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Chapter - First

Global Business

TOPICS WE NEED TO
COVER :
1. Meaning of International Business
2.
3.
4.
5.
6.

Meaning of Globalization
Drivers of Globalization
Overview of changing global pictures
Declining trade Barriers
Change in Communication, information, transportation
technologies

WHAT IS INTERNATIONAL
BUSINESS?
In a very simple way, we can define IB as businesses that are performed across the
border.
International Business is the performance
of business activities abroad by a citizen
or a domestic enterprise in the form of
trade or investment.
So a business can be said international
when its operations go beyond the
national boundaries. A business is
said to have internationalize, once it
started to send its goods and services
apart from home country.
Video : What is international Business?

WHAT DOES
GLOBALIZATION MEAN?
Video : Globalization Animation
The term globalization derives from the root word "globalize", which refers to the emergence of an international
network of social and economic systems.
There are various definitions profound by many prominent scholars about globalization. It can merely be defined
as a whole process of being internationalization,modernization,deteritorization in cultural,political,social,econmic
aspect.
Globalization dreams world as a single economy. Globalization views world as a single village. Today, if anything
does happen bad in political scenario of any country another country frequently changes business policies.
Presently if some cultural revolution happens somewhere then it impacts all of the neighbourhood.
If recession cripples any one country that influences others.
Globalization has existed because no nation could
sufficient to his own. They need to go with the world.
So world become open to each other.
Gradually United Nations got set up.WTO,World bank
,Asian Development Bank,IMF got existed.
Eventually countries started to build trade blocks as
NAFTA,AU,EU,SAFTA,BIMSTEC,ASEAN etc.
After then the significance and importance of Globalization
become inevitable.

Video : Globalization by Noam Chomsky

Globalization can be defined from various corners. Globalization has forms such as economic
globalization,political globalization,socio cultural globalization,natural globalization and
technological globalization.
Economic globalization sees whole world is tied with single economy.American doller has become
common value of exchange.Countries are free to get investment.Companies get enter countries to
countries through various entry methods such as licensing,franchising,direct investment,joint
ventures,mergers and acquisitions.
Political globalization is that politics of one nation does impact to other nation.The political
movement in Tunisia has brought the changeness all throughout arab nations. Almost every nation
have signed to UN doctrines. In many issues countries are cooperating and forcing each other to
regulise. womens rights,child rights,labour rights and many subjects are widely accepted.
Culture has stretched its arms around the globe. Today, New year celebration according to Georgian
calendar and Valentine day is celebrated in the whole of the world.
Natural Globalisation refers all countries of the globe are stand to natural issues. Global
warming,green markeitng, O-zone layer depletion, cross border pollution all issues are globally
discussed and common strategies are being taken to fight against.
Technological globalization is about sharing of common technologies. Internet is common to
everybody. Like wise PSTN telephone,CDMA and GSM is same to all people. Microsoft is sharing
common software WINDOWS to 95 percent of the computer of the globe.
In short Globalization is internationalization,mordernization and deteritorization in
economic,political,cultural and technoligical things. Globalization sees world as borderless and
Global villa.

DRIVERS OF
GLOBALIZATION
Globalization is not spontaneous outcome. It has not easily come to
todays shape. Many ups and downs been suffered over the decades.
There are some reasons that compelled globalization to spread two
times a day and four times a night. These reasons are striving factors
in other words we say drivers.
These drivers are as follows:
1. Problems in Capitalism
2. Tech-boom
3. Comparative Cost advantage
4. Media explosion
5. Competition
6. High deamand / Increasing Market
7. Alliance trading blocs

1. Crisis in Capitalism
Capitalism led two problems to the businessmen. One
is that it led over production of goods and services.
Companies need to waste their products so they took a
nod to go abroad. Another problem was that they had
earned robust money. They had a problem, where to
put money. So they had began to search new countries
to invest and sell goods.
2.Tech- Boom
Globalization been strongly recommended
because of bombarding advancement in
the technology. Over the decades
computerization greatly helped to conduct businesses.
Robust development of communication technology also
realized. Speedy and efficient transportation system
also been developed. These all phenomenon strongly
pushed business to go abroad or say to international.

3. Comparative cost advantage


Comparative cost advantage advocates countries to look upon
only high efficient goods and services. In other words it
stresses to the production of such goods only in what
countries resources could be used and it enjoys all of the
factors of production. So that robust production could be
possible. Once the large volume of production is realized
companies again did have problem to discover market where
they got to sell. It also motivated companies to become
global.
4. Media explosion
If any one has a question which thing
moves faster? The answer probably would
be light but it could not be true. We can
say todys media moves faster than anything else of the
world.
The zest is media has been developed so fast and so sharply
today if anything has happens anywhere in the world then
whole world witness that event. This also pushed companies
to go global because of easily advertisement of their products.

5. Competition
As the means of production such as
technologies,markets,communication tools,
transportation mode are developed, the other thing
came along. Other people also imitated the trend and
they posed threats to each other. Companies started
having competition at their home ground. In such tempo
of circumstances they started to discover newer
markets. Some companies fashion of producing goods
become old for their parent nation so they begin to look
for the market that would to match able. In this way
Globalization been felt even necessarily.
6. High Demand and increasing new market
After the second world war, world has entered another
level of development. That is economic development.
Thus many new countries came up with changed lifestyle with strong economy. Companies started having
leap frogged demand of goods. Many countries had
opened their doors for MNCs. This is how Globalization

7. Alliance trading blocs


After world war 2nd , world has started to integrate to
same regional blocs. North America joined themselves in
NAFTA whereas European countries tied themselves in
EU. Likewise African continent has set up AU and many
regional trading blocs been established in Asia as well.
New emerging countries profound BRICS. Nepal also
actively participated to the inception of SAARC and took
membership of BIMSTEC and SAFTA.
There is one common outcome been realized after
emergence of following trading blocs that Globalization
largely been benefited.

OVERVIEW
OF
CHANGING
GLOBAL
PICTURE

Earlier companies have a sense of patriots. They came up covered


with the flag of their home countries. Gradually globalization have
knocked down them and they forgot their identity. Now they are multi
faced and faceted.
Now Coca-Cola and Pepsi cola are not representing America to the
world. They only take care about the sales of their products. Wherever
they go they come up with that countries interest.
As a result many companies of U.S. including Apple,HP,GE started
production of their goods in China to become cost effective. Japanese
car are being produced in America more than Japan itself. Mercedez
sells more car in Asia than of its parent country Germany. Suzuki
sales more two wheelers in South Asia than it has imagined during
the inception. Samsung collects more than 80% revenues from outer
countries.
Starbucks sells coffee in one time enemy of US, at China and
MacDonald's has got worlds largest restaurant in one time tough rival
of US, Russia. The global picture of Trade and business has
witnessed great change. Today these business orgazations see world
as a village.

Declining trade barriers : World has seen robust trend of trading


blocs. Almost countries of the world been membered from United
nations so as to WTO,World Bank and IMF.
The countries who have signed to these organizations have been
compelled to agree to the accords and agreements. These
orgaizations promotes globalization. Developing countries and least
developing countries are also inviting globalization. Because they
know its a win-win situation. Many countries have removing tariff and
non- tariff barriers. Regional blocs such as
SAFTA,BIMSTEC,ASEAN,NAFTA,EU,AU are also discouraging trade
barriers.

Change in Information and communication tech


Ebay.com,Amazon.com have more than $25 bln transactions in a year.
Flipcart.com of India has turnover of more than 500 crore yearly. With
the click of mouse transactions get happens of millions worth. Online
banking,Mobile banking, SMS advertisements, sponsorship has come
long sophisticated way. The way of marketing has been changed so
as technologies. These days advertisements are not as costlier as it
used to be.

Change in transportation technologies :

Mode and means of transportation


have been changed. World has
become a village. Roads of more than
7 countries of gulf have been
interconnected. Almost all of big
countries of Europe has trail of
connected roads. Sea link has been
very significant. With the development
of heavier air-buses, planes are also
contributing in transportation of
logistics and it is notable they are
more cheaper these days.
Road,Air,Sea transportation has
witnessed drastic development in
technologies. These are more cost
effective.

Merci !!!