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Published by Kailash Shrivastava
ass 2012
ass 2012

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Published by: Kailash Shrivastava on Dec 14, 2012
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Master of Business Administration-MBA Semester 4
International Business Management
Assignment Set- 1Q.1 What is globalization? What are its benefits? How does globalization help in internationalbusiness? Give some instances.
Globlization is a process where businesses are dealt in markets around the world,apart from the local and national markets. According to business terminologies, globalization defined
as, “the worldwide trend of businesses expanding beyond their domestic boundaries’. It is
advantageous for the economy of the countries because it promotes prosperity in the countries thatembrace globalization.
International Vs. Global Business:
Most of us assume that international and global business are the same and that any company thatdeals with another country for its business is an international or global company. In fact there is aconsiderable difference between the two terms.
International Companies:
Companies that deal with foreign companies for their business areconsidered as international companies. They can be exporters or importers who may not have anyinvestments in any other country, apart from their home country.
Global Companies:
Companies, which invest in other countries for business and also operates fromother countries, are considered as global companies. They have multiple manufacturing plants acrossthe globe, catering to multiple markets.The transformation of a company from domestic to international is by entering just one market or afew selected foreign markets as an exporter or importer. Competing on a truly global scale comeslater, after the company has established operations in several countries across continents and isracing against rivals for global market leadership. Thus, there is a meaningful distinction between acompany that operates in a few selected foreign countries and a company that operates and marketits products across several countries and continents with manufacturing capabilities in several of these countries.Companies can also be differentiated by the kind of competitive strategy they adopt while dealinginternationally. Multinational strategy and global competitive strategy are the two types of competitivestrategy.a. Multinational Strategy: Companies adopt this strategy when each countries market needs tobe treated as self contained. It can be for the following reasons:
Customers from different countries have different preferences and expectations abouta product or service.
Competition in each national market is essentially independent of competition in other national markets and the set of competitors also differ from country to country.
 A company’s reputation, customer base, and competitive position in one nation have
little or no bearing on its ability to successfully compete in another market.Some of the industry example for multinational competition includes beer, life insurance and foodproducts.
b. Global Competitive Strategy:
Companies adopt this strategy when prices and competitiveconditions across the different countries are strongly linked together and have common
synergies. In a globally competitive industry, a company’s business gets affec
ted by thechanging environment in different countries. The same set of competitors may competeagainst each other in several countries. In a global scenario,
a company’s overall competitive
advantage is gauged by the cumulative efforts of its domestic operations and the internationaloperations worldwide.
 A good example to illustrate is Sony Ericssson, which has its headquarters in Sweden, Research andDevelopment setup in USA and India, manufacturing and Assembly plants in low wage countries likeChina and sales and marketing worldwide. This is made possible because of the ease in transferringtechnology and expertise from country to country.Industries that have a global competition are automobiles, consumer electronics, watches andcommercial aircraft and so on.
Benefits of Globalization:
The merits and demerits of globalization are highly debatable. While globalization createsemployment opportunities in the host countries, it also exploits labour at a very low cost compared tohome country. Some of the benefits of globalization are as follows:
Promotes foreign trade and liberalization of economies.
Increases the living standards of people in several developing countries through the capitalinvestments in developing countries by developed countries.
Benefits customers as companies outsource to low wage countries. Outsourcing helps thecompanies to be competitive by keeping the cost low with increased productivity.
Promotes better education and jobs.
Leads to free flow of information and wide acceptance of foreign products, ideas, ethics, bestpractices and culture.
Provides better quality of products, customer services and standardised delivery modelacross countries.
Give better access to finance for corporate and sovereign borrowers.
Increase business travel, which in turn leads to flourishing travel and hospitality industryacross the world.
Incease sales as the availability of cutting edge technologies and production techniquesdecrease the cost of production.
Provide several platforms for international dispute resolutions in business, which facilitatesinternational trade.
Q.2 What is culture and in the context of international business environment how does itimpact international business decisions?
Solution:Culture is defined as the art and other signs or demonstrations of human customs, civilisation, and theway of life of a specific society or group. Culture determines every aspect that is from birth to deathand everything in between it. It is the duty of people to respect other cultures, other than their culture.Research shows that national cultures generally characterise the dominant groups values andpractices in society, and not of the marginalised groups, even though the marginalised groupsrepresent a majority or a minority in the society.Culture is very important to understand international business. Culture is the part of environment,which human has created, it is the total sum of knowledge, arts, beliefs, laws, morals, customs, andother abilities and habits gained by people as part of society.The following are the four factors that question assumptions regarding the impact of global businessin culture:
National cultures are not homogeneous and the impact of globalisation on heterogeneouscultures is not easily predicted.
Culture is not similar to cultural practice.
Globalisation does not characterise a rupture with the past but is a continuation of prior trends.
Globalisation is only one of many processes involved in cultural change.
Culture in an International Business OrganisationCross cultural management:
Cross cultural management is defined as the development andapplication of knowledge about cultures in the practice of international management, when peopleinvolved have diverse cultural identities.International managers in senior positions do not have direct interaction that is face-to-face with other culture workforce, but several home based managers handle immigrant groups adjusted into aworkforce that offers domestic markets.The factors to be considered in cross cultural management are:
Cross cultural management skills.
Handling cultural diversity.
Factors controlling group creativity.

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