globalization has positive results for both
Globalization
Globalization refers to the widening set of
interdependent relationships among people from
different parts of a world that happens to be divided
into nations. The term sometimes refers to the
elimination of barriers to international movements of
goods, services, capital, technology, and people that
influence the integration of world economies (Daniels,
Radebaugh, & Sullivan, 2019).
Globalization and the relaxation of trade barriers
have led to the growth of international
trade. Growing demand for products has also led to
greater awareness of brands and special
services. Furthermore, international Trade is the
exchange of capital, goods and services across
international borders or territories, which could
involve the activities of the government and
individual. In most countries, such trade represents
a significant share for gross domestic product (GDP)
(Dawson, 2017).
Factors in Increased Globalization
What factors have contributed the growth of
globalization in recent decades? Most analysts cite
the following factors:
1. Increase in and application of technology.
2. Liberalization of cross-border trade and
resource movements
3. Development of services that support
international business
4. Growth of consumer pressures
5. Increase in global competition
6. Changes in political situations and
government policies
7. Expansion of cross-national cooperation
The Costs of Globalization (Daniels, Radebaugh, &
Sullivan, 2019)
Threats to national sovereignty
You’ve probably heard the slogan “Think globally, act
locally.” In essence, it means that local interests should
be accommodated before global ones. Some observers
worry that the proliferation of international agreements,
particularly those that undermine local restrictions on 
how goods are produced and sold, will diminish a
nation’s sovereignty—its freedom to “act locally” and
without externally imposed restrictions.
 The Question of Local Objectives and Policies 
 The Question of Small Economies’
Overdependence
 The Question of Cultural Homogeneity
Environmental stress
The Argument for Global Growth and
Global. Cooperation Not everyone agrees with
such a conclusion. Others argue that
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sustaining natural resources and maintaining an
environmentally sound planet. Global cooperation,
they say, fosters superior and uniform standards
for combating environmental problems, while
global competition encourages companies to
seek resource-saving and eco-friendly
technologies, such as automobiles that use less
gas and emit fewer pollutants.
Growing income inequality and personal stress.
In measuring economic well-being, we not only look
at our absolute situations but also compare
ourselves to others. We generally don’t find our
economic status satisfactory unless we’re doing
better and keeping up with others.
Income Inequality. By various measurements,
income inequality, with some notable exceptions,
has been growing both among and within a
number of countries. Critics claim that
globalization has affected this disparity by
helping to develop a global superstar system,
creating access to a greater supply of low-cost
labor, and developing competition that leads to
winners and losers.
Personal stress. There is some evidence that
the growth in globalization goes hand in hand not
only with increased insecurity about job and
social status but also with costly social unrest
Characteristics of Global Trade (Dawson, 2017)
 Trading globally gives consumers and
countries the opportunity to be exposed to new
markets and products (i.e., foods, clothes, spare
parts, oil, jewelry, wine, stocks, currencies and
water).
 Services are also traded: tourism, banking,
consulting, and transportation.
 Export are product sold to the global market
and products that is bought from the global market is
import.
 Imports and exports are accounted for in a
country’s current account in the balance of payments.
Industrialization, advanced technology,
including transportation, globalization, multinational
corporations, and outsourcing are all having a major
impact on the international trade system.
International trade is mostly restricted to
trade in goods and services, and only to a lesser
extent to trade in capital, labor or other factors of
production.
 Trades in goods and services can serve as a
substitute for trade factors of production. Ex. Import
of labor-extensive goods by the United States from
China. Instead of importing Chinese labor, the United
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 States imports goods that were produced with global markets depends on knowledge accumulation
Chinese labors. and deployment. Today, more and more marketing
 International trade is also a branch of companies specialize in translating products from
economics, which, together with international finance, one country to another (Dawson, 2017).
forms the larger branch called international Domestic Marketing (Dawson, 2017)
economics.
 A marketing restricted to the political
Global Marketing boundaries of a country. A company marketing only
Global Marketing is “marketing on worldwide scale within its national boundaries only has to consider
reconciling or taking commercial advantage of global domestic competition. Products and services are
operational differences, similarities and developed for customer in the home market without
opportunities in order to meet global thought of how the product and services could be
objectives” (Dawson, 2017). used in other markets and the marketing decisions
are made at headquarters.
Companies today can no longer afford to pay attentio  The biggest obstacle these marketers are
n only to their domestic market, no matter facing is being blindsided by emerging global
how large it is. Many industries are global industries, marketers.
and those firms that operate globally achieve lower
costs and higher brand  The domestic market is a large market that
awareness. At the same time, global marketing is every nation needs. These marketers are all
risky because of variable exchange rates, restricted to be under control of certain boundaries
unstable governments, protectionist tariffs and in that company or country.
trade barriers, and several other factors. Given the  A firm operating in a domestic market also
potential gains and risks of gets the opportunity to operate in different areas and
international marketing, companies a systematic way this gives the company an opportunity to have bigger
to make their international marketing decisions. The marketers to advertise to.
company must understand the international
marketing environment (Global marketing: International Marketing (Dawson, 2017)
International trade system, economic environment,  International marketing is the export,
2020). franchising, joint venture of full direct of an
Worldwide Competition organization’s product or services into another
country.
One of the product categories in which global  Development of the marketing mix for that
competition has been easy to track in U.S. automotive country is then required.
sales. The increasing intensity of competition
in global markets is a challenge facing companies at  It can be a straightforward as using
all stages of involvement in international marketing strategies, mix and tools for export on the
markets. As markets open up, and become more one side, to a highly complex relationship strategy
integrated, the pace of change accelerates, including localization, local product offering, pricing,
technology shrinks distances between markets and production and distribution with customized
reduces the scale of advantages of large firms, new promotion, offers, website, social media and
sources of competition emerge, and competitive leadership.
pressures mount at all levels of the  Internationalization and international
organization. Also, the threat of competition from marketing meet the needs of selecting foreign
companies in countries such as India, China, Malaysia, countries where company’s value can be exported
and Brazil on the rise, as their own domestic markets and there is inter-firm and firm learning, optimization
are opening up for foreign competition, stimulating and efficiency in economies of scale and scope.
greater awareness of international marker  The firm does need to export or enter all
opportunities and of the need to be internationally world markets to be considered an international
competitive. Companies which previously caused on marketer.
protected domestic markets are entering into
Global Marketing (Dawson, 2017)
markets in other countries creating new source of
competition, often targeted to price-sensitive market  Global marketing is a firm’s ability to market
segments. Not only is competition is intensifying for to almost all countries on the planet.
all firms regardless of their degree of global market  The global firm retains the capability, reach,
involvement, but the basis for competition is knowledge, staff, skills, insights and expertise to
changing. Competition continues to be deliver value to customers worldwide.
market-based and ultimately relies on delivering  The firm understands the requirement to
superior value to customers. However, success in service customers locally with global standard
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 solutions or products, and localizes that products as
required to maintain an optimal balance of cost,
efficiency, customization and localization in a
control-customization continuum to best meet local,
national and global requirements to position itself
against or wit competitors, partners, alliances,
substitutes and defend against new global and local
market entrants per country, region or city.
 The firm will price its products appropriately
worldwide, nationally and locally, and promote,
deliver access and information to its customers in
the most cost-effective way.  In the United States, beverages are sold by
 The firm needs to understand, research,
measure and develop loyalty for its brand and global 
brand equity (stay on brand) for long term.
Elements of Global Marketing (Dawson, 2017)
Not only do standard marketing approaches,
strategies, tactics and processes apply, global
marketing requires an understanding of global
finance, global operations and distribution,
government relations, global human capital
management and resource allocation, distributed
technology, development and management,
global business logic, interfirm and global
competitiveness, exporting, joint ventures,
foreign and direct investments and global risk
management.
The standard “Four P’s” of marketing: product,
price, place and promotion are all affected as a
company moves through five revolutionary
phases to become a global company.
Product. A global company is one that can
create a single product only have to tweak
elements for different marketers.
Example: Coca-Cola uses to formulas (one with
sugar, one with corn syrup) for all markets. The
product packaging in every county incorporates the
contour bottle design and the dynamic ribbon in some
way, shape, or form. However, the bottle can also
include the country’s native language and in the same
sizes as other beverage bottles or cans in that same
country.
Luxury products, high-tech products, and
new innovations are the most common
products in the global marketplace. They are
easier to market in a standardized way than
other products because there are no
traditional cultural values attached to their
meanings.
Price. Price will always vary from market to
market. Price is affected by many variables: cost
of product development (product locally or
incorporated), cost of ingredients, cost of delivery
(transportation, tariffs, etc.) and much
more. Additionally, the product’s position in
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relation to the competition influences the
ultimate profit margins. Whether this product is
considered high-end, expensive choice, the
economical, low-cost choice, or something
in-between helps determine the price point.
Place. How the product is distributed is also a
country-by-country decision influenced by how
the competition is being offered to the largest
market. Using Coca-Cola as an example again,
not all cultures use vending machines.
the pallet via warehouse stores.
In India, this is not an option.
Placement decisions must also consider the
product’s position on the market place.
For example, a high-end product would not want to
be distributed via a “dollar store” in the United
States. Conversely, a product promoted as the
low-cost option in France would find limited success
in a pricey boutique.
Promotion. After product research, development
and creation, promotion (specifically advertising)
is generally the largest line item in a global
company’s marketing budget. At this stage of a
company’s development, integrated marketing is
the goal. The global corporation seeks to reduce
costs, minimize redundancies in personnel and
work, maximize speed of implementation, and to
speak with one voice.
Advantages and Disadvantages of Global Marketing
(Dawson, 2017)
Advantages
The advantages of global market include:
 Economies of scale in production and
distribution
 Lower marketing costs
 Power and scope
 Consistency in brand image
 Ability to leverage goods ideas quickly and
efficiently
 Uniformity of marketing practices
 Helps to establish relationships outside of
the “political arena”
 Helps to encourage ancillary industries to
be set up to cater for the needs of the global player
 Benefits of eMarketing over traditional
marketing
Disadvantages
The disadvantages of global market include:
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  Differences in consumer needs, wants, and
usage patterns for products
 Differences in consumer response to
marketing mix elements
 Differences in brand and product
development and the competitive environment
 Differences in legal environment, some of
which may conflict with those of the home market
 Differences in the institutions available,
some of which may call for the creation of entirely
new ones (e.g, infrastructure)
 Differences in administrative procedures
 Differences in product development
 Differences in administrative procedures
and product placement can occur
International business
International business comprises all commercial
transactions (private and governmental sales,
investments, logistics and transportation) that take
place between two or more regions, countries and
nations beyond their political boundaries. The term
“international business” refers to all those business
activities which have cross-border transactions of
goods, services, resources between two or more
nations. Transactions of economic resources
include capital skills, people etc. for international
production of physical goods and services such as
finance, banking, insurance, construction etc.
(Dawson, 2017).
International business consists of all commercial
transactions between two or more countries (Daniels,
Radebaugh, & Sullivan, 2019).
 The goal of private business is to make
profits.
 Government business may or may not be
motivated by profit.
Studying international business is important because
(Daniels, Radebaugh, & Sullivan, 2019)
 Most companies either are international or
compete with international companies. 1.
 Modes of operations may differ from those
used domestically.
 The best way of conducting business may
differ by country.
 An understanding helps you make better
career decisions. 2.
 An understanding helps you decide what
governmental policies to support.
A multinational enterprise (MNE) is a company that
has a worldwide approach to markets and production
or one with operations in several
countries. Well-known MNEs include fast-food
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companies such as McDonald’s and Yum Brands,
vehicle manufacturers such as General Motors, Ford
Motor Company and Toyota, consumer-electronics
producers like Samsung, LG and Sony, and energy
companies such as ExxonMobil, Shell and BP. These
multinational enterprises can make business in
different types of market (Dawson, 2017).
Figure 1.1.1. Factors in International Business
Operations
Source: International Business: Environments and
Operations by Daniels, Radebaugh, & Sullivan
(2019)
The conduct of a company’s international operations
as shown in Figure 1.1.1. depends on two factors: its
objectives and the means by which it intends to
achieve them. Likewise, its operations affect, and
are affected by two sets of factors: physical/social
and competitive. Understanding the complexities
may be useful to you. Companies’ international
operations and their governmental regulations affect
overall national conditions—economic growth,
employment, consumer prices, national security—as
well as the success of individual industries and firms.
A better understanding of international business will
help you make more informed decisions, such as
where you want to work and what governmental
policies you want to support (Daniels, Radebaugh, &
Sullivan 2019).
Why Companies Engage in International
Business (Daniels, Radebaugh, & Sullivan 2019)
Expanding Sales. Pursuing international sales
usually increases the potential market and potential
profits.
Acquiring Resources. Foreign sources may give
companies: lower cost, Lower costs, new or better
products and additional operating knowledge.
Reducing Risk. International operations may reduce
operating risk by smoothing sales and profits and
preventing competitors from gaining advantages.
Modes of Operations in International
Business (Daniels, Radebaugh, & Sullivan 2019)
Merchandise Exports and Imports.
Merchandise exports and imports are usually a
country’s most common international economic
transactions. Merchandise exports are tangible
products—goods—that are sent out of a country;
merchandise imports are goods brought into a
country.
Service Exports and Imports. The terms
export and import often apply only to merchandise.
For non-merchandise international earnings, we use
the terms service exports and service imports and
are referred to as invisibles. The provider and
receiver of payment makes a service export; the
recipient and payer makes a service import. Services
constitute the fastest growth sector in international
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 trade and take many forms. In this section we
discuss the most important:
Tourism and transportation. The economies of
some countries depend heavily on revenue from these
sectors
Service performance. Some services, including
banking, insurance, rental, engineering, and management
services, net companies earnings in the form of fees:
payments for the performance of those services
Asset use. When one company allows another to use
its assets—such as trademarks, patents, copyrights, or
expertise—under contracts known as licensing
agreements, they receive earnings called royalties.
3. Investments. Dividends and interest paid on
foreign investments are also considered service
exports and imports because they represent the use
of assets (capital). The investments themselves,
however, are treated in national statistics as
separate forms of service exports and imports. Note
that foreign investment means ownership of foreign
property in exchange for a financial return, such as
interest and dividends, and it may take two forms:
direct and portfolio.
4. Types of International Organizations.
Companies work together—in joint ventures,
licensing agreements, management contracts,
minority ownership, and long-term contractual
arrangements—all of which are known as
collaborative arrangements.
- Multinational Enterprise A multinational enterprise
(MNE) usually refers to any company with foreign direct
investments. This is the definition we use in this text.
However, some writers reason that a company must
have direct investments in some minimum number of
countries to be an MNE. The term multinational
corporation or multinational company (MNC) is often
used as a synonym for MNE, while the United Nations
uses the term transnational company (TNC).
Why International Business Differs from Domestic
Business (Daniels, Radebaugh, & Sullivan 2019)
1. Physical and Social Factors. The physical and
social factors we show above can affect how
companies produce and market products, employ
personnel, and even maintain accounts. Remember
that any of these factors may require a company to
alter its operation abroad (compared to domestically) Competitors Faced in Each Market. Finally, success in
for the sake of efficiency.
2. Geographic Influences. Managers who are whether the competition is also international or local.
knowledgeable about geography are in a position to
determine the location, quantity, quality, and
availability of the world’s resources, as well as ways
to exploit them. The uneven distribution of resources
throughout the world helps explain why different
products and services are produced in different
places. Further, countries differ in size of landmass
and population.
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Political Policies. Not surprisingly, a nation’s
political policies influence how international business
takes place within its borders (indeed, whether it will
take place). Obviously, political disputes—particularly
military confrontations—can disrupt trade and
investment. Even conflicts that directly affect only
small areas can have far-reaching effects.
Legal Policies. Domestic and international laws
play a big role in determining how a company can
operate abroad.
Domestic law includes both home- and
host-country regulations on such matters as taxation,
employment, and foreign-exchange transactions.
International law — in the form of legal agreements
between countries—determines how earnings are
taxed by all jurisdictions. International law may also
determine how (and whether) companies can operate
in certain places.
Finally, the ways in which laws are enforced also
affect a firm’s foreign operations. In the realm of
trademarks, patented knowledge, and copyrights,
most countries have joined in international treaties
and enacted domestic laws dealing with violations.
Behavioral Factors. The related disciplines of
anthropology, psychology, and sociology can help
managers better understand different values,
attitudes, and beliefs. In turn, such understanding can
help managers make operational decisions abroad.
Economic Forces. Economics explains why
countries exchange goods and services, why capital
and people travel among countries in the course of
business, and why one country’s currency has a
certain value compared to another’s.
The Competitive Environment. Companies’
competitive situations may differ by: (1) their rankings
among countries, (2) the competitors they face by
country; and (3) the resources they can commit
internationally.
Competitive Strategy for Products. Products
compete by means of cost or differentiation
strategies, the latter usually by:
developing a favorable brand image, usually
through advertising or from long-term consumer
experience with the brand; or developing unique
characteristics, such as through R&D efforts or
different means of distribution.
a market (whether domestic or foreign) often depends on
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