Globalization and International Business Essay

Introduction1. The meaning of world(a)isation* Broadly the widening set of interdependent relationships among people from take issueent parts of a world that happens to be divided into nations. * narrowly the integration of world economies by dint of the excretion of barriers to movements of goods, goods, capital, technology, and people.A. How Does global Business Fit In?* worldwide crease consists of all commercial message transactions between both or more countries. The goal of private business is to get in profits Governments whitethorn get them either for profit or for other(a) reasons. a. The Study of supranational Business* just ab break managers carry to approach their operating strategies from an multinational standpoint. * Managers in almost all application need to consider (1) where to obtain the inputs they need of the required quality and at the separate possible price and (2) where you bathroom silk hat sell the product or overhaul youve put tog ether from those inputs. * Studying IB is chief(prenominal) beca rehearse (1) most companies either are transnational or contend with world(prenominal) companies, (2) the trump out way of conducting business may differ by body politic, (3) an down the stairsstanding helps you make cave in career decisions, and (4) an beneathstanding helps you decide what political policies to support. b. Understanding the Environment/Operations kinThe Forces Driving Globalization* Globalization (1) has been growing, (2) is little pervasive than generally thought, (3) has economic and non economic props, and (4) is stimulated by several factors. * The A.T. Kearney / remote Policy Globalization Index or so countries are more globalized than others, and a assumption acres may be exceedingly globalized on sensation dimension and not another. This index ranks countries across four dimension * stinting foreign trade and investing* Technological Internet connectivity* Personal co ntact- multinational perish and tourism, international telephone traffic, and person-to-person transfers of funds abroad * Political companionship in international organizations and government pecuniary transfers A. Factors in cast upd Globalizationa. Increase in and Application of Technology* commonwealth growth, Economic growth* Innovations in superman mean that more countries can grapple for sales to a constituten marketplace. b. relaxation behavior of Cross-Border Trade and Resource Movements c. Development of go That Support International Business * Converting one currency to another, insuranced. ontogenesis Consumer Pressurese. great Global Competition* Born-global companies start out with a global focus because of their founders international experience and because advances in communication theory beget them a good idea of where global markets and supplies are. * Clustering or Agglomeration the situation in which many new companies locate in areas with numero us competitors and suppliers they quickly learn of unusual opportunities and gain easier access to the resources demand for international moves. f. Changing Political Situation* A major reason for growth in IB is the end of the schism between communist countries and the rest of the world. g. Expanded Cross-National Cooperation* To gain interactive advantages* To attack problems correlatively that one country acting alone cannot solve* The resources needed to solve the problem may be too great for one country to manage roughlytimes no exclusive country is willing to pay for a project that will also win another country. * One countrys policies may affect those of others.* To deal with areas of restore that lie outside the territory of any nation* Three global areas endure to no single country the non-coastal areas of the oceans, satellite space, and Antarctica.The Costs of Globalization* Critics of globalization affirm (1) countries lose sovereignty, (2) the resultant grow th hurts the milieu, and (3) some people lose both comparatively and absolutely. A. Threats to national sovereignty* Sovereignty its immunity to act locally and without externally obligate restrictions.a. The Question of Local Objectives and Policiesb. The Question of dinky Economies Overdependencec. The Question of Cultural HomogeneityB. Economic Growth and Environmental reacha. The business for Global Growth and Global cooperationC. Growing In flow Inequality and Personal Stressa. Income Inequality(disparity)* take exception to maximize the gains from globalization while at the same time minimizing the costs borne by the losers. b. Personal Stress* The growth of globalization goes hand in hand not only with increase insecurity about job and sociable status but also with high-priced social unrest.Why Companies Engage in International BusinessA. Expanding SalesB. getting Resources (R& angstrom unitD, Design)* Foreign sources may give companies (1) lower costs, (2) new or b etter products, (3) additional operating knowledge. C. Reducing pretend (Sales, Price swings)* International operations may reduce operating risk by (1) smoothing sales and profits, (2) preventing competitors from gaining advantages.Modes of Operations in International BusinessA. Merchandise Exports and Imports* The export and outcome of goods are the major sources of international revenues and expenditures. B. go Exports and Imports* For non-merchandise international lucre, we call it service exports& imports.a. Tourism and Transportationb. Service work* Turnkey operations construction projects acted under contract and transferred to owners when theyre operating(a). * Management contracts arrangements in which one ac alliance provides personnel to perform general or specialized trouble functions for another.c. Asset Use* Licensing agreements when one ships club allows another to use its asset much(prenominal) as trademarks, patents, copyrights, or expertise under cont racts known as licensing agreements, they receive earnings called royalties. * Franchising a mode of business in which one party (the franchisor) allows another (the franchisee) to use a trademark as an ingrained asset of the franchisees business. Royalties also come from franchise contracts.C. Investments* Dividends and rice beer paid on foreign investment fundss are also considered service exports and imports because they represent the use of assets (capital). * Foreign investment means ownership of foreign quality in tack for a pecuniary return, much(prenominal) as interest and dividends, and it make take two forms direct and portfolio. a. coordinate Investment(foreign direct investment, FDI)* Investor takes a controlling interest in a foreign company * When two or more companies percentage ownership of an FDI, the operation is a critical point venture.b. Portfolio Investment* Non-controlling financial interest in another entity.* It commonly takes one of two forms st ock in a company or loans to a company in the form of bonds, bills, or notes purchased by the investor.D. Types of International Organizations* Collaborative arrangements companies work together in joint ventures, licensing agreements, management contracts, minority ownership, and long contractual arrangements. * Strategic Alliance is sometimes used to mean the same, but it usually refers either to an agreement that is of critical wideness to one or more partners or to an agreement that does not involve joint ownership.a. Multinational Enterprise (MNE)* Any company with foreign direct investments.* Multinational peck or multinational company (MNC), international company (TNC) in US.Why International Business Differs from Domestic Business foreign environment that may affect international operations. A. Physical and Social Factors* Any of these factors may require a company to interpolate its operation abroad (compared to domestically) for the sake of efficiency.a. geographic In fluences* Geographic barriers often affect communications and distribution channels. * Population distribution and the equal of human activity on the environment may exert strong proximo molds on IB.b. Political Policies* A nations political policies influence how international business takes place within its borders. * Political disputes particularly military confrontations can disrupt trade and investment.c. legal Policies* Legal law includes both home- and host-country regulations on such matters as taxation, employment, and foreign-exchange transactions. * International law in the form of legal agreements between countries, determines how earnings are taxed by all jurisdictions. It may also determine how companies can head for the hills in certain places. d. Behavioral Factors* The think disciplines of anthropology, psychology, and sociology can help managers better go out different values, attitudes, and beliefs. In turn, such fellow feeling can help mangers make opera tional decisions abroad. e. Economic Forces* Economics explains why countries exchange goods and services, why capital and people travel among countries in the course of business, and why one countrys currency has a certain value compared to anothers.B. The competitory Environmenta. Competitive Strategy for Products Products compete by means of cost of specialism strategies, the latter usually by * growth a favorable brand image, usually through advertising or from long-run consumer experience with the brand or * maturation unique characteristics, such as through R&D efforts or different means of distribution. b. Company Resources and come across* A companys coat and resources compared to those of its competitors. c. Competitors Faced in Each mart* Success in a market (whether domestic or foreign) often depends on whether the competition is also international or local.