1.1 GLOBALIZATION Flashcards
What is international business?
A commercial transactions that take place between two or more nation or across border.
What is globalization?
The accelerated interdependence of economic and business activities across national boundaries.
Key concepts in IB
INTERNATIONAL TRADE
- Importing
- Exporting
INTERNATIONAL INVESTMENT
- Foreign direct investment (FDI)
- International portfolio investment
PHASE 1 OF GLOBALIZATION
Began in about 1830 and peaked around 1880
Growth of railroads, efficient ocean transport, and the rise of large manufacturing and trading firms
Invention of the telegraph and telephone enabled information flows between and within nations and aided early efforts to manage companies’ supply chains.
PHASE 2 OF GLOBALIZATION
The rise of electricity and steel production.
1900: Western Europe was the most industrialized world region.
Establishment of some of the earliest subsidiaries of multinational enterprises (MNEs).
In the years before World War I (pre-1914), many firms operated globally.
PHASE 3 OF GLOBALIZATION
Began after World War II.
Late 1945:a substantial pent-up demand was created for consumer as well as industrial products to rebuild Europe and Japan.
1947:General Agreement on Tariffs and Trade (GATT) was created, which reduces barriers to international trade and investment
GATT led to the formation of the World Trade Organization (WTO)
Many companies developed internationally-recognized trade names
Foreign subsidiaries of such companies operated as small versions of the parent firm, marketing their products around the world.
MNEs began to seek constant advantages by locating factories in developing countries with low labor costs.
1960s: International trade and investment expanded significantly
PHASE 4 OF GLOBALIZATION
Rapid growth in cross border trade of products, services & capital triggered by the development of personal computers, the Internet and web browsers.
Rise of internationally active SMEs and services firms supported by technological advances in information, communication & transport.
Rising prosperity of emerging market such as Brazil, India & Mexico.
PHASE 5 OF GLOBALIZATION
The rise of digital technologies through technological breakthroughs in fields such as quantum computing, the Internet of Things, artificial intelligence, robotics.
Digital and other new technologies are boosting the efficiency of international trade especially in services. For example, much retailing is now done through giant firms such as Amazon and Alibaba, which sell their offerings around the world via online platform.
Effects of Globalization
Industrial
Financial
Economics
Political
Informational
Language
Competition
Environment
Social
Technical
Cultural
Legal and ethical issues
Effects on poor countries
