Business & Management - Globalisation

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Globalization Unit 1.9

Focus Question

1. What is globalization?

2. What are the causes and impacts of globalization?

3. What are some indicators of globalization?

In business, the competition will bite you if you keep running. If you stand still, they will swallow you. William Knudsen (1879-1948), former president of GM.

Overview what is globalization?

* What is globalization?
* The integration of the world’s economies in relation to their economics, sociology, and politics. * It is an attempt to produce and sell the same products or services in different countries.

* Why are companies interested in globalization?

* Is globalization the right move for some companies?

* What are some indicators of globalization?

* Globalization can also be defined as the growing interdependence of the world’s economies. * Whereby national economies join together into a single global economy. * With globalization, the political and economical decisions of one country are likely to affect those in other parts of the world, too. * MNC will design and market their products to the world. * Products are easily recognizable

* Same production processes
The Effects of Globalization on Business Activity
Increased Customer Base
Increased Customer Base
Customers’ Expectations & needs
Customers’ Expectations & needs
Competition
Competition

The Effect
The Effect

M & A’s Joint venture
M & A’s Joint venture
Choice of location
Choice of location
Economies of Scale
Economies of Scale

Multinational Corporations

Focus Questions
* What are the reasons for the growth of MNCs?
* What role and impact do MNCs have in the global business environment?

* What is a MNC?
* A business that operates in two or more countries.
* It is also called a transnational corporation
* Examples of MNC
Coke
Dell
Samsung
LG
Hyundai
Wendy’s
* Reason for Becoming a MMN
* Increased Sales turnover By widening Customer base
* Globalization of Markets
* Gain economies of scale
* Able to spread risks
* Cheaper Production Cost
* Avoid Protectionist Policies by Producing Overseas

* Potential Problems of Becoming MNC
* Lack of Local Knowledge
* Infrastructure
* Political & Economical Factors
* External Factors Influencing Decisions
* Logistical Cost will Increase

* MNC’s Effect on Host Countries
* Create Jobs * Prone to Takeover Bids
* Benefit the Balance of Payments
* Boost GDP
* Cause Unemployment
* More Competition
* Concern about Social Responsibility
* Technology Transfer

Regional trading Blocs

Focus Question

1. What are trading blocs and what are their major implications for businesses? Levels of ‘’Free’’ Trade
Levels of ‘’Free’’ Trade

CEPA
Closer
Economic
Partnership
Agreement
-Under the WTO
CEPA
Closer
Economic
Partnership
Agreement
-Under the WTO
Common Market
Customs Union
-free trade and free movement of labour and capital
Common Market
Customs Union
-free trade and free movement of labour and capital
FTA
Free
Trade
Agreement

FTA
Free
Trade
Agreement

* RTB’s try to…
* Eliminate trade barriers
* Establish free international trade

* RTB will also
* Impose physical barriers to international trade
* Tariffs: will increase the price of exports, thus reduce competitions. * Quotas: limits placed on the volume or value of foreign goods and services. * This will limit supply and will have two major effects: 1) It reduces the amount available for sale.

2) It raises prices due to limited supply.

* Major RTB Around the World
* EU – The Europeans Union
* EFTA – The European Free Trade Association
* NAFTA – The North American Free trade Agreement
* ASEAN – The Association Of South East Asian Nations
*...
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