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?
-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,
-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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-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:
Table 8-2 Effects of globalization on businesses
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.
-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.
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 …
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:
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
Question for debate:
You are given 10 minutes to prepare a debate:

Globalization and Bussiness

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