IBA Notes:

Globalisation In short, it is the way in which people Globalisation has defined almost every aspect of our society’s growth over the past 100 years. We’ve got
all over the Earth interact with one another in terms globalisation to thank for the availability of everyday items like avocados (cultural globalisation), annual
of economics, politics, and culture. events like Black Friday (globalisation of traditions), and even international cinema on Netflix (digital
globalisation)

Video https://www.youtube.com/watch?v=Z9uj81Mng78

What Is an Example of Globalization? A simple example of globalization would be a car manufactured in the U.S. that sources parts from China,
Japan, S. Korea, Sri Lanka, and South Africa. The car is then exported to Europe, where it is sold to a driver
who fills the car's gas tank with gasoline refined from Saudi oil.

Describe the process of globalisation Globalisation is the process of the systems of the world becoming increasingly interlinked and integrating a
country’s economy with the global economy by removing restrictions on trade and capital flows.

What are three types of globalisation? 1. Economic globalization refers to the increasing interconnectedness of the world's economies.
2. Political globalization refers to how the events in one nation affect events in other nations.
3. Cultural globalization refers to people from all over the world enjoying the same types of entertainment,
cuisines, habits, etc.

What are examples of drivers of globalisation?

⮚ Technological Innovation

⮚ Transportation systems

⮚ Rise of Transnational Corporations

⮚ Social and political reforms

What are advantages and disadvantages of
globalization?
Explain how globalization affects
markets and production
https://www.youtube.com/watch?v=PaXSuuel5ec
Pros of Globalisation
A number of positive aspects of globalization include:
⮚ Building up the economic and social structures of struggling countries and economies through free
trade
⮚ Creation of world power and less and less compartmentalized power sectors
⮚ Learning about and sharing of new and interesting cultures with one another
⮚ The opportunity and desire for prosperous nations to help countries struggling with serious issues
like unemployment, disease, and natural disasters
Cons of Globalisation
Though it comes with perks, there are a number of cons to globalization that analysts and critics have noted
for years. They include:
⮚ The oppression of weaker and poorer economies by those that are more robust; “the rich get richer;
the poor get poorer”
⮚ The danger of job loss, with certain industries and sectors sending jobs to countries where workers
are willing to do the same amount of work or more for smaller wages
⮚ Multinational corporations often get away with poor, unsafe, unethical, or exploitative working
conditions due to variations in laws and regulations from one country to another
⮚ Multinational corporations can exploit tax haven nations, sending large portions of revenue offshore
to avoid taxation
Markets:
⮚ Reduces marketing costs
⮚ New market opportunities
⮚ Levels income stream
 Production:

⮚ Access lower-cost labour

⮚ Access technical expertise

⮚ Access production inputs

⮚ Quality maximization

Some Challenges of Globalization

⮚ Reputational risk: Require ethical and lawful behaviour from all employees and business partners

⮚ Digital Security: Guard proprietary information and confidential communications

⮚ High Investment costs: For aspiring multinational companies (MNC), setting up a business entity in a
new country requires substantial upfront capital.

⮚ Legal and Regulatory Structure: Every nation has unique laws and regulations governing business.
MNCs need access to legal expertise to help them understand in-country laws and comply with
applicable regulations. It is important for businesses to understand the legal and regulatory climate for
their industry and type of organization before entering a new market.

Describe the global business environment The global business environment is a term used to describe
The challenges and opportunities that businesses face when operating in a global marketplace. It reflects
the interconnectedness of all parts of the world, which means that what happens in one country or region
has an impact on other regions or countries.
The Unified framework

Mike Peng's strategic tripod is a framework that

combines three perspectives to analyse and
understand the competitive advantage of firms in
international business.

The three perspectives are the institution-based

view, the resource-based view, and the industry-
based view.

The industry-based view The industry-based view is responsible for examining the environment in the industry. It will focus on the
external circumstances in the market, and will see the possibility of gaining a competitive advantage.

The resource – based view in a nutshell the resource-based view will look at the internal resources. This will focus on how to use internal resources
to gain competitive advantages in the market.

The institution-based view The last view is institution-based view which will focus on the cultural differences and possibility in the broad
view. It is beneficial to supplement the industry-based view and resource-based view.

The driving forces behind globalisation (Factors

⮚ Falling barriers to trade and investment (GATT, WTO) or regional trade agreements (European Union).
that have contributed to globalisation)
The General Agreement on Tariffs and Trade (GATT) is the foundational agreement reached between
many countries after World War II to reduce tariffs, quotas, and other barriers to trade. The World Trade
 Organisation (WTO) deals with the global rules of trade between nations.

⮚ Technological innovation and applications such as LAN (local area network),

WAN (wide area network), Internet, VOIP (voice over internet protocol). (e.g., e-commerce)

Both increase global competition

The World Trade Organization (WTO) deals with Contracts between member nations to maintain fair and open trade policies
the global rules of trade between nations.
There are three goals:
⮚ Help free flow of trade

⮚ Help negotiate further opening of markets

⮚ Settle trade disputes between its members

Key Players in International Business The entities involved in international business range from large multinational firms Multinational Corporations
(MNC) /Multinational Enterprises (MNE) with thousands of employees e.g. Walmart doing business in many
countries around the world to a Entrepreneurs and Small Business, one-person company acting as an
importer or exporter.

What global products are you aware of ?

Why reduces costs?

But what is with local preferences?

What do we understand with “think globally, act The phrase “think globally, act locally” was born in the early 1970s by environmentalists to encourage
locally”? individuals to improve their impact on the environment through local action.

What has globalization to do with low cost or Lower costs for products
quality maximization? Globalization allows companies to find lower-cost ways to produce their products. It also increases global
competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs
 help people in both developing and already-developed countries live better on less money.

Politics and Law in Business