International business

Bus 685
Section -2
Class activity

Submitted to
Dr Chowdhury Saima Ferdous
Lecturer, NSU
Submitted by
 1. Analyze the history of globalization. While analyzing the history please
highlight the driving factors which gave the globalization process a
momentum at different time.

Leading exports
Ans: were
Leading exports textile/industrial Leading exports Supply Chain Gigital goods
were mainly raw goods and were factories was the main and services are
materials and leading country and leading driving force the driving force
lealeading was Englad countries were of of globalization
countries were
USA abd China globalization and the leading
Portugal, Spain,
and the countries are
Netherlands and
leading USA and China
Englad
country was

Age of discovery Globalization 1.0 Globalization Globalization Globalization

2.0 3.0 4.0
(15th-18th (19th century-
Century) 1914) (1945-1989) (1989-2008) (Present time)

The value of The value of

The value of The value of export was
export was
export was less export was 6- boomed by
similar like
than 5% of total 14%of total more than 20%
Globalization 1.0
world economy world economy of total world
was economy

Age of Discovery (15th-18th century): This is the age where the globalization started by the
name of global trade. European explorers connected east and west, and also accidently found
America. Aided by the discoveries of scientific revolution in the fields of astronomy, mechanics,
physics and shipping, the Portuguese, Spanish and later the Dutch and the English first
“discovered”, then subjugated, and finally integrated new lands in their economies.

Globalization 1.0 (19th century-1914): This started to change with the first wave of
globalization, which roughly occurred over the century ending in 1914. By the end of the 18th
century, Great Britain had started to dominate the world both geographically, through the
establishment of the British Empire, and technologically, with innovations like the steam engine,
the industrial weaving machine and more. It was the era of the First Industrial Revolution.

Globalization 2.0 (1945-1989): The end of the World War II marked a new beginning for the
global economy. Under the leadership of a new hegemon, the United States of America, and
aided by the technologies of the Second Industrial Revolution, like the car and the plane, global
trade started to rise once again. At first, this happened in two separate tracks, as the Iron Curtain
divided the world into two spheres of influence. But as of 1989, when the Iron Curtain fell,
globalization became a truly global phenomenon.

Globalization 3.0 (1989-2008): The newly created World Trade Organization (WTO)
encouraged nations all over the world to enter into free-trade agreements, and most of them did,
including many newly independent ones. In 2001, even China, which for the better part of the
20th century had been a secluded, agrarian economy, became a member of the WTO, and started
to manufacture for the world. In this “new” world, the US set the tone and led the way, but many
others benefited in their slipstream. At the same time, a new technology from the Third Industrial
Revolution, the internet, connected people all over the world in an even more direct way.

Globalization 4.0 (present time): In a world increasingly dominated by two global powers, the US
and China, the new frontier of globalization is the cyber world. The digital economy, in its infancy during
the third wave of globalization, is now becoming a force to reckon with through e-commerce, digital
services, 3D printing. It is further enabled by artificial intelligence, but threatened by cross-border
hacking and cyberattacks. At the same time, a negative globalization is expanding too, through the
global effect of climate change. Pollution in one part of the world leads to extreme weather events in
another.

2. Using a diagram and relevant examples, explain how the following terms are related
to each other.

i. International Business- International business is all about commercial transaction, where

at least two countries are involved beyond their political border, that transaction is transaction
of economic resource for the purpose of international production. As lots of companies are
involving into international business to expand their sales, sometimes to get raw material from
other countries, diversify source of sales and supplies or minimize competitive risk.
Example- Amazon, coca cola is involved in international business. These companies has
independent operation in there hope country and they are also selling their products in other
countries. Sometimes they customized the product to sale in other country.

ii. Competitive advantage- the goal of any company is to earn competitive advantage and
that competitive advantage can be earn by two parameters. First by earning superior
profitability and sustainability of superior profitability. Any company has achieved
competitive advantage means that country is earning superior positivity, that company’s
quality of product is superior than others as well as they are more responsive toward
customers’ demands. If any company failed to achieve competitive advantage means other
companies are providing better product or services than this company.

Example- McDonalds has achieve competitive advantage than the other competitive brands
by offering cost leadership strategy, they are offering at a lower cost and producing best
quality product.

iii. Economies of Scale- this means with production increases cost of production decreases.
For the production of any product there is a fixed cost and there is a variable cost. We cannot
minimize the fixed cost but because of globalization as we are getting help from the world
wide at a certain point variable cost got reduced as we distribute the fixed cost. When comes
to globalization by following economics of scale global companies produced a standardize
product at a minimum cost.

Example- Walmart’s everyday low price is due to its huge buying power

iv. Specialization- specialization means expertise. When someone concentrate on a specific

area and became expert on that particular area. Global companies find the specialized people
from all over the world and use those expert people to produce their products so that they can
produce their product at a minimum cost and also within a limited time frame.

Example- when a country can produce for an example watches at a lower cost than other
countries means that country is specialized in producing watch

v. Superior Quality- Superior quality is when my product quality is superior than the product
of other company within the same industry. The product quality is grader than other
companies’ product, that product is higher in the rank or order and can satisfy the need and
wants of customers better than the competitor’s product. With the help of globalization
companies are focusing on producing product of superior quality as they are using the
specialized people, they are going any part of the world to get the raw materials as well as to
acquire the distributor.

Example- According to Starbucks customer case study their customers choose their brand of
coffee over competitors’ brand because of superior quality.

Vi: Standardized products/Services: These kinds of products and services tend to have similar
characteristics no matter which markets or setting the items are sold, I mean it refers to
uniformity.

Example: It can well be understood by having to look at the agricultural products by having to
look at laptops. There are tons of brands; however, the products happen to be uniform when it
comes to performing certain functions.

Vii: Lower price: It’s nothing but a sense of believe that one gets to experience when buying
something at cheaper price. In other words, it’s a pricing strategy that a company comparatively
offers low price in order to amplify demands.

Example: At this moment, clothing brands bombard their customers with low-price offers since
winter nears to end.

Viii:Global company: A global company is said to be the one that runs its business at least in
one country outside its own border. Companies aim to go global predominantly for business
expansion, resource utilization and so on and so forth.

Example: KFC and Pizza Hut are two examples of household names that can be used to specify
what a company looks like.
iX: Globalization: It is the process of interaction and integration among people, companies
globally. One of the notable key factors of globalization is, it promotes the spread products, jobs,
skills, services internationally.

Example: Culture, business, services are no longer confined to a certain boundary, thereby
replication, adaptation of new things are markedly on the rise. All too often, these days we can
get to find lot of common ground with other countries just because of globalization

Diagram: Relation between the factors

Explanation of the relationship: Every firms needs to have competitive advantage which has
two parameters, superior profitability and the sustainability of the superior profitability. Firms go
for international business for superior profitability and to grab opportunities from new markets.
Globalization has been giving the opportunity to go global as it refers to an integrated world
economy. A global company accommodates the benefits of economics of scale and
specialization. A global company basically offers standardized products or services where there’s
no need for customization and adaptation that multi domestic and multinational firms do.
Standardization leads to low-cost production and customers set the level of quality. So, all the
terms are related to each other in terms of doing business internationally.