Chanderprabhu Jain College of Higher Studies

&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)

E-Notes

Class : BBA (G) VI Semester

Paper Code : BBA (G)-306

Subject : International Business Management

Faculty Name : Ms. Ruchi Arora

Unit-II

Globalization

Globalization or globalization is the process of interaction and integration between

people, companies, and governments worldwide. Globalization has grown due to
advances in transportation and communication technology. With increased global
interactions comes the growth of international trade, ideas, and culture

Globalization represents the global integration of international trade, investment,

information technology and cultures. Government policies designed to open
economies domestically and internationally to boost development in poorer
countries and raise standards of living for their people are what drive globalization.
However, these policies have created an international free market that has mainly
benefited multinational corporations in the Western world to the detriment of
smaller businesses, cultures and common people.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
BREAKING DOWN 'Globalization'

Through globalization, corporations can gain a competitive advantage from lower

operating costs, and access to new raw materials and additional markets.

In addition, multinational corporations can manufacture, buy and sell goods

worldwide. For example, A Japan-based car manufacturer can manufacture
auto parts in several developing countries, ship the parts to another country for
assembly and sell the finished cars to any nation.

Globalization is not a new concept. In ancient times, traders traveled vast distances
to buy rare commodities such as salt, spices and gold, which they would then sell
in their home countries. The 19th century Industrial Revolution brought advances
in communication and transportation that have removed borders and increased
cross-border trade. In the last few decades, globalization has occurred at an
unprecedented pace.

Public policy and technology are the two main driving factors behind the current
globalization boom. Over the past 20 years, governments worldwide have
integrated a free market economic system through fiscal policies and trade
agreements. This evolution of economic systems has increased industrialization
and financial opportunities abroad. Governments now focus on removing barriers
to trade and promoting international commerce.

Technology is a major contributor to globalization. Advancements in IT and the

flow of information across borders have increased awareness among populations of

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
economic trends and investment opportunities. Technological advancement such as
digitalization has simplified and accelerated the transfer of financial assets between
countries.

The Broader Meaning of Globalization:-Globalization is also a social, cultural,

political and legal phenomenon. In social terms, globalization represents greater
interconnectedness among global populations. Culturally, globalization represents
the exchange of ideas and values among cultures, and even a trend toward the
development of a single world culture. Politically, globalization has shifted
countries' political activities to the global level through intergovernmental
organizations like the United Nations and the World Trade Organization. With
regard to law, globalization has altered how international law is created and
enforced.

The Globalization Controversy:-Proponents of globalization believe it allows

developing countries to catch up to industrialized nations through increased
manufacturing, diversification, economic expansion and improvements in
standards of living. China is a good example of a national economy that has
benefited immensely from globalization.

Outsourcing by companies brings jobs and technology to developing countries.

Trade initiatives increase cross-border trading by removing supply-side and trade-
related constraints. The North American Free Trade Agreement, for example,
encouraged U.S. car manufacturers to relocate operations to Mexico where labor
costs are lower, and many U.S. companies have outsourced call centers to India.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
Globalization has advanced social justice on an international scale, and
globalization advocates report that it has drawn attention to human rights
worldwide. In addition, some feel the spread of pop culture across borders will
advance the exchange of ideas, art, language and music.

Disadvantages of Globalization:-Economic downturns in one country can affect

other countries' economies through a domino effect. For example, when Greece
experienced a debt crisis in 2010, the all of Europe felt the impact. In addition,
globalization may have disproportionately benefited Western corporations and
enhanced wealth disparity.

Free trade implies a greater risk of failure for small, private or family-owned
companies competing in a global market. There is also a digital divide because not
all populations have internet access. Some suggest that globalization has created a
concentration of information and power in the hands of a small elite, and certain
groups have acquired resources and power that exceed those of any single nation,
posing new threats to human rights on an international scale.

Standards of living have raised overall as more third-world countries experience

industrialization. However, some politicians argue that globalization is detrimental
to the middle class, and is causing increasing economic and political polarization in
the United States. Outsourcing, where U.S. companies transfer their facilities
abroad to lower labor costs and avoid negotiating with unions, means workers in
the United States must now compete internationally for jobs.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
Globalization has contributed to global warming, climate change and the overuse
of natural resources. An increase in the demand for goods has boosted
manufacturing and industrialization. Globalization has also increased
homogenization in countries. For example, international chains, such as Starbucks,
Nike and The Gap, dominate commercial space in every U.S. town and many
towns in other nations. Cultural exchange has been largely one-sided because U.S.
goods and culture have influenced other countries more than those of any other
nation

Globalization and India:

Developed countries have been trying to pursue developing countries to liberalize

the trade and allow more flexibility in business policies to provide equal
opportunities to multinational firms in their domestic market. International
Monetary Fund (IMF) and World Bank helped them in this Endeavour.
Liberalization began to hold its foot on barren lands of developing countries like
India by means of reduction in excise duties on electronic goods in a fixed time
frame.

Indian government did the same and liberalized the trade and investment due to the
pressure from World Trade Organization. Import duties were cut down phase wise
to allow MNC’s operate in India on equality basis. As a result globalization has
brought to India new technologies, new products and also the economic
opportunities.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
Despite bureaucracy, lack of infrastructure and an ambiguous policy framework
that adversely impact MNCs operating in India, MNCs are looking at India in a big
way, and are making huge investments to set up R&D centers in the country. India
has made a lead over other growing economies for IT, business processing, and
R&D investments. There have been both positive and negative impacts of
globalization on social and cultural values in India.

Technology Transfer:-Technology transfer, also called transfer of technology

(TOT), is the process of transferring (disseminating) technology from the
places and in groups of its origination to wider distribution among more people and
places

Technology transfer is the process of transferring scientific findings from one

organization to another for the purpose of further development and
commercialization. The process typically includes:

1) Identifying new technologies

2) Protecting technologies through patents and copyrights
3) Forming development and commercialization strategies such as marketing
and licensing to existing private sector companies or creating new startup
companies based on the technology
4) Academic and research institutions engage in technology transfer for a
variety of reasons, such as: Recognition for discoveries made at the
institution
5) Compliance with federal regulations

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
6) Attraction and retention of talented faculty
7) Local economic development
8) Attraction of corporate research support
9) Licensing revenue to support further research and education

Functions of Technology transfer Coordinate: Coordinating between technology

users and developers, between researchers and manufactures is an important
element of technology transfer. Access to relevant internal and external resources
to individual projects and enterprises has to be enabled.

Nurture: A main ingredient for moving technology from a research laboratory to a

new business enterprise successfully is an environment that is supportive of
entrepreneurship. This needs to be encouraged by providing guidance, counseling
and resource, financing or the names of individuals who can help with a particular
facet of business development.

An Emerging Technology is an innovative technology that currently is undergoing

bench-scale testing, in which a small version of the technology is tested in a
laboratory

Constituents of Technology Transfer Processes

Technology Transfer

Technology Promotion

Technology Deployment

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
Technology Innovation

Technology Development

Technology Research

Technology Assessment

Technology Information and communication

Technology Investment

Technology Collaboration

Technology Commercialization Users/beneficiaries of Technology Transfer:

Trade Barriers in International Business:-Trade barriers are government-

induced restrictions on international trade. Man-made trade barriers come in
several forms, including:

Tariffs

Non-tariff barriers to trade

Import licenses

Export licenses

Import quotas

Subsidies

Voluntary Export Restraints

Local content requirements

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
Embargo

Currency devaluation

Trade restriction

Most trade barriers work on the same principle–the imposition of some sort of cost
on trade that raises the price of the traded products. If two or more nations
repeatedly use trade barriers against each other, then a trade war results.

Economists generally agree that trade barriers are detrimental and decrease overall
economic efficiency. This can be explained by the theory of comparative
advantage. In theory, free trade involves the removal of all such barriers, except
perhaps those considered necessary for health or national security. In practice,
however, even those countries promoting free trade heavily subsidize certain
industries, such as agriculture and steel. Trade barriers are often criticized for the
effect they have on the developing world. Because rich-country players set trade
policies, goods, such as agricultural products that developing countries are best at
producing, face high barriers. Trade barriers, such as taxes on food imports or
subsidies for farmers in developed economies, lead to overproduction and dumping
on world markets, thus lowering prices and hurting poor-country farmers. Tariffs
also tend to be anti-poor, with low rates for raw commodities and high rates for
labor-intensive processed goods. The Commitment to Development Index
measures the effect that rich country trade policies actually have on the developing
world. Another negative aspect of trade barriers is that it would cause a limited

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute

(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi and
Approved by Bar Council of India)
choice of products and, therefore, would force customers to pay higher prices and
accept inferior quality.

In general, for a given level of protection, quota-like restrictions carry a greater

potential for reducing welfare than do tariffs. Tariffs, quotas, and non-tariff
barriers lead too few of the economy’s resources being used to produce tradable
goods. An export subsidy can also be used to give an advantage to a domestic
producer over a foreign producer. Export subsidies tend to have a particularly
strong negative effect because in addition to distorting resource allocation, they
reduce the economy’s terms of trade. In contrast to tariffs, export subsidies lead to
an over allocation of the economy’s resources to the production of tradable goods.

Ethical Barriers:-Despite international trading laws and declarations, countries

continue to face challenges around ethical trading and business practices.

Sd/-

Ms. Ruchi Arora

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