Transcript of Globalization and Bussiness
PowerPoint PresentationTopic 8 :
Key learning goals:
This topic will discuss the influence of globalization over
business today and the definition of multi-national
corporations.
State the definition of globalization
State the three important aspects of globalization
Explain the main factors which have contributed to the growth of
globalization
Explain how globalization might affect the location of a
business
State the influences of multinational companies in the host
country
LEARNING GOALS
Definition:
Globalization is the growing integration of the world’s economy. It
is suggested that economic decision taken in one part of the world
will affect other parts of the worlds so businesses need to base
their business decision-making on what is happening in the world
market rather than the national market.
There are three important features or aspects of globalization,
which can be seen as follows:
The increasing importance o f international trade
More and more multinational companies
More and more businesses thinking globally about their
strategy.
Globalization and Business
-What Is Globalization?
Globalization and Business
-Factors affecting globalization
There are many factors which have contributed to the growth of
globalization, such as:
technological change,
the deregulation of business,
the consumer taste changes,
Globalization and Business
-Factors affecting globalization
Explain how
Technological change
More powerful computers and internet have allowed the easy transfer
of data, which plays an important role in speeding up the
globalization.
The reduction of transportation costs
Air transportation and telephone costs have improved the developing
environment for globalization.
Consumer taste change
More and more consumers today are willing to buy foreign or new
products for fashion or new styles.
The growth of new markets
New markets have been opened up in countries like former Eastern
European countries and China. The growth of new markets has
increased the trend of globalization.
Competition
More and more fierce competition has forced businesses to seek
opportunities in the world markets. To compete successfully,
businesses today must develop a global strategy.
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Globalization and Business
-The effects of globalization on businesses
Globalization may have a great deal of influence on many businesses
throughout the world. The impact may be stronger on some
businesses, especially large businesses, but weaker on
others.
There are a number of effects of globalization on businesses. Some
provide opportunities while others may provide threats to
businesses.
Some major effects of globalization on businesses are seen in the
following table:
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Table 8-2 Effects of globalization on businesses
Globalization and Business
Effects of globalization on businesses
Please try to explain how
Increasing competition
More and more foreign businesses have entered local markets so the
competition has been intensified.
Meeting consumer needs in more effective ways
Consumers have choices for products and services. They can buy the
best products for the best prices.
Being able to enjoy economies of scale
Businesses can enjoy as large scale of production in the whole
world. Their production costs can thus be reduced.
Affecting the choice of location
Businesses can choose the most favorable place for production or
business operation. The production of Motorola company in China can
reduce the production costs of labor and eliminate the tariff
restrictions of exports.
Increasing mergers or joint-development opportunities in the world
market
Businesses have more partners worldwide. They can join together to
produce goods and services or to penetrate foreign markets.
Copyright © 2002 by Harcourt, Inc. All rights reserved.
Globalization and Business
-Multinational companies and their influences
What is a multinational company?
A multinational company is an organization which owns or controls
production or services facilities outside the country in which it
is based. This means that they do not just export their products
abroad, but actually produce their products in other
countries.
It is commonly understood that a company is called a multinational
company provided it operates in more than four countries.
Examples of multinational companies are many such as: HSBC, Toyota,
Honda and so on. China’s HEIR is becoming a multinational
one.
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Globalization and Business
Some reasons why a company may become a multinational firm:
To avoid protectionist policies on trade, producing in another
country can prevent the tariff or quota restrictions on foreign
trade.
To realize globalization of the market and enjoy large scale
economy.
To realize the diversification of markets and spread risks of
operation
To take advantages of information technology and high speed travel
…
Copyright © 2002 by Harcourt, Inc. All rights reserved.
Globalization and Business
Influences of multinational companies on a host country:
There are some benefits and at the same time some problems for
multinational businesses operating a particular country. Please see
the following table:
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Globalization and Business
Benefits for a local country:
Creating new jobs opportunities
Creating competition for domestic businesses and causing them to
improve efficiency
Bringing new technology
Improving the balance of international payments if exporting.
Problems for a local country:
Resulting in some local firms to close plants or cut down
employees
Affecting the balance of payments if the multinational company
imports huge amount of components from other countries
Causing difficulties in government control because of the strong
power of the business
Causing environmental problems to the local country
Copyright © 2002 by Harcourt, Inc. All rights reserved.
Globalization and Business
Question for debate:
You are given 10 minutes to prepare a debate: