Essay About World Trade Organization And National Markets Globalization Of Products

International Business Trends Summary
Essay Preview: International Business Trends Summary
Report this essay
IB Trends:Week 1, GlobalizationGlobalization of Markets: formally separate markets merge into one huge global market place.Easier to sell good internationally because of falling barriers to cross border trade & investmentGlobal taste Benefits for big & small companies Competitors may not change among nations Still difference between national markets Globalization of Products: acquire goods internationally to benefit from different cost & quality factors of production in dif. countries.Not only matter of cost Impediments remain Reshoring can happen Offshoring: relocation of a business process from one country to another Outsourcing: hiring a party outside the company to perform services & create goods FDI: firm invests resources in business activities outside it’s own countryDrivers of Globalization: Declining trade & investment barriers Tariff: Tax on import (high tariffs result in retaliatory trade policies)GATT: General Agreement on Tariffs & Trade Established WTO: World trade organization, responsible for policing the world trade system, 98% of the world are WTO members Knowledge society & trade agreements Role of technological change: communications, internet (equalizer) Global Institutions: GATT, WTO, UN, International monetary fund, World BankChanging face of the global economy Changing world output & world trade picture West has experienced a relative decline China & other emerging countries are growing more rapidly By 2025 developing nations may account for more than 60% of world economic activities Changing FDI picture Non-western firms are increasingly investing across national borderDisperse production activities to optimal locations  Increasing amount of FDI into developing countries Changing nature of the multinational enterpriseRelative decline of US/Western Multinationals Rise of smaller MN (Internet)Changing world orderFormer communists’ country present export & investment opportunities China & India are becoming more powerful (ecumenically & politically) Latin America, Asia, Africa -> expanding economies Global economy of the 21st century Barriers going downAdoption of liberal economic policies The Globalization DebateGlobalization, Jobs & IncomeCritics: Destroy manufacturing-jobs in wealthy advanced countries Outsourcing of services is contributing to higher unemployment and lower living standards Supporters:Benefits outweigh costs Countries will produce only goods and services they can produce most efficiently and import the rest -> whole economy better off + companies reduce cost structure & consumers benefit   Globalization, Labor Policies & the Environment CriticsLack of regulations can result in abuse of low-cost countries Adhering to regulations increases costs  Supporters Economic policies need tougher regulations Globalization & National sovereigntyCritics Shift from power from government to supranational organizations (WTO, EU, UN)SupportersPower of SN-organizations is limited to what states collectively agreed onSN-organizations exist to serve the collective interest of member states Globalization & the World’s poor CriticsGap between rich & poor nations has gotten widerSupportersNot related to free trade Week 2: The Multinational Firm Impact of Globalization on BusinessExpansion of international tradeFDI plays increasing role in economy Exports/Imports are penetrating deeper into the world’s largest economies Companies home market under attack from foreign competitors Greater opportunities More complex & competitive environment Environmental factors to consider Economic environment: foreign investment, growth of developing nations, rising wages in developing nations Technological environment: internet & wireless tech. Legal/Regulatory environment: free trade agreements, anti-corruption lawsDemographics: Aging society in developed nations, growing population ww., especially in developing countriesSocial Issues: Cultural differences, bribery concerns Natural environment: Intensifying demand for resources (oil, water, food), growing desire for sustainable products & operations, increasingly endangered species, climate change Factors to consider when thinking about shifting production abroadCompetitive Advantage (importance of price & quality)What stage is the business in? Can production savings be achieved locally?Can the whole supply chain be improved?Global strategies International: overseas subsidiaries, greater control by parent company (luxury, high tech)[pic 1]Multinational: subsidiaries can respond locally (Heineken)Global: high control by parent company, standardized production Transnational: centralizing certain functions others in subsidiaries for responsiveness, communication among subsidiaries Entry Modes Exporting: Advantages: economies of scale, pure global strategyDisadvantages: high transportations costs & tariff barriers Licensing:Advantages: lower development costs, lower political risks Disadvantages: loss of control over technology  Franchising:Advantages: lower development costs, lower political risksDisadvantages: loss of control over qualityJoint-Venture:Advantages: local knowledge, shared cost & riskDisadvantages: loss of control over technology, conflictWholly owned subsidiary: Advantages: control over technology & operationsDisadvantages: high risk & costsManaging across bordersExpatriates: Parent company nationals who are sent to work in a foreign subsidiary Host-Country nationals: natives in the overseas subsidiary Third-Country nationals: from a third country not host/homeInpatriates: foreign nationals working at parent company How to prevent failed global assignments Clear structureClear job objectivePerformance measurements based on objectives Use effective, validated selection & screening criteria Prepare expatriates & family for assignment Ongoing communicationAnticipate repatriation to facilitate reentry Developing mentor programWeek 3: Political & Economic SystemsPolitical Economy Political, economic and legal systems are independentInfluence each otherPolitical SystemsCollectivism: needs of society are more important than individual freedomSocialism: The few benefit on the expenses of the many in capitalismIndividualism: Individual has freedom in economic and political pursuitInterest of the individual paramount to interest of the stateTwo tenets:Guarantee of individual freedom and self-expressionWelfare of society best served by letting people pursuit their own economic self-interest Democracy & Totalitarianism