GLOBAL BUSINESS ENVIRONMENT

TOPIC 1 EVOLUTION, DEFINITIONS, PATTERNS, FORCES AND LINKAGES OF GLOBAL BUSINESS

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GLOBALIZATION

Globalization means integrating the economy of the country with the economies of other countries under conditions of free flow of trade, capital and movement of persons across borders. Globalization is the process by which an organization activities become worldwide in the scope. Globalization includes Location of the production and other physical facilities of business around the whole world.
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GLOBALIZATION

Globalization is a combination of phenomenon, philosophy and process. As a phenomenon all the people on the planet live in the same environment and that they are linked at present and in the future. As a philosophy, globalization is an important element of discussion and consideration in corporate boardrooms and as a process, globalization is being welcomed by people because it ensures the spread of free markets and investment flows.
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GLOBAL BUSINESS ENVIRONMENT

Global business consists of transactions that are devised and carried out across national borders to SATISFY the objectives of individuals and organizations. Global business environment consists of external and internal environment, where the success of organization depends upon how well they adapt to the external environment.
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EVOLUTION OF GLOBAL BUSINESS ENVIRONMENT

Early records of globalization Trade in Eurasia The European Seaborne Empires Early Modern World Economy The Formation of National Economies Industrial Capital Technological Developments Declining Trade and Investment Barriers Regional Economic Integration in North America Regional Economic Integration in Europe

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Globalization Involves Us All

We experience international transactions daily

Imports and exports reach even remote areas

Technology and e-commerce promote trade Consumers and companies pull markets closer
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FORCES OF GLOBAL BUSINESS

Wide Base Human Resources Expanding Markets Economic Liberalization Competition Technology advancements High returns and profits from global business Increase margins at different stages of product life cycle More efficiency Declining costs of transportation and communication Growth of regional and international trading agreements.

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International Business - EXAMPLE

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Globalization
Trend toward greater economic, cultural, political, and technological interdependence among national organizations and economies
Globalization of markets Convergence in buyer preferences in markets around the world Globalization of production Dispersal of production activities worldwide to minimize costs or maximize quality
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Benefits of Globalization
Globalization of markets Globalization of production

Reduces marketing costs New market opportunities more profits from different markets
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Access low-cost labor

Access technical expertise

Access production inputs

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10

Advice of Global Managers

Know the customer Emphasize global awareness Develop world-class products Market effectively Improve logistics

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Analyze problems correctly

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Globalization Drivers I
Remove barriers to trade and investment

GATT WTO
Regional trade agreements

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12

Globalization Drivers II
Technological Innovation
E-mail and videoconferencing Internet, intranets, and extranets Transportation advancements

Better coordination and control

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Improved communications and management

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More efficient, dependable shipping

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Top 20 Global Nations

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14

International Business Players

Multinational Corporation
Business that has direct investments abroad in multiple countries

Small Businesses and Entrepreneurs

Small companies and individuals becoming increasingly active in international trade and investment

Born-Global Firm
Takes a global perspective on its market and engages in international business from inception

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15

Global Business Environment

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PATTERNS AND LINKAGES OF GLOBAL BUSINESS

Import Export trade pattern Licensing Franchising Management contracts Foreign direct investment Joint ventures and mergers Wholly owned subsidiaries
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