REF 567(International Business Environment)

7/31/2019 REF 567(International Business Environment)

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International Business Environment

Case Study:globalisation is radically changing the

international business environment by creating aglobal village

Contents Page

Introduction 02

Evolution of Globalisation 03

Effects of globalisation 04

Trends in globalisation 06

Advantages and disadvantages 07

Illustrations 09

Conclusion 10

References 11


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Introduction

When concerning the concept Globalisation, as it is a broader concept it is

hard to define in a unique way. However it simply means connecting the

world through web. When considering the broader meaning for some extent,it can be interpreted as the process of harmonization through the advance

technology. In business terms globalization can be described as an event by

which industries transform themselves from multinational to global

structures. It is to be noted that the concept of globalization mainly attach

with free trade and free capital mobility. While concerning the concept

Globalisation it is essential to know about the impact of globalisation on

corporations. This can be categorized under four classes.

Political-Liberalisation of trade between nations

Technological-lower cost of transport, economies of scale, development incommunication and internet and so on. It is to be noted that through

advances in production technology all the activities have become easier and

easier.

Social-media, pressure groups can be identified as push factors under social

class.

Competitive- the new trend under this category is the concept

globalisation of customers

It is to be concerned that the core of strategy of the international businesscontext is the concept of globalisation.

Considering all the factors finally it can be finalized as increasing unification

by reducing barriers to international trade. The ultimate goal of the concept

of globalisation is to increase the material wealth through international

relationships and competition and so on. It describes the impact on

economies, cultures, and societies etc through mainly communication,

transport and trade. While considering the concept globalisation it is

important to know about the goals of it.

Discounting of production in favour of exports. Encouraging production at remote locations. Material growth Creations of systems Facilitation of subsidies


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When talking about the globalisation it is essential to talk about the

Deglobolisation too. There are some key factors of it.

Production for the domestic market should be the major concern thanthe exports.

Encouraging goods at the level of the community.

Trade policy should be there to protect the local market. Law prices concept Industrial policies Produce local financial resources for investment. Equitable income redistribution Upgrade the quality of life Emphasizing economic growth Development with the environment

Evolution of Globalisation

When talking about the history of the concept Globalisation it is observed

that the beginning of the concept is coming from the end of the nineteenth

century. There was a major collapse in it as a result of First World War.

However the pace of globalisation aroused rapidly during the fourth quarter

of the twentieth century. When peeping into the history the Islamic golden

age was also an important stage of the evolution of the conceptGlobalisation. Establishment of the sustained economy over the world have

been resulting in globalisation of crops such as sugar and cotton, trade and

knowledge. Then there was a milestone of the evolution path which was the

creation of the first international postal services which finally facilitated in

superseding the national market with global market.

The next stage of the evolution process was the rise of maritime in the 17 th

century. With the effect of these models globalisation also become a private

business trend too. The age of discovery came up with a huge change in

globalisation .It is to be noted that UK become the first global economicsuperpower as a result of using manufacturing technology and improved

global communications. When considering the late of 19 th century there can

be a new approach to the modern form. This was assisted by the rapid

growth of the population which created a sustained demand for

commodities. It is to be noted that the globalisation also driven by the global

expansion of multinational corporations and worldwide new development in


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science, technology with more and more inventions. Not only that the

development of international transportation and telecommunication played a

crucial role in modern globalisation.

The attention should be drawn to the fact that globalisation has been

facilitated by advances in technology which reduce the cost of trade byintroducing the concept free trade. It is to be noted that the growth of low

cost communication networks allowed work done using a computer for many

works. This included software development, engineering design, accounting

etc.

Economic globalisation

Under the topic globalisation, major attention should be drawn to the term

economic globalisation which is the most closely associated with. It simply

says the integration of national economies into the international economy

through trade, capital flows, foreign direct investments etc. Or it can be

simply defined as changing the international business environment by

creating a global village. Under this topic there can be circulation of ideas

and languages too. The economic globalisation can be measured in many

different ways.

Goods and services Labour(migration rates) Capital(direct investment) Technology(international research and development flows)

Effects of globalisation

When concerning about the impact of the globalisation, it has various

aspects which affect the countries in many ways. They can be categorized as

follows.

Industrial aspectsBroader accesses to a range of foreign goods, worldwide production market

are some major transformations of industrial wise.

Financial aspects

Better access to external financing for borrowers, appearance of worldwide

financial markets can be seen as the major changes in financial field. It is


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proved that more than 1.5 trillion currencies were traded daily to support

the expanded levels of trade.

Economic aspects

Based on the freedom in exchange there was recognition of a global

common market. Furthermore in the job market there can be seen many

differences as nowadays there is a trend in employees to compete in a global

job market than the national market. These are facilitated by arrival of

information age as well as the development of the communication. It is to be

noted that the survival in the global market fully depends on awareness of

the changes. Due to the recognition of global village concept, all the

industries which are at the implementing stage have to upgrade their

products and use the technology tactfully in order to face the competition in

a well manner.

Political aspects

It is observed that the impact on political development go along with thedecrease of the importance of the state. For an example such as EU, WTO

have superseded with the power of policy making and independence.

Informational aspects

This includes introduction of fibre optic communications, satellites and

availability of internet.

Ecological aspects

Global economical challenges such as climate change, water and air pollution

and overfishing are some ecological aspects link with globalisation. But it isargued that developing countries should not prohibit from enhancing their

standard of living by many restrictions or the regulations.

Cultural Aspects

Under this, growth of cross cultural contacts is the major highlighted area of

the globalisation. But this may result in reducing the diversification of thenational cultures. As a positive point it can be said that this will help inpromoting peace and understanding between the people all around theworld. It is true that because of the development of the technology with

globalisation there are some new inventions such as YouTube, face book etc.


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Technical aspects

It is to be noted that the central aspect of the globalisation seems to be the

development of a global information systems along with wireless telephones,fibre optic cables, submarines etc. Under this category virtualisation of

businesses can be distinguished as a key component of the concept E-commerce.

Trends in globalisation

It is to be noted that globalisation has been enhanced by the tradeliberalisation.WTO is a best example for that. It identifies the needs of

establishing for the issues. Cultural and economic ties such as EU, NAFTAare also facilitating WTO. It also allows transferring the skills from one

country to another. It is to be noted that the global nature is changing everytime. Today as a result of payoff from FDI companies are at a position to

enhance their production up to the world. As a result of that companies areable to relocate the new geographies to take advantages.


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Advantages and disadvantagesIt is to be noted that initially educated people were most likely to support

the concept globalisation. The people who are less educated were alwaysagainst the concept globalisation. But this situation was rapidly changed

when educated were also against the global village concept for their owneconomic security. But some countries in third world see globalisation as a

positive signal which lifted out of poverty. The opposition combines withenvironmental concerns with nationalism.

Pros

It is concerned that the concept free trade increases the prosperity aswell as opportunities among developing countries by increasing

efficient allocation of resources while concerning on civil liberty. Notonly that the economic theories such as competitive advantage

highlight that free trade leads to a cost benefit concept with all the

countries involved in the trade benefiting. Frankly saying it leads to

more employment, lower prices, higher output and a higher standard

of living in those developing countries. Apart from that there are some

other benefits too. Shifting to outsourcing is another advantage that

can be seen in globalisation. It is argued that globalisation has allowed

the corporations to move from high cost locations with the lowest

wages and work benefits. This resulting in creating great economicopportunities in poorer countries.

Improves national economies Provide quality goods Spread technologies Encourage international stability

CONS

But in general some argue that globalisation results in,

Impact on poorer countries-Although the globalisation encouragesthe free trade it affects on countries which try to save their national

markets. There is a high impact as they usually export agriculturalgoods.


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The exploitation of workers-This resulted in becoming cheaplabour. Due to lack of protection and unsafe working conditions the

workers are misused. This has resulted in misusing the child labour

too.

Weak labour unions-unions lose their effectiveness whenmembership begins to decline. Because of that unions hold less power

over corporations that easily replace workers, low wages etc.

It is to be noted that globalisation actually decreases the inter-culturalcontacts while increasing the possibility of international conflicts.

It is also considered the unsustainable harm done to the earth as wellas the human costs such as poverty, inequality, injustice as a result of

the economic transformation related to globalisation.

Brain drain is another concept which links with globalisation. It simplymeans the opportunities in rich countries take talents away from poor

countries.

It is to be noted that the survival in the global market fully depends onawareness of the changes.

It is observed that in future the global civilisation lead to a decline infossil fuels and further result in crisis on transportation and food

production. It is predicted that in future local economic activities will

be based on hunting, gathering and sifting horticulture etc.

Not only that it created some problems in spreading diseases etc. oneexample can be expressed as AIDS/HIV

It is to be noted that the todays world is so interconnected andtherefore a collapse of the market will lead to a global financial crisis.

However it will cause a decline in power due to its high trade

imbalance.

It is to be noted that globalisation leads to insecurity and socialinequality.

Other than that environmental damages can be seen as a bad effect ofit.


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Illustrations

Globalisation has an impact on various structures in todays society. As a

result of that there is now interdependency between the economic, cultural,

political and personal factors.

Concerning over the impact of globalisation in developing countries

It is to be noted the establishment of the WTO in 1995 led to a large anti-

globalisation movement that described the negative impact of globalisationin developing countries. It goes up to issues like democracy, exploitation of

workers from issues like environmental issues. It is to be noted that theseanti globalisation movement has been more successful in developing

countries in achieving a broader, more balanced social class work withmillions of workers getting actively participated.

Global village

It is to be noted that globalisation leads to a world where people fromeverywhere become more integrated and shared humanity.

While talking about the practical examples McDonalds plays a vital role in

the concept globalisation. The fast food of it considers as evidence of

corporate globalisation and the integration of the same into differentcultures. It is to be noted that the Japanese accept that globalisation cannot

be avoided. However their resource dependency requires them to be as self-sufficient as possible.

When considering the practical examples, cultural changes cannot be

avoided. Culture is a way of human activity that gives significance for it. It isobserved that globalisation has joined different cultures. As a part of the

culture, culinary has become globalized. For example Japanese noodles,French cheese have become popular outside their countries of origin. The

concept of ones own culture is now in a stage of transform due to

globalisation.


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Conclusion

In business terms globalization can be described as an event by whichindustries transform themselves from multinational to global structures. It is

to be noted that the concept of globalization mainly attach with free tradeand free capital mobility. While concerning the concept Globalization it is

essential to know about the impact of globalization on corporations. When

concerning about the impact of the globalisation, it has various aspectswhich affect the countries in many ways. They can be categorized as

Industrial aspects, financial aspects, Economic aspects, Political aspects,Informational aspects, Ecological aspects, Cultural Aspects, Technical

aspects and so on.

When talking about the history of the concept Globalization it is observedthat the beginning of the concept is coming from the end of the nineteenth

century. There was a major collapse in it as a result of First World War.However the pace of globalization aroused rapidly during the fourth quarter

of the twentieth century. When peeping into the history the Islamic golden

age was also an important stage of the evolution of the conceptGlobalization. Establishment of the sustained economy over the world have

been resulting in globalization of crops such as sugar and cotton, trade andknowledge.

It is concerned that the concept free trade increases the prosperity as wellas opportunities among developing countries by increasing efficientallocation of resources while concerning on civil liberty. Not only that the

economic theories such as competitive advantage highlight that free tradeleads to a cost benefit concept with all the countries involved in the trade

benefiting. Frankly saying it leads to more employment, lower prices, higher

output and a higher standard of living in those developing countries. Impacton poorer countries, the exploitation of workers, Weak labour unions, and

international conflicts can be seen as the cons of globalization.

Globalisation has an impact on various structures in todays society. As a

result of that there is now interdependency between the economic, cultural,political and personal factors.Finally it can be said that globalisation is radically changing theinternational business environment by creating a global village


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References

Book references

Beard, David and Keneth Gloag. 2005. Musicology: The Key Concepts.London and New York: Routledge.

Wallerstein, Immanuel. 2004. World-Systems Analysis. An Introduction.London: Duke University Press, pp.23-59.

Daniels, J (2000) International Business, 9th Edition, Addison

Dicken, P (1998) Global Shift, 3rd edition, London: Paul Chapman Publishing

Waters, M (1995) Globalization, London: Routledge

Dunning, J (1993) the Globalization of Business, London: Routledge

Giddens, A (2000), Runaway World: How Globalization is Reshaping

Our Lives, Andover: Routledge

Morrison, J. (2006) the International Business Environment,

Basingstoke, Palgrave Macmillan

Rugman, A., and Hodgetts, R., (2000) International Business, 2nd

Edition, FT Prentice Hall

Tayeb, M (2000) International Business: Theories, Policies and Practices, 3rd

edition, FT Prentice Hall

Clayton, Thomas. 2004. Competing Conceptions of Globalization Revisited:Relocating the Tension between World-Systems Analysis and Globalization

Analysis. In: Comparative Education Review, vol. 48, no.3, 274-294.

Web References

globalisation, Available from; assemblealegislativa.regione.emiliaromagna.it/.../Presentation glob.

[Accessed on 13th October 2011]


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About globalisation, Available from;en.wikipedia.org/wiki/Globalization

[Access on 13th October2011]

REF 567(International Business Environment)

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