Business Globalisation

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Chapter 1

Globalizing Business



LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Explain the concepts of international business and global business

2. Articulate what you hope to learn by reading this book and takingthis course

3. Identify one most fundamental question and two core perspectivesthat provide a framework for studying this field

4. Participate in the debate on globalization with a reasonably balanced

and realistic view and a keen awareness of your likely bias in favor of globalization

5. Have a basic understanding of the future of the global economy andits broad trends



INTERNATIONAL BUSINESSAND GLOBAL BUSINESS

international business - business (firm) that

engages in international (cross-border) economic activitiesor the action of doing business abroad

global business - business around the globe,

including both international (cross-border) activities anddomestic business activities




multinational enterprise (MNE) - firm

that engages in foreign direct investments

foreign direct investment - investments

in, controlling, and managing value-addedactivities in other countries




gross national product (GNP) - measured asthe sum of value added by resident firms, households,and government operating in an economy

gross domestic product (GDP) - total market

value of all final goods and services produced within acountry in a given period of time usually a calendar year

gross national income (GNI) - GDP plusincome from nonresident sources abroad – the term usedby the World Bank and other international organizationsto supersede the GNP term

purchasing power parity (PPP) - adjustmentmade to the GDP to reflect differences in the cost of living




emerging economies (emerging markets) - term that gradually replaced the term developingcountries since the 1990s

BRIC - acronym for the emerging economies of Brazil,Russia, India, and China




base of the pyramid - vast majority of humanity,about four billion people, live at the base of the pyramidand make less than $2,000 a year



WHY STUDY GLOBAL BUSINESS?

expatriate manager (expat) - manager who

works abroad

international premium - significant pay raise

commanded by expats when working overseas



UNIFIED FRAMEWORK



FIRST CORE PERSPECTIVE:AN INSTITUTION-BASED VIEW

formal rules - requirements that treat domestic and

foreign firms as equals enhance the potential odds forforeign firms’ success, or those that discriminate againstforeign firms would undermine the chances for foreign

entrants

informal rules - cultures, ethics, and norms that

play an important part in shaping the success and failureof firms around the globe

liability of foreignness - inherent disadvantagethat foreign firms experience in host countries because of their nonnative status



WHAT IS GLOBALIZATION?

globalization - close economic integration of

countries and peoples of the worlds

semiglobalization - strategy that suggests that

barriers to market integration at borders are high but nothigh enough to completely insulate countries from eachother



NONGOVERNMENT ORGANIZATIONS

(NGOS)

nongovernment organizations (NGOs) – heterogeneous organizations with numerousclassifications:

advocacy - environmentalists, human rights

activists, consumers, etc. that raise awareness,acceptance, and knowledge by lobbying, press work,and activist events

operational - design and implementation of development-related projects that may stressservice delivery or participation; can be religious orsecular; can be more public- or private-oriented; canbe community-based, national, or international

Business Globalisation

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