C1: Globalization and international business
Globalization refers to the trend toward greater economic, cultural, political, and technological interdependence among national economies. Reduction of barriers to the movement of trade, capital, technology, and people. Has two facets:1. Globalization of Markets; the merging of historically distinct and separate national markets into one huge global marketplace. Benefits: cost, new market opportunities, levels uneven income streams. 3 causes of globalization are falling trade barriers, same basic products worldwide, convergence of tastes and preferences 2. Globalization of production; access to lower-cost workers, technical expertise, production input eg. Resources. Why companies engage in ‘IB’; to expand sales (potential market and profit), to acquire resources (low cost, better products, ksa), diversify or reduce risk. Four Elements of IB ESSAY!!1. The forces of globalization (influence every aspect of the global business environment) 2. The international business environment (influence how firms conduct their operations) 3. The national business environments (unique characteristics that cause synergies but tension as well)4.International firm management (managing widely dispersed production, marketing activities, and communicating with people in distant locations. ) EG. McDonalds; customize menu offerings. India beef/ Compete with different competitors. Produce locally, cost, currency risk. C2 /culture difference
Culture: learned norms based on values, attitudes, and beliefs shared by a group of people. Component of culture: Aesthetics, values and attitudes, manners, social structure, religion, personal communication, education, physical environment. Religion; a system of shared beliefs and rituals concerning the realm of sacred. Why culture and cultural diversity are important in IB? 1. Because every business function is subject to cultural influence 2. Bring together people of diverse backgrounds and experience is key to gain global competitive advantages. Hofsted’s cultural dimensions ESSAY!! 1. Power distance: focuses how a society deals with inequality among people and with relationship between superiors and subordinates. (high, more hierarchy oriented) 2. Uncertainty avoidance: focuses on the degree of accepting ambiguous situations and tolerating ambiguity. High UA (Belgium and Portugal): strict rules, wary of trying new products. Need more confirmation, warranty 3. Individualism and collectivism: focuses the relationship between the individuals and his/her fellows. Sacrifice for group or individual rights (USA个人英雄, china)。 4. Masculine and Feminism: focuses on the relationship between gender and work roles. 女领导？*communication styles: low/high context. *information processing: Monochronic顺序/ Polychronic一起cultures。Avoid Cultural Collision: 1 aware and develop cultural literacy. (educating themselves), evaluating 2. Identify cultural dynamics”nation”.3. Understand behavioral differences affecting business. Managers need to develop a global mindset regarding *cultural adaptability* overcoming gaps(western style not apply to eastern)* global mentality. (openness, flexibity)3. Understand Behavioral Differences affecting business 4. Develop Strategies for Handling cultural differences Company and Management Orientations Polycentrism Ethnocentrism Geocentrism C3Plitical and legal environment ESSAY!!!
Political Ideology definition: System of ideas that expresses the goals, theories, and aims of a sociopolitical program. Two dimensions: emphasis between democracy (individuals) and totalitarianism (Person or political party exercises absolute control over all sphere, restricted decision making process by a few individuals)/ collectivism and individualism. Political risk: Definition: the risk that political decision or events in a country negatively affect the profitability or sustainability of an investment. (China). Sources: nationalization, war, destructive gov. actions,...
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