D270 Midterm: Chapter 1 Flashcards
What is international business?
- All commercial transactions that take place between 2+ countries
- Includes sales/investments/transportation/tourism
Why is it important to study international business?
- Most companies are international or compete with international companies
- Understand different modes of operation
- Best business practices vary by country
- Managers must consider where to obtain best materials at lowest price and where the best market is
What is globalization? Why is it attractive to companies?
- Widening set of interdependent relationships among people who are from different parts of the world
- Elimination of barriers to international movement of goods/services/capital/tech
- Enables better quality, more variety, lower prices
CASE: Globalized Business of Sports
How is globalization exemplified in the sports business?
- Fans (consumers) demand the best athletes (products) in the world
- Cities and countries compete to host events
- Teams/sports go global when popularity increases or revenue decreases (i.e., MLB)
What are 3 main forces that are driving globalization?
- Size of countries: smaller countries more globalized (have fewer resources, lower variety of production)
- Income of countries’ populations: higher income = more globalization (can afford global products)
- Variance among globalization aspects (countries vary for how they rank in terms of globalization)
Factors in increased globalization
- Increase in tech
- Liberalization of cross-border trade & resource movements
- Development of services that support IB (currency conversions)
- Growth of consumer pressures
- Increase in global competition
- Change in political situations and gov policies
- Expansion of cross-national cooperation
What is a born-global company?
A company that starts with a global focus due to founders’ international experience & advances in communication give them leg up in global market
What is clustering/agglomeration? How does it occur?
- Many new companies locate in areas w/ numerous competitors/ suppliers
- Observe how competitors benefit from foreign opportunities»_space; Human talent gravitates to area»_space; Gain easier access to resources needed
What are 3 costs of globalization?
- Threats to national sovereignty
- Environmental stress
- Growing income inequality and personal stress
How is national sovereignty threatened by globalization?
- Countries’ interests may be undermined by international trade
- Small economies might become overdependent on larger economies
- Loss of culture: globalization homogenizes products, work methods, social structures, and language
How is the environment adversely affected by globalization?
- Pollution from increased transportation
- Growth consumes nonrenewable natural resources
How has globalization increased income inequality?
- Created “super-star” system by increasing access to low-cost labor
- Developed competition resulting in win/lose system
- Profits from globalization go to superstars and aren’t evenly distributed
How has globalization increased personal stress?
Increased job insecurity because of offshoring
CASE: IBM Offshoring
Why did IBM (and other companies) choose to offshore?
Cost savings»_space; Growth»_space; More high-income jobs
What is 2 common arguments to the case that offshoring creates more high-income jobs?
Jobs being off shored were jobs that allowed workers to send their children to college»_space; upwardly mobile society
Jobs created in other countries take advantage of situation and don’t treat employees well
