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Globalisation and international business Cheat Sheet by


Define Global­isation

The process of intern­ational integr­ation arising from the interc­hange of world views, products, ideas, and other aspects of culture.
Interd­epe­ndence of economic and cultural activities
Advances in transp­ort­ation and teleco­mmu­nic­ations infras­tru­cture, especially the Internet, are major factors
Enables people to get more variety, better quality, lower prices.

Growth in global­ization of intern­ational business

Technology evolving and expanding, esp in transport and commun­ica­tions
Government lifting of trade restri­ctions
Growth in service industry of tools to facilitate intern­ational business
Consumer interest in intern­ational goods
Compet­ition becoming global via the internet
Improv­ement in political ties in major economic powers
Cross national cooper­ation

Key terms

Benefits that firms obtain by locating near each other
Venture launched to exploit global niche from begining
Indepe­ndent authority over a geographic area. A nations freedom from external control.
Transn­ational company
A commercial enterprise that operates substa­ntial facili­ties, in 2+ countries, does not consider any country national home.

Govs are reducing trade restri­ctions because

Citizen demand for more products and lower prices
Comp increases internal effice­ncies in domestic markets
Hope other countries recipr­ocate

Intern­ational Business Definition

All commercial transa­ctions that take place between two or more regions, countries and nations beyond their political bounda­ries.
Private and govern­mental, sales, invest­ments, logistics, and transp­ort­ation
Private for profit
Govt profit and political
Transa­ction of economic resources include capital, skills, people etc


Human Impact
Social disint­erg­ration, democracy breakdown, spread of diseases, increasing poverty, alienation
Enviro­nmental Impact
More rapid and extensive deteri­oration

The compet­ative advantage

Products compete by cost or differ­ent­iation (brand­image or unique charac­ter­ist­ics). Mass market or niche. Situation differs between countries.
Resources and exp
Size and resources compared to comp
Compet­ition in each market
Success depends on if comp is local or also intern­ational

Costs of global­isation

Threat to national sovere­ignty
National priorities are sometimes compro­mised by intern­ational trade. Eg labour laws, minimum wage etc. External countries dont face same laws. Small countries rely on larger for markets and supplies. Poor countries inadequate capacity to deal with global­isa­tion. Large companies dictate terms (eg tax free) and exploit legal loop holes, fovour home country
Growth and enviro­nmental stress
Brings economic growth, eats up non renewable resources.
Growing income inequality & personal stress
Inequality growing within and between countries

Reasons companies engage in int business

Sales expansion
Resource acquis­ition
Risk minimi­zation
Diversify their revenue stream

Types of intern­ational organi­sations

Collab­orative arrang­ments - Companies work together
Joint ventures, licensing agreem­ents, management contracts, minority ownership,
Multin­ational enterprice
Any company with foreign direct invest­ments

How is Intern­ational business different

Physical factors
Geography and demogr­aphy. Affect where goods and services can be produced
Social factors
Politics influences ease of business, law also, as well as culture and economy
Compet­itive factors
# and strength of suppliers, customers and rival firms

Modes of operation in int business

Merch export and import
Most common IB transa­ctions
Service export and import
Tourism and transp­ort­ation, service perfor­mance (banking, rental, engine­ering, mgmt services) earnings via fees
Asset use
Licensing agreements (contracts to use tradem­arks, patents, copyri­ghts),


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