CHAPTER 1

GLOBALIZATION

Author: Charles w.l.hill

International Business

Any level activity that is carried

across border to earn profit..

Y to do International Business?

(Benefits)

Increase in Profits

Employment opportunities

Foreign Exchange

Split Risk across different Markets

Improvement in Technology

Taxation

Innovations

Cont’d….

Technology

Better utilization of Resources

Political Relations

Hurdles in International

Business

Nationalities of Parties

Law & regulations of different

countries

Political conditions

Risk

Differences in Cultures

Competition

Terrorism etc.

What is Globalization???

Interdependence and interrelation of world economy is basically termed

as “Globalization”

Factors that had led Globalization:

Fall of Barriers of trade

Telecommunication

Transportation

Internet

Globalization Of Markets

• Merging of Historically Distinct National Markets

• Convergence of Consumer taste and Preferences

• Example: Starbucks, KFC, Pepsi

Globalization of Production

• Sourcing of Goods around Globe to take advantage o National Differences in factor of productions.

• Example: Boeing Jet airliner

Global Institutes:

WTO (World Trade Organization)148 nations as member countries up to May,2005.

Responsible for facilitation of multinationals agreements

Promoted low trade barriers

• IMF (International monetary Fund) & World Bank: Came into existence in 1944 by 44 nations

IMF maintain order in international monetary system ; world bank promote economic development

Cont’d….

UN (United Nation)

Oct 24, 1945 by 51 countries

Now 191 member nations

Established to preserve peace through

international cooperation & collective security

UN Charter

Establishes Basic principles of international

relations

Cont’d….

Charter has laid down 4 purposes of UN

Maintain International

Peace & Security

Develop friendly relations among

Nations

Cooperate in solving

International problems &

promote respect for human rights

Harmonizing Actions of Nations

Drivers of Globalization

Declining Trade & Investment Barriers

Role of Technological Change

Microprocessors & Telecommunication

Internet & World Wide Web

Transportation Technology

Global Economy of 21st

Century

Barriers have reduced

Volume of Trade has increased

Investment is growing more than Global output

Privatization, Deregulation, Open Markets etc.

Globalization is not inevitable

Example: Russia

Globalization also brings risk with it

Example: Recession

Globalization Debate

Greater Prosperity

Lower Prices of Goods and Services

Stimulate Economic Growth

Employment opportunities

Raise Income of Consumers

Globalization has its critics also:

Anti-Globalization Protest

Globalization, Jobs and Income

Labor Policies and Environment

National Sovereignty

World’s Poor

Managing in Global

Marketplace

Countries are Different

Range of problems are wider & more Complex

Government Intervention

Currency Exchange Rates