LU1: AN OVERVIEW OF INTERNATIONAL

BUSINESS (GLOBALIZATION)
Globalization is the process of greater
interdependence among countries and their citizens.
It consists of increased integration of product and
resource market across nations via trade,
immigration and foreign investment (Carbaugh,
2008).
Via international flows of goods and services, of people and
of investment such as equipment, factories stocks and
bonds. It also includes noneconomic elements such as
cultural and the environment.
Political technological, cultural and economic.
Globalization refers to the shift toward a more
integrated and interdependent world economy (Hill,
2011).
Increase technology sharing and more extensive cultural
integration


It refers to the merging of separate national
markets into one huge global marketplace
It features
falling trade barriers make it easier to sell globally
consumers tastes and preferences are converging on some
global norm
firms promote the trend by offering the same basic
products worldwide
Technology advancement especially in telecommunication
and transportation


As a major multinational corporation,
McDonalds operates 30,000 restaurants in
119 countries around the world.
There is a McDonalds restaurant on every continent
except ANTARTICA!
In a day
Serve 35 million customers
Prepares more than 6.8 million pounds of French
fries
Employs nearly three million people worldwide

Corporate strategy to adapt THE CULTURAL
EXPECTATIONS of local consumer
Each country has its own menu in addition to
the standard classic McDonalds menu in the
U.S.
McD Thailand McD Japan
McD China McD Russia
McD Saudi Arabia McD Argentina
McD India McD Turkey
McD S. Korea McD France
McD Penang, Malaysia!!
McHuevo, Uruguay McD Beer, Germany

India (Lamp)
Red Bean Ice Cream,
Hong Kong

McFlurry Green Tea
Shake, Japan
Sweet Corn Pie, Thailand

Thailand McLobster, Canada

McRice-Taiwan, Singapore,
Indonesia and Philippines
McLaks, Norway

Bubur Ayam, Malaysia
Shaka Shaka Chicken,
Singapore

McVeggie, India McArabia, Egypt

Banana Pie, Brazil Molletes, Mexico

India
http://www.youtube.com/watch?v=21wsqNqq
qsg&feature=related
China
http://www.youtube.com/watch?v=QoKkk7UfU
9w&feature=related
Arab
http://www.youtube.com/watch?v=B-
TW4qeD2dg
Japan
http://www.youtube.com/watch?v=ungA0tTud
-w&feature=related
It refers to the sourcing of goods and services
from location around the global to take
advantage of national differences in the cost
and quantity of factors of production.
By doing this, the firm can reduce their cost
of production
Promote efficiency in production
become more competitive in the international
marketplace
Even though the final assembly of an airplane
is conducted in US, many component of the
airplane are made by other companies and
the core technology involved in those
components are not owned by Boeing.
30% of the 777 is built
by foreign companies
8 Japanese suppliers
makes parts for the
fuselage, doors and wings
A supplier in Singapore
makes the doors for the
nose landing gear
3 suppliers in Italy
manufacture wing flaps.
Dell 100% depends on its ability to integrate. All
component are made by 400 companies all over the world.
30% major companies located in Asia (Japan, China, Philippines
and Malaysia)
Dell sells 140-150,000 computers every day, and every
computer needs to be custom-made to buyers
specifications
How to get parts from its suppliers all over the world,
assemble them, and send them to customers on time,
requires tremendous effort in communication,
coordination, collaboration and integration. In this case,
Dell plays the role of a conductor for a symphony in
making sure that the suppliers in its global supply chain
will play at the appropriate time, in appropriate loudness,
and at the appropriate speed, so the whole symphony will
always sound melodic, harmonious, and beautiful.
Telecommunication and transportation technology


Institutions
help manage, regulate, and police the global
marketplace
promote the establishment of multinational treaties to
govern the global business system
Some significant global institutions
The World Trade Organization (like its predecessor GATT)
polices the world trading system
makes sure that nation-states adhere to the rules laid down in trade treaties
promotes lower barriers to trade and investment
The International Monetary Fund (1944) maintains order in the international
monetary system
The World Bank (1944) promotes economic development
The United Nations (1945)
maintains international peace and security
develops friendly relations among nations
cooperates in solving international problems and in promoting respect for
human rights
is a center for harmonizing the actions of nations

Average Tariff Rates on Manufactured Products as Percent of Value


0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
60-70 70-80 80-90 00-10
3.86
3.26
3.18
2.52
6.24
5.24
7.64
5.41
GDP growth (annual %) Exports of goods and services (annual % growth)
Source: World bank database (2012)
Telecommunication Technology
Gadget, Internet and Www
Transportation Technology
An advance transportation services

Country 1980 1990 2000 2010
United States 29.02% 28.95% 30.62% 27.89%
Germany 6.98% 6.38% 5.83% 5.00%
France 4.87% 4.47% 4.10% 3.58%
Italy 4.19% 3.86% 3.41% 2.77%
United Kingdom 4.77% 4.54% 4.57% 4.21%
Canada 2.32% 2.23% 2.24% 2.11%
Japan 15.17% 17.34% 14.63% 12.30%
China 1.03% 1.82% 3.71% 7.84%
Brazil 2.43% 2.06% 1.99% 2.22%
India 0.91% 1.13% 1.47% 2.35%
Russian - 1.58% 0.80% 1.00%
Thailand 0.21% 0.33% 0.38% 0.45%
Singapore 0.13% 0.20% 0.30% 0.40%
Malaysia 0.15% 0.19% 0.29% 0.36%
Indonesia 0.33% 0.45% 0.51% 0.66%
Source: World Bank database (2012)
1980 1990 2000 2010
United States 13.31% 13.68% 13.67% 11.54%
Germany 8.49% 8.54% 7.88% 7.92%
France 5.38% 4.84% 4.78% 3.30%
Italy 4.54% 4.31% 3.70% 2.48%
United Kingdom 6.03% 5.15% 5.10% 4.05%
Canada 3.75% 3.68% 4.13% 2.28%
Japan 7.79% 8.15% 6.44% 5.89%
China 2.00% 1.58% 3.50% 11.06%
Brazil 0.68% 0.82% 0.80% 0.91%
India 0.47% 0.47% 0.76% 1.74%
Russia - 3.46% 1.43% 1.56%
Thailand 0.34% 0.74% 1.02% 1.01%
Singapore 1.00% 1.62% 2.31% 3.06%
Malaysia 0.53% 0.87% 1.41% 1.22%
Indonesia 1.34% 0.89% 0.85% 0.96%
Source: World Bank database (2012)


Pro
Lower prices for
goods and services
Economic growth
stimulation
Increase in
consumer income
Create more job
opportunities
Con
Destroys unskilled
jobs in advance
countries
Loss of sovereignty
Thomas Friedman in his book The World is Flat
(2005) suggests that the world is flattening-
meaning it is increasingly interconnected by new
technology such as the Internet. This can raise the
poor from poverty, nurture a worldwide middle
class, and even spread democracy. On the other
hand, this presents significant challenges for
developed economies, whose employees may feel
threatened by competition from low-cost
countries. How does this flattening world affect
you?