Globalisation's effect on Investment Options

Charles and Max

Explain the IssueGlobalisation has resulted in greater connection among markets around the world and increased communication and

awareness of business opportunities over the world

More investors can access new investment opportunities and study new markets at a greater distance than before, and not just rely on the local stock market

Potential risks and profit opportunities are within easier reach thanks to improved communications technology. Countries with positive relations between them are able to increasingly unify their economies through increased investment and trade. Products and services previously available within only one country are made more readily available to new markets

For investors, these opportunities set a wider range of investment options and new ways to profit.

Discuss how this affects Different Investment Options

Globalisation encourages businesses to adapt to different strategies based on new trends that try to balance rights and interests of both the individual and the community as a whole.

Globalisation determines what companies they should invest in. This is due to the fact that Australian companies may have large HQ’s in other countries due to globalisation and when the AUD is low compared to other places this can result in a lot of profit for the company and this ultimately results in an increase in share prices.

For instance, CSL is an Australian company that gains most of it profits from the US, currently in Australia the AUD compared to the USD and because of this CSL is turning a big profit and its share price has increased by 7 points in the last 3 weeks. Many Australians have seen this occur and have bought into CSL shares, but without globalisation CSL may have never started providing for and operating in the US.

Who Benefits + WhyCompanies - companies benefit as globalisation allows them to expand and reach out to many countries all over the world. This means more consumer, larger target market and this ultimately results in an increase in profit margins for the company. Companies also have increasingly turned to global markets as a source not only of new customers but also of production locations and partners for new ventures.

Investors - Investors benefit as a result of this companies thriving in the internationally market and other markets all over the world. As these companies grow and become international companies their profit margins increase and this is very good for investors as when companies begin to make money their share price almost always goes up as well.

Who LosesAs a result of globalisation, most businesses try to stay competitive with their counterparts in other parts of the world, broadening their competitive horizons past their local areas and home countries.

Because of increased competition from global counterparts, some companies find it difficult to keep up with their global counterparts.

So in a way companies can win and lose based on globalisation as the competition can benefit a company, but in the same way it could work against a company.