GLOBALIZATION AND INTERNATIONAL BUSINESS
As people, firms, and other organizations have expanded their access to resources, goods, services, and markets across wider geographical areas, they have also become more deeply affected (positively and negatively) by conditions outside their home countries. Globalization refers to the broadening set of interdependent relationships among people from different parts of a world that happens to be divided into nations. What is International Business?
International business involves all commercial transactions—private and governmental—between parties of two or more countries. Global events and competition affect almost all firms—large or small. However, the international environment is more complex and diverse than a firm’s domestic environment. [See Fig. 1.1.]
THE FORCES DRIVING GLOBALIZATION
Globalization is a difficult concept to measure. Currently, about 25 percent of world production is sold outside of its country of origin, restrictions on imports continue to decline, the foreign ownership of assets as a percent of world production continues to increase, and world trade continues to grow more rapidly than world production. Recessionary contraction in recent years has at least temporarily reversed this trend. That said, on a value basis, only a few countries (mainly very small nations) either sell more than half of their production abroad or source more than half of their consumption from foreign countries. Further, the principal source of capital in almost all nations is still domestic. Following are seven interrelated factors that have contributed to the spiraling growth in globalization.
Factors in Increased Globalization
There are seven factors that are often cited as having contributed to the increased growth
in globalization. 1. Increase in and Expansion of Technology
Vast improvements in transportation and communications technology—including the development of...
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