This document discusses the impact of globalization on international business. It begins with an introduction to international business and defines globalization. Globalization has increased economic integration between countries through rising trade, foreign investment, and financial market integration. For businesses, globalization has led to greater competition, access to new technologies and markets, and pressure to meet higher consumer expectations worldwide. It has also allowed more opportunities for outsourcing and procurement internationally. Overall, while globalization presents challenges for international businesses, it also provides significant opportunities to expand operations and take advantage of global markets.
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
People looking out for International Trade theories, This Porters Diamond will be a useful presentation for you!... If requested on mail i will send you any particular Topic in International Business.
All the Best!
> To define globalization and international business and show how they affect each other
> To understand why companies engage in international business and why international business growth has accelerated
> To discuss globalization’s future and the major criticisms of globalization
> To become familiar with different ways in which a company can accomplish its global objectives
> To apply social science disciplines to understanding the differences between international and domestic business
> To define globalization and international business and show how they affect each other
People looking out for International Trade theories, This Porters Diamond will be a useful presentation for you!... If requested on mail i will send you any particular Topic in International Business.
All the Best!
Social and cultural Environment - International Business - Manu Melwin Joymanumelwin
The socio-cultural fabric is an important environmental factor that should be analysed while formulating business strategies. The cost of ignoring the customs, traditions, taboos, tastes and preferences, etc., of people could be very high.
World trade in goods and services – major trends and developmentsmeenee
This ppt shows how trade has emerged and evolved. Further, the graphs and charts, picked from wto reports show the trade pattern wrt the year 2011. Further, recent trends in world trade are mentioned.
1. Introduction to International Business, Globalization and Trading Environm...Charu Rastogi
This presentation explores meaning and features of International Business Management, meaning of Globalization, dimensions of globalization, stages of globalization and advantages and disadvantages of globalization. It also talks about the trading environment of International Trade
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
Concept of international business environmentPinki Verma
Presentation on Concept of International Business Environment which includes:
1. Difference between International Business and International Business Environment
2.Difference between Domestic Business and International Business
3.Entry Modes of International Business
4.Nature of International Business
5.Advantages of International Business
6.Classification Of International Business Environment
(a) Micro and Macro Environment
(b) Domestic, Foreign and Global Environment
7.Components Of International Business Environment with examples.
To watch more ppt follow our channel.
Social and cultural Environment - International Business - Manu Melwin Joymanumelwin
The socio-cultural fabric is an important environmental factor that should be analysed while formulating business strategies. The cost of ignoring the customs, traditions, taboos, tastes and preferences, etc., of people could be very high.
World trade in goods and services – major trends and developmentsmeenee
This ppt shows how trade has emerged and evolved. Further, the graphs and charts, picked from wto reports show the trade pattern wrt the year 2011. Further, recent trends in world trade are mentioned.
1. Introduction to International Business, Globalization and Trading Environm...Charu Rastogi
This presentation explores meaning and features of International Business Management, meaning of Globalization, dimensions of globalization, stages of globalization and advantages and disadvantages of globalization. It also talks about the trading environment of International Trade
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
01 Globalization and International BusinessBrent Weeks
To define globalization and international business and show how they affect each other
To understand why companies engage in international business and why international business growth has accelerated
To discuss globalization’s future and the major criticisms of globalization
To become familiar with different ways in which a company can accomplish its global objectives
To apply social science disciplines to understanding the differences between international and domestic business
Concept of international business environmentPinki Verma
Presentation on Concept of International Business Environment which includes:
1. Difference between International Business and International Business Environment
2.Difference between Domestic Business and International Business
3.Entry Modes of International Business
4.Nature of International Business
5.Advantages of International Business
6.Classification Of International Business Environment
(a) Micro and Macro Environment
(b) Domestic, Foreign and Global Environment
7.Components Of International Business Environment with examples.
To watch more ppt follow our channel.
In this presentation, we will discuss about International Business Environment while focusing on the factors to globalize a business. Types of international business, growing importance to globalize, motivators to become an international company for a domestic firm will also be discussed here. Various favorable business environment and strategic decisions that influence and affect international business will be discussed along with.
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International trade is distorted by countries applying tariff and non tariff trade barriers.
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As per the adage, ‘Every cloud has a silver lining’, we have observed that pro- and anti-globalization go hand in hand. If one section of the society considers it to be advancing for good, other section will always pick the bad out of it.
Pro-globalists debate that globalization brings about much increased opportunities for almost everyone, and increased competition is a good thing since it makes agents of production more efficient, the anti-globalists, on the contrary, argue that certain groups of people who are devoid in terms of resources are not currently capable of functioning within the increased competitive pressure that will be brought about by allowing their economic to be more connected to the rest of the world.
Let's read more to understand the impact of both the faces of globalists, their ideology and perception.
Happy reading!
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The impact of globalization on international business
1. Page 1 of 13
THE IMPACT OF GLOBALIZATION ON
INTERNATIONAL BUSINESS
GROUP NO-01
FMG3231 INTERNATIONAL BUSINESS ECONOMICS
FACULTY OF MANAGEMENT
UNIVERSITY OF JAFFNA
3. Page 3 of 13
CONTENTS PAGE NO
An introduction to international business 3
What is globalization? 6
The impact of globalization on international business 6
Future of international business and globalization 12
Summary 12
Reference 13
4. Page 4 of 13
1. AN INTRODUCTION TO INTERNATIONAL BUSINESS
International business involves all commercial transactions—private and governmental—
between parties of two or more countries. Global events and competition affect almost all
firms—large or small. However, the international environment is more complex and diverse than
a firm’s domestic environment.
An international business has many options for doing business, it includes,
Exporting goods and services.
Giving license to produce goods in the host country.
Starting a joint venture with a company.
Opening a branch for producing & distributing goods in the host country.
Providing managerial services to companies in the host country.
Features of International Business
Large scale operations: In international business, all the operations are conducted on a very huge scale.
Production and marketing activities are conducted on a large scale. It first sells its goods in the local
market. Then the surplus goods are exported.
Integration of economies: International business integrates (combines) the economies of many countries.
This is because it uses finance from one country, labour from another country, and infrastructure from
5. Page 5 of 13
another country. It designs the product in one country, produces its parts in many different countries and
assembles the product in another country.
Dominated by developed countries and MNCs: International business is dominated by developed
countries and their multinational corporations (MNCs). At present, MNCs from USA, Europe and Japan
dominate (fully control) foreign trade. This is because they have large financial and other resources. They
also have the best technology and research and development (R & D). They have highly skilled
employees and managers because they give very high salaries and other benefits. Therefore, they produce
good quality goods and services at low prices. This helps them to capture and dominate the world market.
Benefits to participating countries: International business gives benefits to all participating countries.
However, the developed (rich) countries get the maximum benefits. The developing (poor) countries also
get benefits. They get foreign capital and technology. They get rapid industrial development. They get
more employment opportunities. All this results in economic development of the developing countries.
Therefore, developing countries open up their economies through liberal economic policies.
Keen competition: International business has to face keen (too much) competition in the world market.
The competition is between unequal partners i.e. developed and developing countries. In this keen
competition, developed countries and their MNCs are in a favorable position because they produce
superior quality goods and services at very low prices. Developed countries also have many contacts in
the world market. So, developing countries find it very difficult to face competition from developed
countries.
Special role of science and technology: International business gives a lot of importance to science and
technology. Science and Technology (S & T) help the business to have large-scale production. Developed
countries use high technologies. Therefore, they dominate global business. International business helps
them to transfer such top high-end technologies to the developing countries.
International restrictions: International business faces many restrictions on the inflow and outflow of
capital, technology and goods. Many governments do not allow international businesses to enter their
countries. They have many trade blocks, tariff barriers, foreign exchange restrictions, etc. All this is
harmful to international business.
Sensitive nature: The international business is very sensitive in nature. Any changes in the economic
policies, technology, political environment, etc. has a huge impact on it. Therefore, international business
must conduct marketing research to find out and study these changes. They must adjust their business
activities and adapt accordingly to survive changes.
6. Page 6 of 13
2. WHAT IS GLOBALIZATION
Fundamentally, globalization is the closer integration of countries and peoples of the world
which has been brought about by the enormous reductions of costs of transport and
communications and the breaking down of artificial barriers to the flow of goods, services,
capital, knowledge and to a lesser extent, people across borders (Joseph Stiglitz, former chief
economist at the World Bank)
Globalization is an umbrella term for a complex series of economic, social, technological,
cultural and political changes seen as increasing interdependence, integration and interaction
between people and companies in disparate locations.
The concept has been referred to as 'the shrinking of time and space'.
3. THE IMPACT OF GLOBALIZATION ON INTERNATIONAL
BUSINESS
International business refers to a wide range of business activities undertaken across national
borders. Along with rapidly increasing globalization, international business has become a
popular topic and has drawn the attention of business executives, government officials and
academics. International business is different from domestic business. At the international level,
the globalization of the world economy and the differences between countries present both
opportunities and challenges to international businesses. Business managers need to take account
of the globalisedbusiness environment when making international strategic decisions and in
managing ongoing international operations.
Globalization in the economic, social and political fields has been on the rise since the 1970s,
receiving a particular boost after the end of the Cold War. Many economists believe
globalization may be the explanation for key trends in the world economy such as:
Lower wages for workers, and higher profits, in Western economies
The flood of migrants to cities in poor countries
Low inflation and low interest rates despite strong growth
7. Page 7 of 13
Globalization has accelerated in the last 20 years. During a period of relatively strong economic
growth, world exports as a share of GDP increased from under 20% in 1994 to over 32% in
2008, and whilst global trade fell back in 2009, as a result of the global slowdown, but bounced
back in 2010.
Increasing foreign investment can be used as one measure of growing economic globalization.
Foreign direct investment (FDI) is a measure of foreign ownership of productive assets, such as
factories, mines and land. The largest flows of foreign investment occur between the
industrialized countries. However, in recent years the flows into and out of emerging countries
has grown significantly.
Following the worldwide recession, world GDP fell more than1% in 2009. Some of the world's
key emerging economies suffered sharp recessions during 2009, whilst others notably India and
China, were able to maintain strong growth.
Organizations are exposed to global forces of demand, supply, international market competition, their
relevance to global issues global concerns, demographic changes and political developments instead of
remaining protected by local environment. Stakeholders' interests are accordingly affected also by the net
impact of the same set of factors instead of being mere subject to local situations and trends. This applies
to all stakeholders - investors, business managers, labour, suppliers, farmers, consumers, politicians and
administrative bureaucrats, govt. servants, the young, and the old, men and women as also all types of
organizations - business firms, trade associations, govt.s, civic authorities, NGOs, civil societies, social
and cultural organizations, religious establishments, scientific bodies, education and research institutions,
political parties, the military organizations, multi-lateral organizations and the terrorist outfits. Those who
cannot adapt to the global forces sooner or later lose their relevance and struggle to survive. Those who
adjust and change as the globalization proceeds convert global opportunities into strategies that strengthen
them and make them continuously relevant and deal with the threats from the environment more
effectively.
Sculpture by Robert Indiana at Taipei 101 (Taiwan) Globalization has various aspects which affect the
worldin several different ways such as:
Industrial (alias trans nationalization) - emergence of worldwide production markets and broader
access to a range of foreign products for consumers and companies
8. Page 8 of 13
Financial - emergence of worldwide financial markets and better access to external financing for
corporate, national and sub national borrowers .
Economic - realization of a global common market, based on the freedom of exchange of goods
and capital.
Political - political globalization is the creation of a world government which regulates the
relationships among nations and guarantees the rights arising from social and economic
globalization.
Informational - increase in information flows between geographically remote locations .
Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and
identities such as Globalism - which embodies cultural diffusion, the desire to consume and enjoy
foreign products and ideas, adopt new technology and practices, and participate in a "world
culture"
Ecological- the advent of global environmental challenges that can not be solved without
international cooperation, such as climate change, cross-boundary water and air pollution, over-
fishing of the ocean, and the spread of invasive species. Many factories are built in developing
countries where they can pollute freely.
Social - the achievement of free circulation by people of all nations
Transportation - fewer and fewer European cars on European roads each year (the same can also
be said about American cars on American roads) and the death of distance through the
incorporation of technology to decrease travel time.
Globalization is a leading concept which has become the main factor in international business
life during the last few decades. This phenomenon affects the international business in following
ways.
1. Rise in Competition
Globalization leads to increased competition. This competition can be related to product and
service cost and price, target market, technological adaptation, quick response, quick production
by companies etc. When a company produces with less cost and sells cheaper, it is able to
increase its market share.
9. Page 9 of 13
With enhanced competition from foreign brands and companies, industries of every nation are
compelled to improve their standards and quality and customer satisfaction services. This
benefits the customers and the economy as a whole, and raises the standard of living of
everybody. This could be viewed as a negative impact by many, but no-one can deny the impact
it has had.
2. Rise in Technology and Know How
The rise in knowledge levels of countries as newer cultures and technologies are opened to a
particular area are clear, their knowledge base also grows and expands simultaneously. As a
result, they are better able to handle their primary and secondary industries, and this ultimately
affects their tertiary sectors in a positive manner as well.
3. Rise in Opportunities
With a larger number of industries and resources available, the opportunities for people grow
exponentially too. There are many more jobs available to people, and more and more people are
also exposed to the lucrative benefits of moving abroad. This increases immigration rates as well,
thus giving people the chance to grow economically and socially. Whatever your viewpoint of
immigration, there is no doubt it has opened up masses of opportunities to millions of people
who would otherwise have not seen any improvements
4. Rise in Investment Levels
The rise in foreign investment in countries helps industries and native cities grow at a rapid pace,
and this is something that every nation should be open to since it is a highly beneficial venture
for them. There is so much that they can gain in the process as well. Every country now imports
more than ever before, so that global growth has shared resources and abilities in a way that we
could never have imagined even 50 years ago
5. Meeting consumer expectations and tastes
Generally, consumers all over the world are better informed, have higher incomes and therefore
higher and more exacting expectations. This forces businesses to meet higher standards.
10. Page 10 of 13
6. Economies of scale
Selling into a global market allows for enormous economies of scale, although not all industries
benefit from these.
7. Choice of location
Businesses are now much freer to choose where they operate from, and can move to a cheaper
and more efficient location. In the last decade the world has been seen by many businesses as an
attractive business location, especially in financial services. The increased movement of
businesses and jobs has, to some extent, forced governments to compete with each other in
providing an attractive and low-cost location. businesses now have more freedom of movement
in moving to get hold of those cheaper inputs e.gLabour in developing countries. One limitation
on this is that managers won’t always move to some countries if living conditions are unpleasant
or even dangerous.
8. Information transfer
Information is a most expensive and valuable production factor in the current environment.
Information can be easily transferred and exchanged from one country to another. If a company
has a chance to use knowledge and information then it means that it can adapt to this global
changing. This issue is similar with the technology transfer issue in global markets. The rapid
changing of the market requires also quick transfer of knowledge and efficient using of that
knowledge and information.
9. Increased mergers and joint ventures
The globalization allows the businesses access to bigger markets and associated cost advantages.
10. Multi-national and multi-cultural management
This is a major challenge to businesses and their managers. A multi-national business
environment is more complex with more variables, and so is more difficult to manage. A multi-
cultural employment policy leads to employees of many different nationalities, languages,
religions and cultures in different offices across the globe. These employees react in quite
11. Page 11 of 13
different ways to incentives, to motivation and it is very difficult to find managers who are
sensitive to all these different factors. It is very easy to inadvertently give offence and demotivate
workers. For example, the Japanese were initially very disappointed with their Thai employees
who didn’t respond well to Japanese methods of building up corporate loyalty and motivation.
Once they turned production targets into a game, the Thais worked extremely well.
11. Globalization of markets
National borders are becoming less and less important. Markets stretch across borders is well-
placed to take advantage of this. The same issues of language and culture and so on arise.
Consumers are more alike, but by no mean the same. Many businesses have made expensive
mistakes by not taking local variation sufficiently into account. Marketing, in particular, is a
minefield because of its dependence on language. The marketing books are full of stories, often
very amusing, of how businesses got it wrong.
12. Procurement and Outsourcing
The opening up of global markets and improvements in intercultural communication creates a
wealth of opportunities to source high-quality, low-cost materials and labor. Outsourcing is when
less expensive, foreign labor is used for activities traditionally performed at home. In some
countries, such as the United States, outsourcing is seen as a growing evil. In others, such as
India, outsourcing brings unparalleled economic prosperity to the people. Developed nations
often fail to realize that for every individual that loses a job to outsourcing, another individual --
usually in a more economically depressed situation -- gains a job.
13. Economic Development
Globalization provides new opportunities to underdeveloped nations by allowing them access to
new markets around the world. China and India have ridden the wave of globalization
throughout the twentieth century and into the twenty-first, for example, and are rapidly becoming
economic powerhouses. Even tribal groups in nations, like Brazil and Africa, can ride the wave
of globalization, selling locally-made products around the world via the Internet to raise their
standard of living.
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14. A higher level strategizing
As a result of globalization, there are used powerful strategies for marketing and promotion
events in many organizations by using electronic tools and equipments such as computer
networks, iPod and mobiles are used with the help of internet.
4. FUTURE OF INTERNATIONAL BUSINESS AND GLOBALIZATION
• Further globalization is inevitable.
• International business will grow primarily along regional rather than global lines.
• Forces working against further globalization and international business will slow down
both trends.
5. SUMMARY
Globalization is the key factor for international business. This new era of globalization brings
with it opportunities and also new considerations and challenges with the dynamics of a free
market. Globalization grant access to benefit from the international division of labor,
technologies, international specialization, inter-cultural exchange and the consumers enjoy a
wider variety of products at lower prices. With globalization, there comes a higher level of
thinking and strategizing. Business evolves in new ways.
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6. REFERENCE
http://bookboon.com/blog/2011/10/how-globalization-affects-business/
http://kalyan-city.blogspot.com/2011/09/what-is-international-business-meaning.html
http://www.m-t-d.co.uk/blog/the-effects-of-globalisation-on-business.htm
http://www.gregglee.biz/ftp/student/BusinessOrg/page_139.htm
http://www.gregglee.biz/ftp/student/BusinessOrg/page_141.htm
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