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Chapter 9
Companies
Higher Profit & Market Share (Economic impacts)
MNCS- higher profits>operatlons indifferenttocations Access to newmarkets,lowenlabour
costs andcheapes resources. (Def)
Foreign MNCs- American MNCs PepsiCo with 22 global brands (Eg)
Singapore MNCsofferwiderange of products and services from healthcare,food and
technological expertise (Eg)
Getstoans grants and taxincentivesto helpthemexpand (Eg)
Benefits(Forboth) (Expl)
Easily allow more companies to expand thetrproduction and sales to other countries
Due to cheaper labour and resourcesin other countries
More profits would leads to widening their reach by expanding in to other markets and
increaseddevelopment of the company as well as the country as profits are brought back
More market share
Benefits specially for Singapore MNCs
IncreaseinJobs especially in managerial positions
Increase variety of goods which lead to more investments
Reduce SG's vulnerability when foreign MNCs withdraw. amb,ne bot, ighr
a
Lww
LowerProfit & Market Share (Def) (Economic Impacts on Companies)
Globalisation allows foreign companies to access local markets to expand their production and
Pois
sale of goods in other countries.

Trade-off from being able to access overseas markets

Harmful
.Local SMES face increased competition and unabletocompete with larger foreign MNCs offering
same products or services and close down (Eg) fhte)
Reduction ofmanagerial jobs. (Eg)
Increased dependence increases SG's economic vulnerability when foreign MNCs withdraw
economic dedline (Eg)

Challenge
SG has a small domestic market(Eg) P a )
Shortage of expertise and labout (Eg) (rq 4)
SMEs have to constantly innovate and adapt to ensure they retain market share (Eg) (Specially
for profits)
Foreign MNCs expand their production to local markets which result more similar compantes
able to face competition from foreign MNCs
(Speciallyfor profits) Cpl)
Lessprofits less market share for local SMES hence having the possibilityof closing down. (Expl)

Solution/Response from SMEs & Companies (Eg)

1. Understand local conditions, offer goods and services which appeals to the locals
 2. New MoonandMiliprovide widerange of food productstostayaway from markettren
processed foodto remain competitive
3. Play complementany roles to MNeS
4. MMiHolaings (SME), supplies hard drive disk for tuS-basedSeagate Technolog (MN

Solution/ Government Response (Eg)

1. Financlalasslstamee at different stages of growth
2. Monetary Aid in Venturing Abroad
3. Help facilitate partnership between SMEs and MNCs
4. Loans, grants and taw incentives
Challenge(Expl) and
for innovation
LocalMNCS not ableto competewithlargenforeign MNCs (Econ impacts
complementary)
Securemarket shares as MNCs cannot compete effectively, allowingfereign
MNCswithoutas connue
4 ycan contribute to the econ output and employment to profit, stay competitive
and
to operate. (Econ impacts for innovation and complementary)
Singapore has a small domestic market + shortage of expertise and labour
Need to constantly innovate and reinvent
Especially since SMEs contribute more than 50% economic output and 70% employment

Beneficial (Econ impacts on individuals)

cars and
Globalisation allows increased mobilitythrough transportation like planes, trains,
technology allowing for communication and collaboration (Def)
or travelling to meet
Connected via Internetand mobile communications Eg: videoconferencing
Overseas companies want to employ due to their skills (Eg)
for better job prospects and high income (Expl)
Easierfor individuals to look for jobs overseas

More demand from overseas companies to attract individuals who are skilled (Expl)

Harmful (Econ impacts on individuals)

Increased competition in securing employment (Def)
lower abour costs (Eg)
Companies access foreign markets offering
in China and india at a much lower cost
Americans lostjobs when work could be done by people
and later to Vietnam and Inland Chinese cities. (Eg)
Uniqlo closed down in Shenzhen to Vietnam which had half of China's costs (Eg)
As economies evolve, due to the investments of MNCs, nature of skills change from agriculture
to manufacturing and service industries where lowly skilled workers cannot find jobs (Eg)
and interpersonal skills (Eg)
Increasing demand for new skills Info processing
-

MNCs easily shift their operations to cheaper locations

rate
Easily change a country's economy and unemployment
.Causing peoplewith lower income and lower standard living. " losejobs

Solution-Government response
relevant to
Continuing Education and Training (CET) Masterplan. Offer training courses
Singaporean workers to help them adapt and improve to find jobs. (Eg)
 WorkfareTraining support Scheme (WTS) allows for oldertower-wageworkers to upgrade
thelr skills to
retaih/upgrade jobs& earn higher wages. (Eg)
A economies evolve, due to the investments of MNCs, nature of skills change from agriculture
to
manufacturing and service industries. (Expl)
Increasing demand for new skills- Info processing and interpersonal skills (Expl)
with new acquired knowledgeand skil, lowly skilled workers are able to find jobs (Expl)
Leading tobetter income, les chances for poverty andincreasing standard of liing (Expl)

n es
Economic Growth
Def Increasedtrading allowing expansion of busines with profis and development

Foreign Direct Investments (FDI)

Investments in Singapore by a company from another country (Eg)
USA and Japah are cities with major FDIs in SG (Eg)

(Benefits) SG able to attractforeign investors, strengthen their important activities to expandin

Asiadue to the political stability, low tax rate, skilled and cheap labour
(Negatives) FDI offers litte benefit for domestic businesses. Little transfer of knowledge and
skills and limited employment opportunities which do not benefit the locals.

Free Trade Agreement

Treaties between countries to establish a free trade area for the exchange of goods and services,
without tariffs or hindrances (Def)
(Benefits) Electronics and information technology, chemicalindustries benefit from US-
Singapore FTA (Eg)
(Negatives) Cheaper products by other countries can be imported leading to competition with
Tocal products, affecting livelihood of local businesses(Eg)
Impacts
(Positive) More trade-> More tax revenue and job opportunities Improve its infrastructure
Greater variety of goods and services
Morerevenile (GDP) Increase standardof living
(Negative) Local businesses do not thrive> Limits social mobility-> Failure of local businesses-
Loss of jobs-> Poorerlivingstandards People lose their trust with the government

Econ downturn
Def: Acountry may withdraw investments or reduce demands for goods and services. This leads to
lower incomes and employment
2008 Global Financial Crisls, US banks had unpaid loans and confiscated properties which lead to
their closedowh. The Lehman Brothers filed for bankruptey. (Eg)

Impacts (Expl)
Fall of stock markets
Decline in demand for goods and services
Inpat LBPI)
.
FA o totk
Márkehs

Decrease in industrial production

Leading to increases in unemployment
Losetheir jobs or lesser income
Decrease standard of livingand GD
People risk living in poverty
Less economic development

Solution Government response for individuals

Opportunitiesto retrain with new skills
basic need ti
Rentalrebatès given to lower income families to help them get re-employed with
they find job

Solution Government response for Companies

.Financingwith reduced interest
Increased subsidies.for insurance premiums
Further tax exemptions

Challenges- Especially since

1. Limited naturat resources, Singapore needs glotbat economy for produrts and servees
2. Smali domesttc or local market needs global economy for market shace