CHAPTER ONE
INTERNATIO
Dr. Priya M. Kenkare - AY - 2009-10
GLOBALIZATION AND INTERNATIONAL BUSINESS
Dr. Priya M. Kenkare - AY - 2009-10
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
Dr. Priya M. Kenkare - AY - 2009-
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.
Dr. Priya M. Kenkare - AY - 2009-
Concept of Globalization
The process of integration and convergence of
economic, financial, cultural and political systems
across the world.
Dr. Priya M. Kenkare - AY - 2009-
Globalization: A Holistic Approach
Economic Globalization
The increasing integration of national economic systems through
growth in international trade, investment and capital flows.
Financial Globalization
The liberalization of capital movements and deregulations,
especially of financial services that led to a spurt in cross-border
capital flows.
Dr. Priya M. Kenkare - AY - 2009-
Globalization: A Holistic Approach
Cultural Globalization
Convergence of cultures across the world.
Political Globalization
Convergence of political systems and processes around
the world.
Dr. Priya M. Kenkare - AY - 2009-
Dimensions of Economic Globalization
Globalization of production
Globalization of markets
Globalization of competition
Globalization of technology
Globalization of corporations and industries
Dr. Priya M. Kenkare - AY - 2009-
Movers of Globalization
Economic liberalization
Technological breakthrough
Multilateral institutions
International economic integrations
Move towards free marketing systems
Rising research & development costs
Global expansion of business operations
Advents in logistics management
Emergence of the global customer segment
Dr. Priya M. Kenkare - AY - 2009-
Factors Restraining Globalization
Regulatory controls
Emerging trade barriers
Cultural factors
Nationalism
War and civil disturbances
Management myopia
Dr. Priya M. Kenkare - AY - 2009-
Measuring Globalization
Trade Openness
KOF Index of Globalization
A.T. Kearney/ Foreign Policy Globalization Index
Dr. Priya M. Kenkare - AY - 2009-
Reasons for Support of Globalization
Maximization of Economic Efficiencies
Enhancing Trade
Increased Cross-border Capital Movement
Improves Efficiency of Local Firms
Increases Consumer Welfare
Dr. Priya M. Kenkare - AY - 2009-
Criticism of Globalization
Developed versus Developing Countries: Unequal Players in
Globalization:
Widening Gap between the Rich and the Poor
Wipes out Domestic Industry
Leads to Unemployment and Mass Lay-offs
Brings in Balance of Payments Problems
Increased Volatility of Markets
Diminishing Power of Nation States
Loss of Cultural Identity
Shift of Power to Multinationals
Dr. Priya M. Kenkare - AY - 2009-
Response Strategies to Globalization Forces
for Emerging Market Companies
Defender
Extender
Dodger
Contender
Dr. Priya M. Kenkare - AY - 2009-
Concept of International Business
International Trade: Exports of goods and services by a firm
to a foreign-based buyer (importer)
International Marketing: It focuses on the firm-level
marketing practices across the border, including market
identification and targeting, entry mode selection, and
marketing mix and strategic decisions to compete in
international markets.
Dr. Priya M. Kenkare - AY - 2009-
Concept of International Business
International Investments: Cross-border transfer of
resources to carry out business activities.
International Management: Application of management
concepts and techniques in a cross-country environment and
adaptation to different social-cultural, economic, legal,
political and technological environments.
Dr. Priya M. Kenkare - AY - 2009-
Concept of International Business
International Business: All those business activities which
involves cross border transactions of goods, services, and
resources between two or more nations
Global Business: Conduct of business activities in several
countries using a highly co-ordinated and single strategy
across the world.
Dr. Priya M. Kenkare - AY - 2009-
Reasons for
International Business Expansion
Market-Seeking Motives
Marketing opportunities due to life cycles
Uniqueness of product or service
Economic Motives
Profitability
Achieving economies of scale
Spreading R&D costs
Strategic Motives
Growth
Risk spread
Dr. Priya M. Kenkare - AY - 2009-
Differences between
Domestic and International Business
Economic Environment
Socio-Cultural Environment
Legal Environment
Political Environment
Competition
Infrastructure
Technology
Dr. Priya M. Kenkare - AY - 2009-
Managing Business in the Globalization Era
Global strategies adopted by business
enterprises may include:
• Global conception of markets
• Multi-regional integration strategy
• Changes in external organisation of multinational firms
• Changes in internal organisation
Dr. Priya M. Kenkare - AY - 2009-
INTERNATIONAL BUSINESS
Chapter One concludes
Dr. Priya M. Kenkare - AY - 2009-10