Professional Documents
Culture Documents
OBJECTIVE
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 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
International business involves all commercial transactionsprivate and governmentalbetween parties of two or more countries. Global events and competition affect almost all firmslarge or small. However, the international environment is more complex and diverse than a firms domestic environment.
Two
mega trends are underscored that have altered the international business landscape:
PHASES OF GLOBALISATION
Seek opportunities for growth through market diversification higher margins and profits
2.Earn
3.Gain new ideas about products, services, and business methods 4.Better serve customers that have relocated abroad
5.Be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in the sourcing of products
CONTD
6.
Gain access to lower-cost or better-value factors of production Develop economies of scale in sourcing, production, marketing, and R&D Confront international competitors more effectively or thwart the growth of competition in the home market Invest in a potentially relationships with foreign partners rewarding
7.
8.
9.
facilitator of the global economy and interconnectedness A contributor to national economic well-being A competitive advantage for the firm An activity with societal implications A source of competitive advantage for you
Increase sales
Maximize returns: Foreign markets often generate returns far superior to those in domestic markets.
Global scale economies: International players can maximize their efficiencies by securing costeffective factor inputs from around the world. Resource acquisition: Access to otherwise unavailable critical resources
As firms increase their international activities, so does responsibility to society to be a good corporate citizen. Large corporations like Wal-Mart, Unilever, and Sony have annual revenues larger than the GDPs of many of the nations they operate. The internationalization of thousands of firms negatively impacts the natural environment, e.g. pollution (Royal Dutch Shells refining operations in Nigeria). Large banks and international investment brokers have disrupted the economies of nations with aggressive currency trading or by manipulating stock markets. Some MNEs ignore human rights and basic labor standards by establishing factories in countries that pay low wages with substandard working conditions, e.g. Nike in Asia. Building factories abroad often leads to job losses at home.
There are numerous forms of collaborative arrangements through which companies work together internationally, such as minority ownership, licensing agreements, management contracts, or other long-term contractual arrangements.