he Effects of Globalisation on Business The effects vary a lot from one part of the world to another, and from one area of business to another. Communications infrastructure is important to modern businesses, but not all countries have got one. There is also the ‘non-traded’ sector ie goods and services which are not traded internationally. Domestic services, for example, have to be provided where the house is; you can’t export a clean house. Competition - Foreign businesses buy into domestic markets. - Deregulation opens up markets to competition. - Deregulation encourages innovation in new products and markets which challenges traditional market leaders Meeting consumer expectations and tastes - Generally, consumers all over the world are better informed, have higher incomes and therefore higher and more exacting expectations. This forces businesses to meet higher standards. Economies of scale Selling into a global market allows for enormous economies of scale, although not all industries benefit from these. Choice of location Businesses are now much freer to choose where they operate from, and can move to a cheaper and more efficient location. In the last decade the UK has been seen by many businesses as an attractive business location, especially in financial services, and many businesses have located in the UK which has boosted the UK economy but also provided increased competition for UK businesses. This increased movement of businesses and jobs has, to some extent, forced governments to compete with each other in providing an attractive and low-cost location. Ireland, for example, offers ‘tax holidays ’ to businesses relocating there. Manufacturing businesses are increasingly relocating to low-wage countries such as Indonesia. Inputs vary in price across the world, and businesses now have more freedom of movement in moving to get hold of those cheaper inputs eg labour in developing countries, or financial advice in the City of London. One limitation on this is that managers won ’t always move to some countries if living conditions are unpleasant or even dangerous. Multi-national and multi-cultural management This is a major challenge to businesses and their managers. A multi-national business environment is more complex with more variables, and so is more difficult to manage. A multi-cultural employment policy leads to employees of many different nationalities, languages, religions and cultures in different offices across the globe. These employees react in quite different ways to incentives, to motivation and it is very difficult to find managers who are sensitive to all these different factors. It is very easy to inadvertently give offence and demotivate workers. For example, the Japanese were initially very disappointed with their Thai employees who didn’t respond well to Japanese methods of building up

Globalisation of markets National borders are becoming less and less important. channel development planning. feasibility reviews. 3) A strategic alliance is a collaboration between two or more companies which can take on many forms such as:     technology transfer purchasing and distribution agreements marketing and promotional collaboration joint product development. the Thais worked extremely well. involving business. Overall.co.http://news. . Many businesses have made expensive mistakes by not taking local variation sufficiently into account. Preparations involve multiple stages.bbc. franchising. For example. for example. but by no means the same. the GM Nova failed in Spain because ‘NoVa’ means ‘doesn’t go’ in Spanish. legal and accounting specialists.corporate loyalty and motivation. Once they turned production targets into a game. business optimization. from target country selection. a well. Markets stretch across borders and MNCs are well-placed to take advantage of this. Each partner usually retains their independence while contributing towards a mutual shared goal. often very amusing. The same issues of language and culture and so on arise. See. in particular. Consumers are more alike.stm 2) Successful international franchising and licensing development takes considerable planning. The marketing books are full of stories. systemization to marketing. Marketing. is a minefield because of its dependence on language.uk/1/hi/business/1592295.planned and structured international franchising and licensing program has the potential to provide many successful domestic companies with an intelligent and efficient method to leverage returns from the intellectual property associated with their businesses. of how businesses got it wrong.

facilities and resources by two or more companies to a combined venture. All involved will have an equity stake in the new venture. which benefits all companies. Joint ventures can also be used to get around country trade barriers.A joint venture involves a potentially long term investment of funds. In some cases a joint venture with a local company may be required to enter some overseas markets. 4) . A joint venture may be formed to:    run production facilities in another country establish a marketing and distribution presence use complementary technologies held by each participant.




5) Exporters should seriously consider having the freight forwarder handle the formidable amount of documentation that exporting requires. Consular invoice 4. 1. Inspection certification 6. freight forwarders are specialists in this process. which of them are actually used in each case depends on the requirements of both our government and the government of the importing country. Commercial invoice 2. Certificate of origin 5. Dock receipt and warehouse receipt 7. Destination control statement . Bill of lading 3. The following documents are commonly used in exporting.

invest in new and more efficient technology. Companies have a foothold in a number of countries so they don’t have to depend on the economy of one country. MAC Cosmetics is a business that increased sales and broadened their markets in order to become more successful. They ended up selling their product in 118 countries. Insurance certificate 9. MAC Cosmetics really did expand their markets. Diversification In order to diversify a company’s product line they may choose to enter a specific international market. Export packing list Section b 1) Expand Markets and Increase Sales Expanded markets and increased sales mean more profits. Companies will examine the resources they need and where they can get them at the lowest price. By searching outside of their own borders. They also mean that a business can make contributions to causes that they believe in. A recession in one county won’t have a huge effect if business is doing well in another country. so some companies will therefore enter the global arena to minimize their costs. they might move manufacturing plants closer to natural resources. Export license 10. meaning that a company will obtain something by contracting it from another source. For example. controlled 45% of cosmetic sales and had $3. companies hope to find more economical solutions to the production and manufacturing problems they have. Business might choose to take advantage of lower labor costs. Controlling Expenses Every business wants to have low expenses. This business in particular decided to create a fund dedicated to the cure and prevention of AIDS.8. Companies engaged in international business can protect their investments and their markets by dealing with countries in a variety of countries. This will apply to both a large scale international business along with a small company. For example a company that is located in Toronto that gets most of their resources from Japan might want to look into moving the company closer to Japan or they might have to look into finding a new place to get their resources. .6 million in USD. This is known as outsourcing. Profits mean success for a business. This business started as a small idea and eventually expanded to a greater establishment by going international. or profit from another countries innovations or tax structures.

Moreover. employees who are hired at subsidiary level would not have any problem adapting to the culture. possibly international company. The disadvantage of using this type of policy is that sometimes employees from home or host countries are not unselected. It is best used when companies need the best personnel to work at subsidiary. Communication is smooth within the operation. If their businesses are too threatened. This policy is best used when companies want to keep hiring cost low. This policy is generally adopted by headquarters by sending employees from the home or parent countries to the host country. they may find wider markets or merge with a larger. This staffing strategy is reliable for all subsidiaries because best employees are selected and sent from the company’s worldwide network. Instead. Polycentric is the policy involved hiring and promoting employees who are citizens of the host countries that the subsidiary is operated. In today’s business environment. Geocentric staffing approach is used when companies adopt a transnational orientation. [continues] 3) n this section of the course we will study the Cultural Forces. a team is sent from the home country to help setting up a new plant as well as train subsidiary personnel to use new system. This approach is used when regional employees are needed for important positions. a more specialized stock or even lower prices. employees from a third are selected to subsidiary in which they may face cultural differences.Competitiveness Many companies expand globally for defensive reasons-to protect themselves from competitors or potential competitors. It is critical to understand the effects of the cultural environment on International Business. local businesses may find if difficult to compete with the selection and price that multinational companies can offer. On the other hand. This approach is used best in some situations such as. both employees from host countries and a third country are employed. Employees are selected regardless where they come from. A local store may have a limited selection because of its small size but it may be able to offer more personal service. . A neighbourhood video store is facing competition from a larger international company such as Blockbuster Video. Regiocentric staffing policy involves hiring and promoting employees based on specific regional context where subsidiary is located. even a small business is competing with international businesses. The benefit of having staffs from home country abroad is that employees may gain experiences worldwide in order to become higher level in management of their headquarters because international managers require broad perspective and international exposure. 2) Ethnocentric is a staffing policy that is used in companies that has primarily international strategic orientation. or to gain advantage over them. However.

retail structure. drive can they use a phone. each culture. The cultural environment is in turn influenced by some of the other environments: the economic evironment o o o o  o o o is the standard of living comfortable. will inevitably be subjected to the world market environment. Third. Second. International marketing is facing more diverse selection of marketing programs Companies in the . International marketing is facing a more complex market environment . every business .. you need to know the effects. economic.. it's more difficult to make sure the total demand. Domestic marketing is conducted in this country and so faced corresponding structure of the market environment is relatively simple . However. International marketing is facing a more complex environment. coupled with the volatility of the objective process. This is because those companies who engage in international marketing . including the world's political. purchasers and competitors and more difficult to investigate and predict wholesale segment. access the internet effects weather growing food housing and living conditions the technological environment the geographic environment 4) Difference between international marketing and domestic marketing First. cultural and so on. or stressed how people are able to do things do they walk to work.Even if you do not have the resources to "know". military. "Because international business includes people from different cultures. international marketing facd more uncertainties factors for the companies . technological and other aspects.which consists of those factors that are more familiar to companies -. Which requires companies to face the world market environment. economic. International marketing is facing more Uncertainties factors The contradiction between subjective understanding and objective reality.. legal. is subject to cultural challenges" The cultural environment has influences on some of the other environments:    the cultural environment strongly influences the labour environment and the socio-economic environment and the politics of the populace o   which effects the Political / Regulatory / Legal Environment.Compared with domestic marketing. buying habits in international marketing. in detail.the domestic political. it's a market with multi-level structure.

although also need to deal with different regions and different programs for different target markets.Enterprises in the international marketing. the international market is a market composed of different countries . Four. The risks are added by the changing international political situation and the fluctuate exchange rate . and even the use of different promotions. not unified marketing program. different strategies. Enterprises in different country markets to sell their products. Marketing in international marketing is more difficult Besides the complex environment and the uncertain factors .diverse selection programs. and must host country market.Competitor's brilliant competitive strategy in price.domestic market. promotion and products made the international market more and more narrow. different scenarios were developed. but the overall program is the same however. . its marketing programs are of diversity. international marketing have more risks and meet more fierce competition.