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
Agglomeration |
Benefits that firms obtain by locating near each other |
Born-global |
Venture launched to exploit global niche from begining |
Sovereignty |
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 |
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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 |
Critiques
Human Impact |
Social disintergration, democracy breakdown, spread of diseases, increasing poverty, alienation |
Environmental Impact |
More rapid and extensive deterioration |
The competative advantage
Strategy |
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 |
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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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