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Session1 Globalization

This document defines key concepts in international business and globalization. It discusses how globalization has increased through factors like advancing technology, liberalized trade, and expanded transportation services. While globalization allows access to new markets and resources, criticisms include loss of sovereignty, negative environmental impacts, and rising inequality from offshoring jobs. Overall, managing international business is more complex due to country and cultural differences, and a company's competitiveness varies in each foreign market.

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Zaky Febri
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64 views

Session1 Globalization

This document defines key concepts in international business and globalization. It discusses how globalization has increased through factors like advancing technology, liberalized trade, and expanded transportation services. While globalization allows access to new markets and resources, criticisms include loss of sovereignty, negative environmental impacts, and rising inequality from offshoring jobs. Overall, managing international business is more complex due to country and cultural differences, and a company's competitiveness varies in each foreign market.

Uploaded by

Zaky Febri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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International Business

Globalization and
International Business
www.showbie.com
Lecturer:
Sign in with gmail account
Filda Rahmiati, MBA
Email:
[email protected]
Phone/WA:
+6285319093803
Atau TU69L
Learning Objectives

 To define globalization and international


business
 To understand why companies engage in
international business
 To identify major participants in international
business
 To appreciate who you should study
international business
International Business Defined
 International business: all commercial
transactions between parties in two or more
countries – cross-border business
International
Trade

Globalization of International
markets Investment

Elements of
International
Business

Foreign market International


entry strategies Business Risk

Participants:
firms,
intermediaries,
facilitators,
governments
International trade
 Exchange of products and services across national borders,
typically through exporting and importing
 Forms: export and import (global sourcing)
 Entrepôt economies : Singapore, Hongkong, and the Netherland
International Investment
 Two types: portfolio investment and
foreign direct investment (FDI)
 FDI is the foreign entry strategy
practiced by the most internationally
active firms.
 Long term, retain partial or complete
ownership of the assets acquire.
 Established a new legal business
entity in the host countries
(regulation of host government)
Reasons that Firms Engage in

International Business
Seek opportunities for growth through market diversification
 Earn higher margins and profits
 Gain new ideas about products, services, and business method
 Serve key customers better that have relocated abroad
 Be closer to supply sources, benefit from global sourcing
advantages, or gain flexibility in product sourcing

 Gain access to lower cost or better value factor of production


 Develop economies of scale in sourcing, production, marketing, and R&D
 Confront international competitors more effectively
 Invest in a potentially rewarding relationship with a foreign partner
Globalization Defined

 Globalization: the ongoing social, economic, and


political process that deepends and broadens the
relationships and inter-dependencies amongst
nations-their people, their firms, their organizations,
and their governments.
 Globalization enables us to get more variety, better
quality, or lower prices.
 International business facilitates globalization
process.
Globalization-KIA Sorento
CD Player

Make the Send to


Final
optical- Thailand for
assembly in
pickup units mechanical
Mexico
in China structure

Shipped from U.S. Port


to Kia’s South Korean
factory
Factors in Increased Globalization
 Increase in and expansion of technology
 Population is involved in developing new products
 The Internet – companies can reach global customers and
suppliers

 Liberalization of Cross-Border Trade and Resource Movements


 Citizen want greater variety of goods and services at lower prices
 Competition spurs domestic producers to become more efficient
 Encourage other countries to lower their barriers in turn
Factors in Increased Globalization
 Development of Services That Support International
Business
 Bank Credit Agreements, clearing arrangements, and
insurance.
 International package-service companies: UPS, TNT, etc.

 Growing Consumer Pressures


 Consumers today want more, newer, and better
product.
 Consumers are more proficient at scouring the globe
for better deals – cheaper products
Factors in Increased Globalization
 Increased Global Competition
 Competitors are already gaining sales
 Seek supplies where competitors are getting cheaper
 Merged with foreign firms to gain operating efficiencies

 Changing Political Situations


 Transformation of political and economic policies
 Government willing to support programs favorable to
international trade
Factors in Increased Globalization

 Expanded Cross-National Cooperation


 International cooperation: treaties, agreements, and
consultation
 To attack problems jointly that one country acting alone
cannot solve
 To deal with areas of concern that lie outside the
territory of any nation
The Criticisms of Globalization

 Country lose sovereignty


 Negative costs of economic growth
 Increasing income inequality
The Criticisms of Globalization
 Country lose sovereignty
 Countries seek to fulfill their own citizens by
setting rules that reflect to collective national
priority.
 If regulations are stringent, company can simply
move production where less rigorous rules – face
unemployment and tax loss
 Country should protect private property, enforce
the law, banks should regulated appropriately.
The Criticisms of Globalization

 The resultant growth hurts the environment


 It consumes more nonrenewable natural resources
 Increases environmental damage
 Pesticide runoffs into rivers and oceans
 Air pollution from factory and vehicle emissions
 Deforestation affect weather and climate
The Criticisms of Globalization
 Offshoring
 Offshoring causes those in lower-level jobs to lose
more in relation to their bosses
 The stress imposed on the people who are losers in
income-equality competition
 Increased insecurity about job and social status also
increased in crime activity
 Effect on the poor
 Paying low wages
 Exploiting workers
 Employing child labor
Conclusions

Managing an international business differs


from managing a domestic business
because:
-countries and cultures are different
-international business operations
are more complex than domestic
operations
[continued]
Conclusions

A company’s own competitive strategy


influences how and where it can best
operate.
From one country to another, a company’s
relative competitiveness will vary because of
the differences in the local and foreign
competitors that are present.
International Business and Local
Business
International Business Local Business
Take home assignment

 Debating the Good and Harm of Globalization


 Source: Cavusgil, S.T., Knight, G, and Riesenberger, J. (2017),
“International Business” 4th Edition, Pearson Education Limited, Pg 78-
79.

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