Week one - The global business environment Flashcards
what is globalisation
a social and economic phenomenon which implies a shift towards greater integration and interdependence amongst economies of different countries
what are the indications of growing globalisation
the intensification of international flows of people, services, technology, knowledge, capitals and information
what are the different globalisation levels
global/country/industry/company scale
what does globalisation at a global scale indicate
greater worldwide convergence of variables and economic dimensions, such as consumer tastes, standardisation of products, economic policies and players, institutional organisations etc.
what does more globalisation indicate
less importance of local issues
what does globalisation at a country scale imply
that specific countries have different degrees of integration into the global economy
what are the measures of degrees of globalisation of specific countries
1) foreign trade flow (X+M as % of GDP)
2) foreign direct investment (outflows or inflows as a % of GDP)
what does globalisation at an industry scale imply
that there is a great interdependence of competitive positions of companies in a particular industry across countries
what does globalisation at a company scale imply
that the company has extended its presence to all significant markets of the world, creates value in many countries and coordinates constant knowledge, capital and product flows, i.e. global dispersion of assets
how is globalisation at a company scale measured
trans-nationality index (TNI): average foreign values over total sales, assets and employees (%)
what are globalisation drivers
- internationalisation of firms
- economy liberalisation
- technology development
what does economy liberalisation entail
- trade liberalisation
- liberalisation financial flows
- liberalisation of FDI flows
pros and cons of free trade agreements
pros
- increased economic growth
- lower government spending
- technology transfer
cons
- increased job outsourcing
- poor working conditions
- degradation of natural resources
what are indicators of technology development
cheaper and more efficient production
what are indicators of firms’ internationalisation
offshoring due to locations’ comparative advantages
deterrents of globalisation
- covid containment policies
- geopolitical tensions
- negative perception of globalisation
- increased transportation costs and logistic problems
negative perceptions about globalisation
- unemployment in developing countries
- increased lifestyle diseases
- abandonment of culture
- environmental damage
- multinational companies gain power
benefits of globalisation
- spread of technology and innovation
- free trade
- access to new markets
- creates jobs
- access to more goods and services
what do MNC’s need to ensure (ethically)
corporate ethical behaviour
what is CSR
corporate social responsibility: balancing the needs of different stakeholders, i.e. fulfilling economic, social and environmental obligations
what is the United Nations global compact
a voluntary initiative based on CEO commitments to implement universal sustainability principles, thus supporting UN goals
what are the four action areas of the United Nations global compact
- human rights
- labour (no child labour, elimination of discrimination and compulsory labour)
- environment
- anti-corruption (corruption is the misuse of entrusted power for private gain)
what are the costs of corruption
- political costs
- economic costs
- social costs
- environmental costs
all leading to a weaker society as a whole
advantages of ethical MNCs
- better reputation
- better employee motivation and productivity
