Globalization in

International
Business and
Trade

Dr. Mary O’ Territorio Penetrante

Director, University Research Center
Central Philippine University
Learning Objectives
1. Understand the concept and significance of globalization
in international business and trade.
2. Identify the key drivers and benefits of globalization.
3. Analyze the challenges and risks associated with
globalization.
4. Explore the role of multinational corporations and global
trade systems.
5. Evaluate real-world examples and case studies of
globalization's impact.
6. Discuss future trends and strategies for sustainable
globalization.
Introduction to Globalization
• Globalization: The process of interaction and integration
among people, companies, and governments worldwide,
driven by trade, investment, and technology.
• Importance in today’s economy
1. Facilitates economic interdependence and promotes
innovation and development.
2. Promote collaboration, co-operation, and partnerships
among society, businesses, and governments.
3. Promote economic, social, and environmental exchanges
among society, businesses, and governments.
Drivers of Globalization
1. Technological advancements: Innovations in
communication and information technology that enable
global connectivity.
Example: The internet enabling e-commerce platforms
like Amazon and Alibaba.
2. Liberalization of trade and investment: Reduction of
trade barriers that allows free flow of goods, services,
and capital.
Example: Reduction of tariffs through WTO or RCEP
agreements
Drivers of Globalization
3. Global financial markets: Integration of international
financial systems that facilitate global investments.
Example: Stock exchanges like NYSE and Tokyo Stock
Exchange influencing global capital flows.
4. Transportation and communication improvements:
Faster and cheaper ways to move goods and information
across borders.
Example: Container shipping and air freight reducing
logistics costs.
Benefits of Globalization
1. Market expansion opportunities: Companies gain
access to new markets, boosting revenues and brand
recognition.
Example: Starbucks entering new markets in Asia and the
Middle East.
2. Access to diverse resources and labor markets:
Businesses benefit from lower production costs and
specialized skills.
Example: Companies outsourcing manufacturing to
countries like Vietnam and the Philippines.
Benefits of Globalization
3. Enhanced competition and innovation: Encourages
businesses to improve products and services.
Example: Tech giants like Google and Microsoft driving
technological advancements.
4. Economic growth and development: Creates jobs,
raises living standards, and fosters global economic
stability.
Example: Emerging economies like India and Brazil
benefiting from foreign investments.
Challenges of Globalization
1. Economic inequality and wage gaps: Disparities
between developed and developing countries.
Example: Wealth concentration in developed countries
vs. poverty in some regions.
2. Cultural homogenization: Loss of cultural identities as
global brands dominate markets.
Example: Western fast-food chains influencing local food
cultures.
Challenges of Globalization
3. Environmental degradation: Overexploitation of
natural resources and increased pollution.
Example: Deforestation in the Amazon driven by global
demand for soy and beef.
4. Dependence on global supply chains: Vulnerabilities
due to disruptions in international logistics.
Example: The 2020 COVID-19 pandemic disrupting global
manufacturing.
Globalization and International
Business
1. Role of multinational corporations (MNCs):
Companies operating in multiple countries, influencing
global trade and economies.
Example: Toyota manufacturing cars in multiple countries.
2. Foreign direct investment (FDI): Investment made by
a company in one country into business interests in
another country.
Example: Google investing in data centers in different
regions.
Globalization and International
Business
3. Global supply chain management: Coordination of
production, distribution, and logistics on a global scale.
Example: Apple’s supply chain spanning multiple
continents.
4. Strategic alliances and joint ventures: Partnerships
between companies to enter new markets or share
resources.
Example: Renault-Nissan-Mitsubishi Alliance.
Global Trade Systems
1. World Trade Organization (WTO): International body
regulating global trade and ensuring fair competition.
Example: WTO resolving trade disputes between nations.
2. Regional trade agreements (RTAs): Agreements
between countries to facilitate regional trade.
Example: ASEAN Free Trade Area (AFTA) promoting trade
in Southeast Asia.
Global Trade Systems
3. International trade policies and tariffs: Rules and
taxes affecting cross-border trade.
Example: U.S.-China trade war impacting global markets.
4. Impact of trade blocs (e.g., EU, ASEAN,
NAFTA/USMCA): Economic regions fostering trade and
economic cooperation.
Example: European Union enabling free movement of
goods and labor.
Impact of Globalization
1. Increased market access: Companies can reach
consumers across the globe, increasing sales and
revenue.
Examples: Nike’s global retail operations and marketing
campaigns.
The rise of multinational companies like Apple and
Samsung operating globally.
Impact of Globalization
2. Faster innovation cycles: Global competition pushes
companies to innovate rapidly.
Example: Tech companies like Samsung and Apple
continuously launching new products.
3. Cost efficiencies: Access to global supply chains
reduces production and operational costs.
Example: Clothing brands manufacturing in Bangladesh
to lower labor expenses.
Impact of Globalization
4. Cultural exchange and business diversification:
Promotes understanding and collaboration among
different cultures.
Example: McDonald’s offering localized menus in
different countries, like the Philippines.
5. Economic interdependence: Countries become
economically connected, reducing the risk of conflicts.
Example: EU countries trading extensively with one
another to ensure economic stability.
Case Studies of Companies Leveraging
Globalization

Examples:
Coca-Cola’s global marketing and supply chain
strategies.
India’s IT industry thriving due to global outsourcing.
Lessons learned from global financial crises
Understanding vulnerabilities and resilience.
Example: The 2008 global financial crisis and its ripple
effects.
Globalization Trends and Future
Outlook

1. Digital globalization and e-commerce: Expansion of

online markets and virtual businesses.
Example: Growth of Shopify and other online retail
platforms.
2. Rise of emerging economies: Countries gaining
economic influence in global markets.
Example: China becoming a global manufacturing
powerhouse.
Globalization Trends and Future
Outlook

3. Sustainable and inclusive globalization: Focus on

environmental and social responsibility.
Example: Fair trade initiatives supporting ethical
sourcing.
4. Impact of geopolitical shifts: Changing trade
dynamics due to political events.
Example: Brexit altering trade relationships in Europe.
Conclusion
1. Globalization has fundamentally reshaped international business
and trade, creating opportunities for economic growth,
innovation, and cultural exchange.
2. Companies that understand and adapt to the complexities of
global markets are more likely to thrive in today’s interconnected
world.
3. Despite its challenges, including economic inequality and
environmental impacts, globalization remains a powerful force
driving global prosperity.
4. Balancing the benefits and risks of globalization requires strategic
approaches that promote sustainable development, fair trade,
and inclusive economic policies.
5. As we look toward the future, businesses and governments must
Thank you
References
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Dicken, P. (2015). Global Shift: Mapping the Changing Contours of
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Lopez-Mariano, N. D. (2023) International Business and Trade. Rex
Bookstore, Manila, Philippines.
Rugman, A. M., & Collinson, S. (2012). International Business.
Pearson Education.
World Trade Organization. (2023). Global Trade Outlook and
Statistics. WTO Publications.
UNCTAD (2023). World Investment Report. United Nations
Conference on Trade and Development.