Globalization and Its Impact on International Business

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Table of the content

Introduction....................................................................3

What is Globalization....................................................4

The engines for Globalizations…………………..……5

Globalization’s impacts on international business…..7

The road ahead for international business……..……9

Summary…………………………………….………..11

Reference………………………………..……………12

Introduction

Every day we hear it on the news, read it in the papers, overhear people talking about it… and in every single instance the word globalization seems to have a different meaning. So, what is globalization? What are its main drivers? Why and how does globalization impact international business? What’s the future of international business? This paper, through conceptualizing the significance of globalization for international business and explore core concepts of the international business environment, will answer the above questions.

What is Globalization?

Globalization can be described as a process by which the people of the world are unified into a single society and functioning together. This process is a combination of economic, technological, sociocultural and political forces. Globalization, as a term, is very often used to refer to economic globalization, that is integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and spread of technology. The word globalization is also used, in a doctrinal sense to describe the neoliberal form of economic globalization.Globalization is also defined as internationalism, however such usage is typically incorrect as "global" implies "one world" as a single unit, while "international" (between nations) recognizes that different peoples, cultures, languages, nations, borders, economies, and ecosystems exist(http://en.wikipedia.org/). Globalization has two components: the globalization of market and globalization of production. Globalization of markets moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time and culture, and toward a system in which national markets are merging into one global market. Globalization of production is a trend by individual firm to disperse part of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production (Hill C.W.L., 2006).

The engines for Globalizations

What factors spur globalization? Are there driving forces that facilitate or promote the spread of globalization? Considering that globalization has accelerated in the last decades, answers to these questions can be sought by identifying changes that have occurred over the latter part of the last century that may have magnified the globalization trend. Among the many possible engines that push it forward, six are most prominent (http://tutor2u.net): oImprovements in transportation including containerization – the reduced cost of shipping different goods and services around the global economy helps to bring prices in the country of manufacture closer to prices in the export market, and adds to the process where markets are increasingly similar and genuinely contestable in an international sense. oTechnological change – reducing massively the cost of transmitting and communicating information - sometimes known as “the death of distance” – this is an enormous factor behind the growth of trade in knowledge products using internet technology. Advances in transport technology have lowered the costs, increased the speed and reliability of transporting goods and people – extending the geographical reach of firms by making new and growing markets accessible on a cost-effective basis. oDe-regulation of global financial markets: The process of deregulation has included the abolition of capital controls in many countries. The opening up...
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