Importance and Impact of Global Trade and Globalization

This report discusses the importance and impact of global trade and globalization. It explores strategies and analytical tools used by international organizations, using Morrison as a case study. The report also includes a SWOT analysis of Morrison and discusses various theories such as mercantilism, absolute advantage, comparative advantage, and the Heckscher-Ohlin theory. Subject: Business, Course Code: N/A, Course Name: N/A, College/University: N/A

Report about Morrison Appraise the
importance and impact of global trade
and globalisation

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
How from international company Morrison can become global company.................................3
Importance and impact of Global trade and globalization...........................................................3
SWOT analysis of Morrison........................................................................................................3
PEST analysis and Porters five forces.........................................................................................4
Discussion of the range of strategies and analytical tools used by international organizations. .5
Mercantilism theory:....................................................................................................................5
Smith’s theory of absolute advantage:.........................................................................................6
Ricardo’s Theory of Comparative Advantage:............................................................................6
The Heckscher-Ohlin Theory:.....................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global trade means exchange of goods and services by companies in international markets.
It has been analysed that dealing in foreign market is really complex in comparison to dealing in
home country. There are various challenges that is being associated with international trade like
for example change in technology, culture, belief, values and thought process of individual. All
these factors can lay positive and negative impact on business working in global market. Present
study will lay emphasis on Morrison’s. It is a super market company headquartered in United
Kingdom. It is the largest chain of super market in country. Report will discuss about various
strategies and analytical tool that are being used by various organizations.
MAIN BODY
How from international company Morrison can become global company
Morrison can convert into global organization by selling their goods and services in
different market. They also need to reduce the dependence on market which they have developed
in United Kingdom. Also company can engage in exploring various global opportunities which
can assist them in expanding their market share.
Importance and impact of Global trade and globalization
Global trade is important as it assists in developing of economy, reduce global conflict and
also increase gross domestic income and revenue of countries. Expanding business in global
market assists organization in increasing their market share, provide them with more
opportunities and increases revenue of firm. Globalization can also increase competition in state.
It is also beneficial as firm like Morrison can engage in bringing new innovation so that they can
gain competitive advantage. Global trade and globalization is important as it also enhances the
relationship shared by two countries, it motivate them to produce innovative goods.
SWOT analysis of Morrison
Strength
Company is engaged in providing value for
price which is being paid by consumer.
They are providing diverse range of products
Weakness
Sometimes they do not provide high quality
products

Opportunities
They have the opportunity to expand in
international market.
Threat
They have huge threat from competitors.
PEST analysis and Porters five forces
Morrison can be impacted by various macro environmental factors. These factors can lay
positive as well as negative impact on firm. It includes the following:
Political factor: Factors such as tax laws, labour laws, Brexit can greatly influence the
performance aspects of Morrison’s. It has been analysed that financial crisis is going in and
around world, as Morrison is also operating Globally government can encourage them to create
more job opportunities for domestic or local people. Brexit has made pound weak, so the
importing food products has become expensive (Perera, 2017). This has increased expenses of
company. Morrison’s are pressurising to seek assistance from more expensive suppliers. Due to
this firm might have to re-plan its budget as expenses are increasing day by day.
Economic factor: It includes various factors like inflation rate, fiscal policy, labour rate
that can lay positive as well as negative impact on company. Due to impact of Brexit, there has
been a declining trend in spending of consumer. This has lowered down the profitability aspects
of company. Brexit has also increased the prices of raw materials, energy, transport and
packaging which means that expenses of company has gone up. Also trading of food products is
becoming expensive day by day which is ultimately reducing the revenue aspects of Morrison’s.
Social factor: Change in lifestyle, thoughts, attitude, belief of people can also impact
Morrison. If company is going to expand their market globally, they must be involved in
analysing needs, taste and preference of consumers living over there. This will assist company in
establishing their market share and also increase their revenue aspects. It is essential for
international growth of organization. If firm does not comply with values and ethics of people,
then this can hamper goodwill of firm. They might lose their consumer base that directly affects
their growth (Fozer and et.al., 2017).
Technological factor: In this Morrison can make use of artificial intelligence to mark their
presence in global market. Like for example automated delivery is one of the best option that can
be adopted by firm. This feature eliminates middle man and directly transfer products to
individual’s home. It can increase level of comfort for consumers. Company can also develop

their personal app which can be used by customers to order item. This can enhance customer
experience and will assist Morrison in growing globally. They can gain competitive advantage
by this.
PORTERS FIVE FORCES
This can be used by Morrison to analyse the competitive environment and growth
opportunities in global market. It includes the following:
Threat of new entrants: It has been analysed that economies of scale is really hard to be
achieved in sector in which Morrison’s deal in. So threat of new entrant is low. It is very difficult
to enter the market as high amount of capital is required. Government also have strict licensing
policy that needs to be taken by new companies.
Bargaining power of suppliers: There are number of suppliers in sector in which
Morrison operates (Lewis, 2017). So Bargaining power of supplier is really high. Company can
gain benefit when they purchase raw materials from supplier at lower cost, they can also change
the supplier.
Bargaining power of Buyers|: It is low as the quality is important for buyers and they
have less number of substitute for this. In order to attract more consumers Morrison can engage
in producing innovative and creative products.
Threat of substitutes: It is low as the products in which Morrison operates have less
number of substitute. In order to gain competitive advantage, company can engage in increasing
quality of their products and services.
Rivalry among existing firms: There are only few competitors who are dealing in the
sector in which Morrison is operating, so the threat of existing competitor is low. To gain
competitive position in market firm can also involve in diversifying their products and services.
Discussion of the range of strategies and analytical tools used by international organizations
There are various strategies that are being used by Morrison’s so that they can establish their
business in global market and overcome the problems or challenges which is being faced by
them in international areas. Below discussed are some analytical tools used by company:
Mercantilism theory:
In this government is engaged in regulating economy so that they can promote trade of
domestic industry. In this government is also involved in investing in research and development

so that domestic company can grow. Morrison can take benefit from this as they can get support
from government to engage in doing more research about developing products and services.
Smith’s theory of absolute advantage:
This theory is being given by father of modern economics that is Adam Smith. This theory
lays emphasis on that Morrison must only engaged in producing that product and services who
can provide them with absolute advantage in global Market. Organization must be involved in
selling those products who have no trade barriers. As barriers in trade can restrict the import and
export of goods which directly hampers the business of firm (Bellino, 2019). They must be
engaged in selling goods in those countries who take more time to produce it. Like for example if
firm is dealing in Australia, they must be engaged in analyzing the time taken by Australia to
deliver and produce goods and services. After analyzing it Morrison will be involved in
implementing strategies to deliver products in less time. This will support organization in gaining
absolute advantage and setting down their business in international market. This theory is
beneficial for growth of enterprise; it will also help in keeping up the trade balance. Company
can also involve in dealing of those goods who have lack of mobility (Davis and Dingel, 2020).
Ricardo’s Theory of Comparative Advantage:
Comparative advantage is an economic term that refers to an economy's ability to produce
goods and services at a lower opportunity cost than that of trade partners. It means that Morrison
in order to enter the international market and establish their business over there must make use of
this theory. It analyses that voluntary cooperative trade can provide them with various benefits.
They can lay emphasis on producing or delivering the goods on lower opportunity, not by
producing large amount of goods and services (Watson, 2017). Morrison can take comparative
advantage by dealing with any such company in international market who produce grocery items
at low cost, and in contrast they will also do the same. This strategy can provide firm with unique
benefits like there operational cost can be reduced. This can also increase productivity aspects of
company.
The Heckscher-Ohlin Theory:
It is a model that is based on general equilibrium and assist countries in developing their
international trade. This model lay emphasis on that company must be involved in exporting the
good and services that are cheap for them to produce and imports such materials which are
developed with the help of scarce resources (Seretis and Tsaliki, 2016). This model lays

emphasis on that how countries must trade when they do not have an adequate resource.
Tradable commodities are not the only elements that are been taken into consideration in this
model. They also motivate company’s in importing labour from those places where they are
available for cheap. If this type of Trade relation exists, then Morrison can engage in making use
of labour from place where it is available for cheap, as this will help them in reducing the cost
which is being engaged in production of goods.
CONCLUSION
From the above study it has been summarised that in order to gain absolute advantage
company has engaged in producing and exporting that good in international market which takes
less time in developing. This has assisted firm in increasing their productivity and reducing their
operational cost. It has helped them in establishing their organization in international market. It
has helped firm in growing and gaining absolute advantage. Other strategies like comparative
advantage has also been used.

REFERENCES
Books and Journals
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Fozer, D. and et.al., 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS
process alternatives. Journal of cleaner production.147.pp.75-85.
Lewis, R., 2017. Porter's Five Forces of competitive advantage.
Seretis, S.A. and Tsaliki, P.V., 2016. Absolute advantage and international trade: Evidence from
four Euro-zone economies. Review of Radical Political Economics.48(3). pp.438-451.
Bellino, E., 2019, June. Capital mobility and absolute advantages in international trade theory.
In STOREP 2019-The Social Rules! Norms, Interaction, Rationality.
Watson, M., 2017. Historicising Ricardo’s comparative advantage theory, challenging the
normative foundations of liberal International Political Economy. New Political
Economy.22(3). pp.257-272.
Davis, D.R. and Dingel, J.I., 2020. The comparative advantage of cities. Journal of International
Economics.p.103291.

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