FOR EDUCATION USE ONLY

1. CAPE 2007 U1/P2/#1 GLOBALISATION
The concept of globalization has been one of the most current topics in the Business World.
a) Define globalization. [3 marks]
b) Discuss THREE positive and TWO negative impacts of globalization on Caribbean
business organizations. [22 marks]
Globalization refers to the free movement of labour, capital and goods around the world. It is
the term used to describe the growing integration of the world’s economy.
B. Globalization refers to the free movement of labour, capital and goods around the world.
It is the term used to describe the growing integration of the world’s economy. The impact of
globalization on Caribbean business organisations can be both positive and negative.
One of the positive impacts of globalization on Caribbean business organisations is
improved technologies. As a result of globalization, businesses will now have access to the
improved technologies being developed elsewhere. For example, the most advanced technology
available in Silicon Valley would be available to local firms in Trinidad. Such examples can be
complex management information systems and production set ups for businesses. This can go a
long way in improving productivity in the business organisation. Improvements in technology
would lead to improvements in quality and this is beneficial to the firm as consumers nowadays
are far more quality conscious and are willing to pay higher prices for a higher quality product.
By extension, this will increase profit margins for businesses in the Caribbean and can lead to
expansion of the business. Improved technology is beneficial since it gives firms the competitive
edge in the global environment.
Secondly, globalization can also be positive to Caribbean business organisations because
of the enormous market opportunity that stems from it. Evidence of the integration of the
world’s economy can perhaps best be seen in businesses that design, market and trade their
products to a world market such as House of Angostura in Trinidad and Tobago. House of
Angostura is probably best known for their famous Angostura Bitters which is sold in many
countries throughout the world. Consumers in different countries recognize the product easily
and have similar tastes for the product. House of angostura is able to market their product
worldwide and because of this, they are able to operate distillers in the United States of America,
Canada, The Bahamas as well as in Suriname. The world now becomes the market and a wider
market provides opportunities for many Caribbean firms to grow. This is beneficial to these
firms since they now have a larger market to sell their products which can increase sales and
profits for the business.
Thirdly, globalization can positively impact Caribbean business organisations by making
available to them cheaper supplies of raw materials and products. This can now be possible
through the use of the internet. The internet brings closer to these local businesses, cheaper
higher quality raw materials, intermediate products and final products. A classic example is seen
in the Asian economies where goods are sold at extremely low prices. This can be beneficial

2. CAPE 2007 U1/P2/#1 GLOBALISATION
since it reduces their cost of production and this can be passed on to customer through lower
prices. This would lead to an increase in profit margins which ultimately can be used to do
further research and development which can sharpen their competitive edge in the global
markets.
Conversely, globalization can also have negative impacts on Caribbean business
organisations. One such impact is the greater competition among firms. With the removal of
trade barriers and the free movement of labour, goods and finance across international borders, it
provides customers with a wider variety of choice. This is an advantage to the customer but a
major blow to business organisations. This is felt more severely by infant industries since they
are forced to lower their prices to compete with cheaper products being imported. Reduced
prices will cause a loss in revenue and since these firms are new, they will be unable to absorb
such significant losses and may even lead to such firms being driven out of the industry. In
addition, higher standards may have to be met such as ISO 9000 and such can be rather costly to
these firms.
A second negative impact of globalization of globalization on Caribbean business
organisations is the technological divide that can be as a result. In this modern world,
technology is rapidly improving in nature and many local firms may be unable to keep up to pace
with the shifting frontier of technology and remain competitive. At the same time, it may be very
difficult for such firms to keep costs down and this can make them lose their competitive edge
over competitors and this can result in reduced profit margins. This problem is even more
common in the Caribbean where there are a high number of small businesses operating.
In retrospect, globalization can have both positive and negative impacts on Caribbean
businesses. Even though the local businesses may adversely be affected by globalization, the
benefits gained can surpass potential drawbacks.
Lee Yum Nablab