LECTURE 1: INTERNATIONAL BUSINESS & GLOBALIZATIO

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Global Integration of the Bangladesh Economy
Indicator (Million FY FY FY FY FY FY
USD) 1981 1991 2001 2011 2016 2017
1. Export (X) 725 1718 6467 22928 34242 34656
2. Import (M) 1954 3472 9335 33658 42921 47005
3. Remittance 379 764 1882 11650 14391 12769
4. ODA 1146 1733 1369 1777 3450 2728
5. FDI (net) 0 24 550 775 1285 1706
Total (1 to 5) 4204 7711 19603 70788 96829 98865
GDP (Current Price) 19812 30975 53991 128682 221396 248767
Degree of Openness 13.5 16.8 29.3 44.0 34.9 32.8
(export +import as %
of GDP)
Extent of Global 21.2 24.9 36.3 55.0 43.7 39.7
Integration
Introduction
International Business: Any business that takes place betw
een two or more countries is classified as international bu
siness.

Multi-national Business: A business that has multi-domestic

policy over the nations where it operates.

Global Business: A business that has same business polic

y throughout the world.

Transnational Business: A business that transcends its poli

cy over several nations.
Globalization
Globalization refers to the trend towards a more integrated
global economic system.

Modern globalization is facilitated by advances in technolog

y, negotiations and liberalization.

Impacts of globalization:
Economic: large market, better technology, greater capital.
Political: economic policies; refine government role.
Social: infrastructure; reduce poverty.
Globalization
Facets of globalization:
1) Industrial Globalization ( Market and Production)
2) Financial Globalization ( Financial Services and Capit
al Market).
3) Political Globalization ( Regional System, International
Organization, Legal System).
4) Information Technology ( Technology and ICT).
5) Cultural Globalization (Food and Entertainment).
Globalization
Drivers of International Business:
1. declining trade and investment barriers
2. technological change

The Costs of Globalization

i. The question of local objectives and policies.
ii. The question of small economies overdependence.
iii. The question of cultural homogeneity.
iv. The growing global environmental degradation.
v. The growing income inequality.
vi. The growing personal stress.
Risks in International Business
1. Cross-Cultural Risk: a situation or event where a cultura
l miscommunication puts some human value at stake
2. Country Risk: potentially adverse effects on company
operations and profitability holes by developments in the
political, legal, and economic environment in a foreign c
ountry
3. Currency Risk: risk of adverse unexpected fluctuations i
n exchange rates
4. Commercial Risk: firms potential loss or failure from po
orly developed or executed business strategies, tactics,
or procedures
The Changing World Order
Changing Demographics of Global Economy:
 New Emerging Economies (China, Brazil, India, Russia, Vi
etnam, South Korea etc.)
 The stock of foreign direct investment (total cumulative valu
e of foreign investments) Emerging Economies is on rising.
 Trade War is getting stated between economic superpower
s.
 The largest recipient of FDI is China .
 Many former Communist nations in Europe and Asia are no
w committed to democratic politics and free market econom
ies
 creates new opportunities for international businesses.
 but, there are signs of growing unrest and totalitarian ten
dencies in some countries.
How Will The Global Economy Of The 21st Cen
tury Look?
 The world is moving toward a more global economic syste
m…
 But globalization is not inevitable
 there are signs of a retreat from liberal economic ideol
ogy in Russia
 Donald Trump’s Cancellation of Trans Pacific Partner
ship.
 Globalization brings risks
the financial crisis that swept through South East Asia in
the late 1990s.
the recent financial crisis that started in the U.S. in 200
7-2008, and moved around the world.
Is An Interdependent Global Economy A Good
Thing?
 Supporters believe that increased trade and cross-border i
nvestment mean
 lower prices for goods and services
 greater economic growth
 higher consumer income, and more jobs
 Critics worry that globalization will cause
job losses
 environmental degradation
 the cultural imperialism of global media and MNEs
 Anti-globalization protesters now regularly show up at mo
st major meetings of global institutions
How Does The Global Marketplace Affect Mana
gers?
 Managing an international business differs from managing
a domestic business because
countries are different
 the range of problems confronted in an international bu
siness is wider and the problems more complex than th
ose in a domestic business
 firms have to find ways to work within the limits impose
d by government intervention in the international trade a
nd investment system
 international transactions involve converting money int
o different currencies