.

Exam technique

Build a sustained 20-mark judgement

Structure supports reasoning; it does not replace it.

Read the command and identify the precise decision the business must make.
Use the mark allocation and command word—not the number of answer lines—to judge the depth required.
Select the most relevant case evidence and theory; do not unload every fact you know.
Develop cause-and-effect chains and reconnect each chain to the decision in the question.
Use the case throughout the answer, not only in the introduction.
Evaluate each major argument rather than saving all evaluation for the conclusion.
Compare short and long term, stakeholders, finance, objectives, scale, uncertainty, market conditions and limits in the evidence.
Choose the factor that matters most and explain why it outweighs the alternatives.
Finish with a conditional judgement: state what could change the decision rather than repeating earlier points.

Answer deconstruction

Evaluate whether the proposed decision is the best way for the business to achieve its objective. [20]

A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.

Weak fragment

The decision is good because it will help the business. However, it could be expensive. Overall, the business should do it.

Mid-level response

The decision could support the objective because international entry trades control, speed, resource commitment and local knowledge. bartlett and ghoshal help frame global integration and local responsiveness.. In this case, the business has a clear opportunity, although the cost and uncertainty mean the outcome is not guaranteed. The alternative may be safer.

High-level response

The strongest argument is not the decision in isolation but whether its likely long-term contribution exceeds its financial and stakeholder cost. The case evidence makes the benefit plausible; however, its value depends on execution, timing and the business's capacity. A staged approach with a measurable review point would protect the objective while limiting irreversible risk.

The weak fragment names a benefit and drawback but contains little AO1, no developed AO2–AO3 chain and an unsupported AO4 judgement.
The mid-level response selects relevant knowledge and introduces context and uncertainty, but needs more precise evidence and a developed comparison.
The high-level response weighs conditions, opportunity cost and implementation. It makes a contextual judgement rather than merely repeating earlier points.
Length is not a substitute for quality: a shorter, evidence-rich chain can outperform a long generic essay.

Common exam traps

Using the business name without explaining how the evidence changes the argument.
Treating a possible consequence as certain or ignoring the time needed for it to occur.
Adding a token 'however' rather than weighing magnitude, evidence and conditions.

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Connections

See the topic as part of the course

Licensing affects joint venture, which then changes the resources, incentives or constraints facing the organisation.
Globalisation, global entry and trade connects to finance because its expected benefit must be compared with cash timing, affordability and the opportunity cost of this decision: Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.
Globalisation, global entry and trade also connects to people and operations because implementation quality can strengthen, delay or reverse its predicted result.

Active recap

Can you do these without notes?

Define Licensing and distinguish it from Joint venture.
Use the topic scenario to build a three-link cause-and-effect chain.
Explain why this statement is unsafe without context: “Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.”
State the most important missing evidence and explain how it could change the final judgement.

What you need to know

Global context and reasons for globalisation

Global business strategies

Foreign direct investment and Bartlett and Ghoshal model

Franchising, joint ventures, licensing and direct investment

Reasons, effects, opportunities and threats of global trade including e-business

Global marketing, regulations and assistance

Analysis of global financial and non-financial data, trends, forecasts, percentage change and government statistics

Understand the business idea

International entry trades control, speed, resource commitment and local knowledge. Bartlett and Ghoshal help frame global integration and local responsiveness.

Can you define the central concept precisely?

Can you identify evidence that makes the concept relevant to this business?

Can you distinguish a possible outcome from a guaranteed outcome?

Apply and analyse

Use a case fact inside each major analytical chain.

Explain at least two linked consequences rather than asserting an outcome.

Test whether the same evidence could support a competing interpretation.

Evaluate and decide

Do not assume there is one correct conclusion in globalisation, global entry and trade. Test the judgement against this recurring error: Globalisation does not make national differences irrelevant.

Which factor is most important in this context, and why?

What assumption is your conclusion relying on?

What new evidence could change the judgement?

Organise the argument before writing

Skill

Stronger approach

Weaker approach

Knowledge

Select the part of globalisation, global entry and trade that answers the decision.

Write every definition remembered from the topic.

Application

Use this case constraint because it changes the likely effect or risk: A Belfast food brand must choose exporting, licensing or a joint venture to enter Japan while protecting quality and adapting flavour.

Mention licensing without showing where it appears in the case.

Analysis

Develop at least two credible links between licensing and the stated objective.

Jump from the proposal straight to higher profit or success.

Judgement

Compare the proposal in “Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.” with a feasible alternative and identify a decisive condition.

Choose whichever side has the longest list of points.

See the topic as part of the course

Licensing affects joint venture, which then changes the resources, incentives or constraints facing the organisation.

Globalisation, global entry and trade connects to finance because its expected benefit must be compared with cash timing, affordability and the opportunity cost of this decision: Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.

Globalisation, global entry and trade also connects to people and operations because implementation quality can strengthen, delay or reverse its predicted result.

Can you do these without notes?

Define Licensing and distinguish it from Joint venture.

Use the topic scenario to build a three-link cause-and-effect chain.

Explain why this statement is unsafe without context: “Low-commitment entry limits capital at risk, but can weaken control over brand, data and operating quality.”

State the most important missing evidence and explain how it could change the final judgement.