Globalization and International Business Essay

Introduction1. The destineing of globularization* much often than not the widening set of interdep exterminateent relationships among mess from different parts of a world that happens to be carve up into nations. * Narrowly the integration of world economies by the elimination of barriers to movements of goods, services, capital, technology, and people.A. How Does internationalist Business Fit In?* external bloodline consists of all commercial transactions between dickens or more countries. The goal of cloistered business is to make profits Governments may undertake them either for profit or for other reasons. a. The reputation of world(prenominal) Business* Most managers need to approach their operating strategies from an international standpoint. * Managers in almost every industry need to consider (1) where to obtain the inputs they need of the required quality and at the best doable price and (2) where you fuck best sell the product or service youve put unitedly from those inputs. * perusal IB is important because (1) most companies either are international or compete with international companies, (2) the best fashion of conducting business may differ by country, (3) an understanding helps you make better career decisions, and (4) an understanding helps you settle what governmental policies to support. b. Understanding the Environment/Operations RelationshipThe Forces Driving globalisation* world-wideization (1) has been growing, (2) is less permeant than generally thought, (3) has economic and non economic dimensions, and (4) is stimulated by several factors. * The A.T. Kearney / Foreign Policy sphericization might some countries are more globalized than others, and a burstn country may be highly globalized on unmatchable dimension and not another. This index ranks countries across four dimension * Economic international administer and investment* Technological Internet connectivity* Personal contact- international travel and tourism, international telephone traffic, and personal transfers of silver abroad * policy-making participation in international organizations and government monetary transfers A. Factors in Increased Globalizationa. Increase in and Application of Technology* Population growth, Economic growth* Innovations in transportation mean that more countries can compete for sales to a given market place. b. Liberalization of Cross-Border Trade and Resource Movements c. emergence of Services That Support International Business * Converting one currency to another, insuranced. Growing Consumer Pressurese. Greater Global Competition* Born-global companies start out with a global focus because of their founders international experience and because advances in communications give 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 numerous competitors and suppliers they quickly learn of dista nt opportunities and gain easier access to the resources needed 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 reciprocal advantages* To attack problems jointly that one country acting alone cannot solve* The resources needed to solve the problem may be excessively great for one country to manage sometimes no single country is willing to move over for a project that will overly benefit another country. * One countrys policies may affect those of others.* To deal with areas of concern that lie outside the territory of any nation* Three global areas belong to no single country the non-coastal areas of the oceans, outer space, and Antarctica.The Costs of Globalization* Critics of globalization claim (1) countries overlook sovereignty, (2) the resultant growth hurts the environment, and (3) some people lose both r elatively and absolutely. A. Threats to national sovereignty* sovereignty its freedom to act lo chew the faty and without externally imposed restrictions.a. The un genuinety of Local Objectives and Policiesb. The Question of Small Economies Overdependencec. The Question of Cultural HomogeneityB. Economic Growth and Environmental Stressa. The Argument for Global Growth and Global cooperationC. Growing Income Inequality and Personal Stressa. Income Inequality(disparity)* Challenge to maximize the gains from globalization while simultaneously minimizing the comprise borne by the losers. b. Personal Stress* The growth of globalization goes hand in hand not just now with increased insecurity about job and kind status but also with costly social unrest.why Companies Engage in International BusinessA. Expanding SalesB. Acquiring Resources (R&D, Design)* Foreign sources may give companies (1) lower costs, (2) new or better products, (3) additional operating knowledge. C. Reducing Risk (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 import of goods are the major sources of international revenues and expenditures. B. Service Exports and Imports* For non-merchandise international earnings, we call it service exports& imports.a. Tourism and Transportationb. Service Performance* Turnkey operations construction projects performed under submit and transferred to owners when theyre operational. * Management contracts arrangements in which one play along provides personnel to perform general or specialized management functions for another.c. Asset Use* Licensing agreements when one company allows another to use its plus such as trademarks, patents, copyrights, or expertise under contracts known as licensing agreements, they receive earnings called royalties. * Fr anchising a mode of business in which one party (the franchisor) allows another (the franchisee) to use a trademark as an essential asset of the franchisees business. Royalties also come from franchise contracts.C. Investments* Dividends and enkindle paid on foreign investments are also considered service exports and imports because they represent the use of assets (capital). * Foreign investment means ownership of foreign property in exchange for a financial return, such as interest and dividends, and it make take two forms mold and portfolio. a. Direct Investment(foreign direct investment, FDI)* Investor takes a controlling interest in a foreign company * When two or more companies share ownership of an FDI, the operation is a joint venture.b. Portfolio Investment* Non-controlling financial interest in another entity.* It usually takes one of two forms stock in a company or loans to a company in the form of bonds, bills, or notes purchased by the investor.D. Types of Internation al Organizations* Collaborative arrangements companies work together in joint ventures, licensing agreements, management contracts, minority ownership, and long-term contractual arrangements. * Strategic Alliance is sometimes employ to mean the same, but it usually refers either to an agreement that is of critical importance 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 corporation or multinational company (MNC), Transnational company (TNC) in US.Why International Business Differs from Domestic BusinessExternal environment that may affect international operations. A. corporeal and Social Factors* Any of these factors may require a company to alter its operation abroad (compared to domestically) for the saki of efficiency.a. Geographic Influences* Geographic barriers often affect communications and distribution channels. * Population distribution and th e impact of adult male activity on the environment may exert strong future influences 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 operate in certain places. d. behavioural Factors* The related disciplines of anthropology, psychology, and sociology can help managers better understand different values, attitudes, and beliefs. In turn, such understanding can help mangers make operational decisions abroad. e. Economic Forces* Economics explains why countries exchange goods and services, why capital a nd people travel among countries in the course of business, and why one countrys currency has a certain value compared to anothers.B. The Competitive Environmenta. Competitive Strategy for Products Products compete by means of cost of differentiation strategies, the latter usually by * Developing a favorable brand image, usually through advertising or from long-term consumer experience with the brand or * Developing unique characteristics, such as through R&D efforts or different means of distribution. b. Company Resources and Experience* A companys size and resources compared to those of its competitors. c. Competitors Faced in Each Market* Success in a market (whether domestic or foreign) often depends on whether the competition is also international or local.