Globalization

Question 1

What is globalization?

Answer 1

Refers to the increasing integration and

interdependence of the world economy

Question 2

Why do companies globalize?

Answer 2

• Locate economies of scale and scope
• Leverage established brand
• Access new resources
• Increase revenues outside of mature markets
• Reduce single-market risks
• Remain competitive against globalized rivals
• Grow fan or consumer bases

Question 3

What are the drivers of globalization?

Answer 3

• Trade and Investment
• Technology
• Transportation Technologies

Question 4

What are the 5 main methods of international entry?

Answer 4

1) Exporting
2) Licensing
3) Strategic alliances
4) Acquisitions
5) Greenfield Ventures

Question 5

What are the pros to globalization?

Answer 5

• Victims are more visible than beneficiaries
• First-world consumers receive cheaper goods
• Third-world workers receive jobs
• Free trade leads to democracy
• Inequality within and between national economies is
  reduced dramatically
• Poverty is reduced
• Nonglobalizers are the real losers
• Problems are protectionism from first world and poor
  institutions in third world

Question 6

Criticisms of globalization?

Answer 6

• Loss of sovereignty and identity
• Trade agreements should incorporate human rights
  and environmental standards
• Corporate colonialism underestimates the social costs
• Stakeholders must include workers and communities
  as well as shareholders
• IMF and WTO are unfair, undemocratic institutions

Question 7

What is a CAGE framework?

Answer 7

Cultural (e.g. language, religion, diaspora)
Administrative / political (e.g. Trade block, currency, corruption, population)
Geographic (e.g. distance from major cities, time zone, close to body of water?)
Economic (e.g. GDP, Growth Rate, human penetration)

The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies. It may also be used to understand patterns of trade, capital, information, and people flows.

Question 8

What are the elements to Porter’s Diamond of National Advantage?

Answer 8

1) Factor Conditions
2) Demand Conditions
3) Related and Supporting Industries
4) Firm Strategy, Structure, and Rivalry
5) Government and Chance

Example from async:

Factor Conditions:
High work force in addition to many top tier universities for many different specialities (school for film, school for engineering, etc)
Highly technical country where many people have access to information
country’s culture is a work/career first mindset
High concentration of globally recognized schools (Harvard, Stanford, MIT, Yale, etc)
Diverse cultures and many immigrants who bring their talents to the US.
Higher wages.

Demand Conditions:
Like dublin, predominantly international
large customer base, and very large population
GDP per Capita is relatively high at $54,629.50
Culture that indulges in spending

Related and Supporting Industries:
Computer hardware & software in many different high tech areas throughout the United States.
LA is the centralized hub for anything to do with cinematic entertainment (special effects, makeup, producing, etc)
Many different areas throughout the United States where oil is present

Firm Strategy, Structure, and Rivalry:
Highly concentration of tech companies (Google, Apple, Facebook, Twitter, etc)
LA central hub for movie production and high quantity of actors
High concentration of biotech companies in locations like San Francisco, California (Gilead sciences, Genentech, Johnson & Johnson, Amgen, etc)
Relatively young, hungry, and hardworking workforce.

Government:
Laws like bankruptcy allow companies a second chance to succeed
Government spends a lot of money on research in order to improve healthcare.
Encourage companies to act ethically and maintain a level of quality.
Chance:
The idea of the American dream of having the opportunity of building something from nothing