International Business

Topics: European Union, International trade, Single market Pages: 21 (5930 words) Published: April 25, 2013
| | | | | | | |Subject |International Business | |Table of Contents

Question 11

Question 26

Question 311

Question 414

Question 518

Word Count:537923

Question 1

With reference to relevant literature, critically discuss how the Chinese SOE, Baosteel, has benefited from both the globalisation of markets as well as the globalisation of production.


Baosteel is China’s largest steel producer and is placed fifth in the world. Baosteel produces steel predominantly for carmakers, shipbuilders, electronics and household appliances manufacturers, oil drilling and pipeline companies as well as construction companies. Baosteel aims to become one of the three largest steel producers in the world. Baosteel aims to achieve this goal through mergers and acquisitions and through globalisation.


Globalisation refers to the shift towards a more integrated and interdependent world economy. (Hill, 2011:6). Globalisation can further be broken down into two elements, globalisation of markets and globalisation of production. Globalisation of markets refers to the merging of historically distinct and separate markets into one huge global market place (Hill, 2011:6) while globalisation of production refers to sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labour, energy, land, and capital). (Hill, 2011:7).

Globalization has changed the world of business. With increased competition and relaxed borders, many businesses are entering into foreign markets in order to increase their market share. [{} accessed 24 March 2013] Baosteel Europe GmbH

Baosteel was conducting business in Germany for a long time, however its primary focus was on sourcing parts in Germany to supply to companies in China for domestic production. This changed when Baosteels’ management decided to expand into Europe and founded Baosteel Europe GmbH. Baosteel Europe GmbH was established in Hamburg, Germany in October 1993, which is a wholly owned overseas subsidiary of Baoshan Iron & Steel Co., Ltd. Its scope of business includes trading of metallurgic raw material, steel products, machinery parts, equipment engineering etc.. [{} Accessed 24 March 2013]

Globalisation of Markets

Baosteel has taken advantage of and benefitted from falling barriers to cross border trade, growth, legal regulations, faster and cheaper communication as well as faster and cheaper transportation in the marketing of their product offering. Globalization of markets allows for a firm to cater for the demand of their goods and services as well as to increase the companies profits and achieve company objectives. [{} accessed 25 March 2013]. Baosteel’s products are required globally and hence they benefit from the growth in both volume of sales and profit margins from increased sales.

Barriers to cross border trade

Many countries are relaxing their barriers to trade owing to the need for their economy to expand, reduce...
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