1.4 GLOBAL BUSINESS & INVESTMENTS

Question 1

Driving forces of globalization

Answer 1

1. Worldwide reduction of barriers to trade & investments
2. Market liberalization & the adoption of free market
3. Industrialization, economic development & modernization
4. Integration of world financial markets
5. Advances in technology

Question 2

Technological innovations have facilitated the globalization of markets. How?

Answer 2

1. INFORMATION TECHNOLOGY
2. COMMUNICATIONS
3. MANUFACTURING
4. TRANSPORTATION

Question 3

Dimensions of globalization

Answer 3

1. Integration & interdependence of national economies
2. Rise of regional economic integration blocs
3. Growth of global investments & financial flow
4. Convergences of consumer lifestyles & preferences
5. Globalization of production
6. Globalization of services

Question 4

Firm level consequences of market globalization

Answer 4

• Direct consequences on the firm’s value chain
• Globalization compels firms to organize their sourcing, manufacturing, marketing & other value-adding activities on a global scale to achieve cost advantages & time efficiencies
• E.g: exporting firms perform many upstream value-chain activities (R&D
  and production) in the home market and many downstream activities (marketing and after-sales service) abroad.

Question 5

Societal consequences of globalization

Answer 5

1. Contagion
2. Loss of National Sovereignty
3. Offshoring
4. Reshoring
5. Effect on the Poor
6. Effect on Sustainability and the Natural Environment
7. Effect on National Culture