Study Paper, Midterm in Ib
International Business
CHAPTER 1
Globalization: Refers to the trend towards a more integrated global economic system
(Drivers of globalization: declining trade & investment barriers, technological change)
Globalization of markets: the merging of historically distinct and separate national markets into one huge global marketplace.
(Taste and preference of consumers in different nations are the same everywhere like; Coca-Cola, Starbucks, McDonalds, Playstation, IKEA-furniture)
Globalization of production: the 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 (labor energy, land and capital. Samsung moved production to India, borrow land from the government to give jobs to the Indian population)
The Goal is to lower overall cost or improves the quality of their product → gain competitive advantage
Declining trade and investment barriers
Lower trade barriers help companies view the world as a single market and establish production activities in optimal locations around the globe. (This has increased the volume of world trade and investment since 1980)
International trade: occurs when firms export goods or services to other countries
Foreign Direct Investment (FDI): occurs when firms invest resources in business activities in other countries
The role of technological change
What are the implications of technological change for the globalization of production?
- Lower transportation costs make a geographically dispersed production system more economical and allow firms to better respond to international customer demands
What are the implications of technological change for the globalization of markets?
- Low cost communications networks help create electronic global marketplaces
- Low cost transportation enable firms to greate global markets, and facilitate the movement of people from country to country promoting a convergence of
CHAPTER 1
Globalization: Refers to the trend towards a more integrated global economic system
(Drivers of globalization: declining trade & investment barriers, technological change)
Globalization of markets: the merging of historically distinct and separate national markets into one huge global marketplace.
(Taste and preference of consumers in different nations are the same everywhere like; Coca-Cola, Starbucks, McDonalds, Playstation, IKEA-furniture)
Globalization of production: the 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 (labor energy, land and capital. Samsung moved production to India, borrow land from the government to give jobs to the Indian population)
The Goal is to lower overall cost or improves the quality of their product → gain competitive advantage
Declining trade and investment barriers
Lower trade barriers help companies view the world as a single market and establish production activities in optimal locations around the globe. (This has increased the volume of world trade and investment since 1980)
International trade: occurs when firms export goods or services to other countries
Foreign Direct Investment (FDI): occurs when firms invest resources in business activities in other countries
The role of technological change
What are the implications of technological change for the globalization of production?
- Lower transportation costs make a geographically dispersed production system more economical and allow firms to better respond to international customer demands
What are the implications of technological change for the globalization of markets?
- Low cost communications networks help create electronic global marketplaces
- Low cost transportation enable firms to greate global markets, and facilitate the movement of people from country to country promoting a convergence of