Globalization refers to the changes in the world where we are moving away from self-contained countries and toward a more integrated world. Globalization of business is the change in a business from a company associated with a single country to one that operates in multiple countries.

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GLOBALIZATION
AND
INTERNATIONAL
BUSINESS

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Learning Objectives
 To explain the concept of globalization
 To elucidate factors influencing globalization
 To discuss global business expansion strategy for emerging
market companies
 To explicate the concept of international business
 To delineate motives for international business expansion
 To expound the strategy for managing business in the
globalization era

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Globalization of Business:
A Historical Perspective
In the initial years of human history, there were hardly
any formal barriers, such as tariffs or non-tariff
restrictions, for the movement of goods or visa
requirements for the people. The concept of
globalization can be traced back to the phenomenon of a
nation-state.

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What is International
Business?
International business consists of transactions that
are devised and carried out across national borders
to satisfy the objectives of individuals, companies,
and organizations.

5. Why Go International?
 Higher Profits
 Utilization of Excess Production Capacity
 Competition in Domestic Market
 Limited Home Market
 Political Stability Vs Instability
 Availability of Technology & Managerial
Competence.
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6.  High Cost of Transportation
 Nearness to Raw Material
 Availability of Cheap labour
 Liberalization & Globalization
 To Increase Market Share
 To Avoid Tariffs & Quotas
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International Business
 International business:
• causes the flow of services, and
capital across the world
• offers consumers new choices
• permits the acquisition of a
wider variety of products
• facilitates the mobility of labor,
capital, and technology
• provides challenging employment
opportunities

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International Business Questions
 How will an idea, good, or service fit into the
international market?
 Should trade or investment be used to enter a
foreign market?
 Should supplies be obtained domestically or
abroad?
 What product adjustments are necessary to
be responsive to local conditions?
 What are the threats from global competitors,
and how can these threats be counteracted?

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Factors Influencing Globalization

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Movers of Globalization
 Economic liberalization
 Technological breakthrough
 Multilateral institutions
 International economic integrations
 Rising research & development costs
 Global expansion of business operations
 Advents in logistics management
 Emergence of the global customer segment

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Factors Restraining Globalization
 Regulatory controls
 Emerging trade barriers
 Cultural factors
 Nationalism
 War and civil disturbances
 Management myopia

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Reasons for Support of Globalization
 Maximization of Economic Efficiencies
 Enhancing Trade
 Increased Cross-border Capital Movement
 Improves Efficiency of Local Firms
 Increases Consumer Welfare

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Criticism of Globalization
 Wipes out Domestic Industry
 Leads to Unemployment and Mass Lay-offs
 Increased Volatility of Markets
 Loss of Cultural Identity

14. Stages of Internationalization
 1. Domestic Company
 Limited Operations
 Focuses on Domestic Business
 Formulate Strategies for National Business
Environment
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15.  2. International Company
 Extends Business Operations to Foreign
Countries
 Extends the Domestic Product, Price,
Promotion to Foreign Markets.
 Enter with Limited Resources
 Reduced Risk
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16.  3. Multinational/Global/ Company
 Extend their Business Operations
 Make Necessary Changes
 Introduce New products
 Establishes Offices/Branches/Subsidiaries
 Different Strategy for Different Country
 Operate Like Domestic Company
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