Globalization and International Business Essay

Introduction1. The miserlying of sphericization* Broadly the widening set of interdependent relationships among people from divers(prenominal) part of a military man that happens to be divided into nations. * Narrowly the integration of world economies through the elimination of barriers to movements of goods, services, capital, technology, and people.A. How Does transnational care Fit In?* outside(a)ist problem consists of all commercial transactions in the midst of two or more countries. The goal of private business is to make profits Governments may undertake them either for profit or for other reasons. a. The Study of transnational Business* Most repugnrs extremity to approach their operate strategies from an international standpoint. * Managers in almost any industry need to consider (1) where to obtain the inputs they need of the required quality and at the best possible price and (2) where you push aside best sell the product or service youve put unitedly f rom those inputs. * Studying IB is important because (1) most companies either are international or repugn with international companies, (2) the best way of conducting business may differ by land, (3) an understanding helps you make better career decisions, and (4) an understanding helps you define what politicsal policies to support. b. Understanding the Environment/Operations RelationshipThe Forces Driving globalization* Globalization (1) has been growing, (2) is less pervasive than oecumenically thought, (3) has economic and non economic dimensions, and (4) is excite by several factors. * The A.T. Kearney / Foreign Policy Globalization Index slightly countries are more globalized than others, and a given country may be highly globalized on unmatched dimension and not another(prenominal). This index ranks countries crosswise four dimension * Economic international trade and investment* expert Internet connectivity* Personal contact- international travel and tourism, in ternational telephone traffic, and own(prenominal) transfers of funds afield * political participation in international organizations and government monetary transfers A. Factors in Increased Globalizationa. Increase in and activity of Technology* Population growth, Economic growth* Innovations in transportation mean that more countries shadow compete for sales to a given market. b. relaxation behavior of Cross-Border Trade and Resource Movements c. Development of services That Support International Business * Converting one currency to another, insuranced. Growing Consumer Pressurese. Greater Global rival* Born-global companies start out with a global focus because of their founders international have inter logical argument 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 sink in areas with numerous competitors and suppliers they quickly learn of contradictory opportunities and gain easier door 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 Co consummation* To gain reciprocal advantages* To attack puzzles jointly that one country acting alone cannot solve* The resources needed to solve the problem may be too great for one country to manage sometimes no single country is willing to pay for a project that will besides benefit another country. * One countrys policies may affect those of others.* To deal with areas of concern that lie foreign 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 deed (1) countries lose sovereignty, (2) the resultant growth hurts the surroundings, and (3) some people lose both rel atively and absolutely. A. Threats to national sovereignty* Sovereignty its freedom to act topically and without externally imposed restrictions.a. The promontory of Local Objectives and Policiesb. The Question of Small Economies Overdependencec. The Question of Cultural HomogeneityB. Economic Growth and Environmental emphasisea. The debate for Global Growth and Global cooperationC. Growing In neck Inequality and Personal Stressa. Income Inequality(disparity)* Challenge to maximize the gains from globalization while simultaneously minimizing the costs borne by the losers. b. Personal Stress* The growth of globalization goes gift in hand not only with increased insecurity about job and neighborly status but in any case with costly social unrest.Why Companies assume 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 (S ales, Price swings)* International operations may stamp down 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 contract and transferred to owners when theyre operational. * Management contracts arrangements in which one play along provides personnel to perform general or specialized wariness functions for another.c. Asset Use* Licensing agreements when one family allows another to use its asset much(prenominal) as trademarks, patents, copyrights, or expertness under contracts known as licensing agreements, they receive earnings calle d royalties. * Franchising a modal value 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 interest paid on foreign investments are also considered service exports and imports because they represent the use of assets (capital). * Foreign investment means will power of foreign property in exchange for a financial return, such as interest and dividends, and it make take two forms call and portfolio. a. behave Investment(foreign direct investment, FDI)* Investor takes a controlling interest in a foreign participation * 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 International Organizations* Collaborative arrangements companies work together in joint ventures, licensing agreements, management contracts, minority ownership, and long-term contractual arrangements. * Strategic Alliance is sometimes use 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 quest joint ownership.a. Multinational Enterprise (MNE)* whatsoever company with foreign direct investments.* Multinational corporation or multinational company (MNC), Transnational company (TNC) in US.Why International Business Differs from Domestic Business impertinent environment that may affect international operations. A. Physical and Social Factors* Any of these factors may require a company to alter its operation abroad (compared to domestically) for the sake of efficiency.a. Geographic Influences* Geographic barriers often affect communications and dispersion channel s. * Population distribution and the impact of human 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, baffles how earnings are taxed by all jurisdictions. It may also determine how companies can operate in certain(prenominal) places. d. Behavioral 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 ex change 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 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 advertizement or from long-term consumer experience with the brand or * Developing anomalous characteristics, such as through R&D efforts or different means of distribution. b. Company Resources and Experience* A companys size of it 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.