Chapter 1: Globalization
International Business consists of business transactions between parties from more than one country. Areas that change as you cross borders: boundaries, currencies, cultures, legal systems, availability of resources, and skills & knowledge.
International Business Activities:
• Exporting and importing: countries can depend heavily on exports, e.g. Netherlands 83%. You can import and export services (invisible traders) or goods (visible trade). Most secure way to test if your good can be well received by another culture.
• International investments: Two options. Foreign Direct Investment opens a store in the host country with the same operating system that ...view middle of the document...
More decentralized, each location works with a global mindset.
Globalization refers to the shift toward a more integrated and interdependent world economy. Trend to move away from a distinct national economic unit and toward one huge global market. Barriers to cross-border trade and investment are falling, perceived distance is shrinking due to advances in transportation and telecommunication, and national economies are merging.
Globalization has several different facets, including:
• Globalization of markets: Merging national markets into one global market by offering one standardized product worldwide. There are still significant differences in tastes and preferences, distribution, culture, and legal regulations.
• Globalization of production: parts of the production process are dispersed on different locations around the world to take advantage of differences in cost and quality of factors of production.
• Globalization of consumers: concept of a worldwide consumer due to the developments in communication and technology and a homogenization of economies.
Global Institutions: institutions that help manage and regulate the global marketplace.
• United Nations (1945): 192 countries. Preserve peace through international cooperation and collective security.