Globalization Overview
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Questions and Answers

What are two primary reasons for companies to expand internationally?

Growth opportunities and cost savings.

Name one advantage and one disadvantage of direct exporting.

Advantage: Low initial costs; Disadvantage: High transportation costs.

How does licensing benefit a company looking to expand its market reach?

It allows for rapid market entry with minimal investment and risk.

What are the key differences between a joint venture and a strategic alliance?

<p>A joint venture involves forming a new legal entity, while a strategic alliance is a flexible partnership without creating one.</p> Signup and view all the answers

What is a major disadvantage of franchising for the franchisor?

<p>High setup costs and franchise fees.</p> Signup and view all the answers

Describe one risk associated with licensing.

<p>Risk of intellectual property misuse.</p> Signup and view all the answers

What does a wholly owned subsidiary provide that other entry modes may not?

<p>Full control over operations and brand.</p> Signup and view all the answers

Why might a company prefer joint ventures over establishing wholly owned subsidiaries?

<p>To share risks and access local market knowledge.</p> Signup and view all the answers

What is globalization, and how does it impact national economies?

<p>Globalization is the interaction and integration among people, companies, and governments worldwide, leading to economic interdependence among national economies.</p> Signup and view all the answers

Name two key characteristics of globalization.

<p>Multinational Corporations (MNCs) with global reach and technological advancements that facilitate faster travel and shipping.</p> Signup and view all the answers

How does globalization affect the concept of 'global consumers'?

<p>Global consumers drive the integration of markets by creating similar demands for products and services worldwide.</p> Signup and view all the answers

What are some advantages of globalization?

<p>Advantages include job creation, reduced costs, increased competitiveness, and technological innovation.</p> Signup and view all the answers

Identify a disadvantage of globalization.

<p>Globalization can increase social inequality and lead to job losses in developed countries due to outsourcing.</p> Signup and view all the answers

Explain how technology plays a role in globalization.

<p>Technology, such as microprocessors and the internet, accelerates globalization by enhancing communication and transportation capabilities.</p> Signup and view all the answers

What is internationalization, and how does it differ from globalization?

<p>Internationalization involves conducting business in multiple countries within a specific region, focusing on limited regional expansion unlike globalization, which is broader.</p> Signup and view all the answers

What does the Uppsala Model suggest about international business expansion?

<p>The Uppsala Model suggests that companies expand incrementally into foreign markets, gradually increasing their commitment.</p> Signup and view all the answers

What are the four stages of international market entry according to the content?

<p>Sporadic exports, export via independent representatives, establishing foreign sales subsidiaries, and setting up foreign manufacturing units.</p> Signup and view all the answers

What is 'local adaptation' in the context of international business?

<p>Local adaptation involves modifying products, services, and marketing strategies to align with local cultures and consumer preferences.</p> Signup and view all the answers

Give an example of a company that has adapted its product to suit local tastes and explain what they did.

<p>Coca-Cola created a guarana-flavored drink specifically for the Brazilian market.</p> Signup and view all the answers

What defines a 'glocal strategy'?

<p>A glocal strategy combines global standardization of products with local differentiation to suit specific markets.</p> Signup and view all the answers

Describe the differences between multidomestic and transnational business strategies.

<p>Multidomestic strategy focuses on high local responsiveness and low global integration, while transnational strategy emphasizes both high integration and responsiveness.</p> Signup and view all the answers

How did Avast localize its operations in Brazil to enhance its business performance?

<p>Avast adapted language, currency, and payment methods, which led to tripling conversion rates from 1% to 3%.</p> Signup and view all the answers

What is the primary advantage of adopting a glocal strategy for businesses?

<p>A glocal strategy builds strong relationships with local customers while enhancing profitability and brand relevance.</p> Signup and view all the answers

In the context of Stopford’s model, what is the significance of establishing manufacturing branches?

<p>Establishing manufacturing branches indicates a deeper commitment to local markets and can enhance efficiency and responsiveness.</p> Signup and view all the answers

What are the advantages of exporting as a market approach?

<p>Exporting is the simplest and lowest risk market approach, allowing companies to enter new markets without high investment.</p> Signup and view all the answers

How do joint ventures balance cooperation and conflict?

<p>Joint ventures involve collaboration between companies, sharing resources and risks, but can lead to conflicts due to differing objectives.</p> Signup and view all the answers

Describe the concept of culture according to Edward Tylor.

<p>Edward Tylor defines culture as a complex system that includes knowledge, belief, art, morals, law, and custom.</p> Signup and view all the answers

In what ways does social structure differ between Western and Eastern cultures?

<p>Western cultures emphasize individualism, while Eastern cultures focus on collectivism and community orientation.</p> Signup and view all the answers

What role does religion play in shaping cultural values?

<p>Religion provides shared beliefs and rituals that influence ethical systems and moral principles within a culture.</p> Signup and view all the answers

How does language reflect and shape culture?

<p>Language, both spoken and unspoken, reflects cultural values and norms, and multilingual environments may reveal diverse cultural perspectives.</p> Signup and view all the answers

What impact does education have on cultural values?

<p>Education instills societal values and norms, teaching individuals about obedience, respect, and punctuality.</p> Signup and view all the answers

Explain how political and economic philosophies can influence culture.

<p>Political systems shape individual freedoms and rights, while economic systems determine the level of state control over markets, impacting cultural practices.</p> Signup and view all the answers

What is the main difference between low and high power distance in Hofstede's framework?

<p>Low power distance emphasizes equality and decentralized authority, whereas high power distance acknowledges hierarchies and centralized authority.</p> Signup and view all the answers

How does individualism differ from collectivism according to Hofstede's cultural dimensions?

<p>Individualism focuses on personal independence and self-gratification, while collectivism emphasizes group harmony and shared resources.</p> Signup and view all the answers

What are the implications of high uncertainty avoidance in a workplace?

<p>High uncertainty avoidance leads to a preference for structured environments, detailed planning, and risk aversion among employees.</p> Signup and view all the answers

How do masculinity and femininity dimensions influence workplace values?

<p>Masculinity emphasizes achievement and traditional gender roles, while femininity values harmony, quality of life, and overlapping gender roles.</p> Signup and view all the answers

In what way do long-term and short-term orientation affect business strategies?

<p>Long-term orientation focuses on future goals and persistence, while short-term orientation emphasizes tradition and immediate results.</p> Signup and view all the answers

What role does indulgence play in cultural attitudes towards gratification?

<p>Indulgence allows for free gratification of desires and promotes leisure, while restraint emphasizes discipline and strict norms.</p> Signup and view all the answers

How can cultural differences shape workplace interactions?

<p>Cultural differences influence greetings, communication styles, and negotiation approaches in the workplace.</p> Signup and view all the answers

What is the importance of cross-cultural communication in a global business context?

<p>Cross-cultural communication enhances global workforce management, effective negotiations, and customer satisfaction in international markets.</p> Signup and view all the answers

Flashcards

Globalization

The process of interaction and integration among people, companies, and governments worldwide, leading to economic interdependence and impacting politics, culture, ecology, trade, and communication.

Multinational Corporations (MNCs)

Companies with a global reach and increasing power, influencing economies and markets worldwide.

Globalization of Markets

The merging of national markets into a single global marketplace, where companies face similar competitors and cater to shared consumer demands.

Globalization of Production

Sourcing goods and services globally to leverage cost and quality differences in labor, energy, land, and capital.

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Advantages of Globalization

Includes increased free trade, job creation, reduced costs, enhanced competitiveness, technological advancement, and global communication & information exchange.

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Disadvantages of Globalization

Includes social inequality, unfair labor practices, job losses in developed countries due to outsourcing, security risks, and ecological challenges.

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Internationalization

Conducting business in multiple countries, often within a specific region, with a focus on limited regional expansion.

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International Business

Companies engaging in trade or investment across borders, making decisions to either stay domestic or go global.

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Local Adaptation

Customizing products, services, and marketing to fit specific regional cultures, customs, and preferences.

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Glocal Strategy

A balance between global standardization and local customization, aiming to achieve both global reach and local appeal.

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Multidomestic Strategy

Focuses on adapting to local markets with minimal coordination across countries, prioritizing local needs over global integration.

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Global Strategy

Emphasizes standardization across global markets, offering the same products and services worldwide with minimal adaptation.

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Transnational Strategy

Seeks a balance between global integration and local responsiveness, leveraging global efficiencies while tailoring to local needs.

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International Strategy

Minimal global integration and local responsiveness, often characterized by exporting or setting up simple foreign operations.

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What are the core values of ESET?

The company's core values are fairness, honesty, and innovation.

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How did Avast localize its operations in Brazil?

Avast adapted its website and software to use Portuguese language, Brazilian real currency, and payment methods like installments and cash.

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Exporting

Selling goods or services to customers in another country. Can be direct (company manages sales) or indirect (through intermediaries).

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Licensing

Granting a foreign company the right to produce or sell your product in their market.

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Franchising

Providing a foreign company the right to use your brand, business model, and systems.

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Joint Venture (JV)

A partnership between two or more companies to create a new legal entity and share resources.

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Strategic Alliance

A flexible partnership between companies to share resources without creating a new entity.

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Wholly Owned Subsidiary

100% ownership of a company in a foreign market, either through building a new facility (greenfield investment) or buying an existing company (acquisition).

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Growth Opportunities

Expanding internationally can help businesses gain more customers, increase sales, and boost revenue.

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Cost Savings and Risk Diversification

International expansion can help businesses reduce operational costs and spread business risks across different locations.

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What are cultural values?

Abstract beliefs about what is considered good, right, or desirable within a society. They shape what people find important and influences their behavior.

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What are cultural norms?

Social rules that guide appropriate behavior within a society. They dictate how people interact and what is considered acceptable or unacceptable.

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What is social structure?

The way a society is organized, focusing on relationships and interactions between individuals and groups.

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Individualism vs. Collectivism

Individualism emphasizes individual rights and achievements. Collectivism emphasizes the needs of the group over individuals.

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Social mobility

The ability of individuals to move between different social strata based on factors like income, occupation, and family background.

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Religion and Ethical Systems

Shared beliefs about the sacred (religion) and sets of moral principles guiding behavior (ethical systems).

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Unspoken Language

Non-verbal communication through gestures, body language, and facial expressions. It plays a key role in conveying meaning and understanding.

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Education Influence on Culture

Institutions like schools and universities formally and informally transmit societal values, norms, and skills, shaping individuals' behavior and perspectives.

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Power Distance

The extent to which a society accepts unequal distribution of power, with high power distance indicating a hierarchical structure and low power distance signifying greater equality.

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Uncertainty Avoidance

A society's tolerance for ambiguity and risk. High avoidance prefers structure and predictable rules, while low avoidance embraces uncertainty and is more open to change.

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Masculinity vs. Femininity

Describes a society's emphasis on traditional gender roles and values. Masculine cultures prioritize achievement and material success, while feminine cultures value relationships, quality of life, and cooperation.

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Long-Term vs. Short-Term Orientation

This dimension relates to a society's focus on future goals vs. the present. Long-term orientation values persistence and saving, while short-term orientation prioritizes tradition and immediate results.

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Indulgence vs. Restraint

This dimension describes a society's attitude towards gratification and pleasure. Indulgent cultures allow free expression of desires, while restrained cultures emphasize control and discipline.

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How Culture Impacts Workplace Interactions

Cultural differences affect communication, negotiation, and greetings within a workplace. Understanding these differences fosters effective collaboration.

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Culture & Customer Relations

Understanding cultural preferences is crucial for successful marketing and product development. Tailor your strategy to local tastes and needs.

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Study Notes

Globalization Definition

  • Globalization is the interaction and integration of people, companies, and governments worldwide
  • Economic interdependence is a key aspect of globalization, integrating economies globally
  • Globalization impacts politics, culture, ecology, trade, and communication

Key Characteristics of Globalization

  • Multinational corporations (MNCs) have a growing global reach and influence
  • Technological advancements, such as faster travel and shipping, accelerate globalization
  • Governments reduce trade barriers to promote free trade

Globalization of Markets

  • National markets are merging into a single global marketplace
  • Companies face similar competitors globally (e.g., Coca-Cola and PepsiCo)
  • Global consumers drive market integration, creating shared demands

Globalization of Production

  • Companies source goods and services globally to leverage cost and quality differences in factors like labor, energy, land, and capital
  • Examples include Boeing 777 and Apple iPhone, which rely on globally sourced components, showcasing complex production networks

Advantages of Globalization

  • Encourages free trade and job creation
  • Reduces costs and increases competitiveness
  • Facilitates global communication and knowledge sharing
  • Promotes technological advancements and innovation

Disadvantages of Globalization

  • Increases social inequality between the rich and poor
  • Causes job losses in developed countries due to outsourcing
  • Raises security risks (e.g., terrorism, data protection)
  • Contributes to ecological challenges

Role of Technology

  • Innovations like microprocessors, telecommunications, the internet, and transportation accelerate globalization

Internationalization

  • Internationalization is conducting business in multiple countries, often within a specific region, focusing on limited regional expansion
  • Key aspects include international business across borders, decisions to "stay domestic" or "go global", and barriers like insufficient finances, knowledge, or productive capacity.

Theoretical Models for Internationalization

  • Uppsala Model: Companies gradually expand internationally - sporadic exports, exports via representatives, foreign sales subsidiaries, and foreign manufacturing units.
  • Stopford's Model: Gradual entry into foreign markets - initial export activities, branch establishment, and full ownership of foreign subsidiaries.

Local Adaptation

  • Adapting products, services, advertising, and communication strategies to align with local cultures, customs, traditions, and preferences

Glocal Strategy

  • Combining global standardization with local differentiation (Think Global, Act Local)
  • Global Strategy: Standardized products and promotion (e.g., Coca-Cola globally).
  • Local Strategy: Customized products and promotion (e.g., Kuat by Coca-Cola in Brazil); Localizing a global brand for a specific market.
  • Glocal Strategy: A mix of global and local strategies (e.g., McDonald's' global brand with local menus)

Case Studies

  • ESET (Slovakia): IT security company with operations in 22 countries, known for antivirus software like NOD 32.
  • Avast (Czech Republic): Cybersecurity firm localized operations in Brazil adapting languages, currency, payment methods.

International Business Strategies

  • Multidomestic: High local responsiveness, low global integration
  • Global: High integration, low local responsiveness
  • Transnational: High integration and responsiveness
  • International: Low integration and responsiveness

Reasons for Expanding Internationally

  • Growth Opportunities (gaining more customers, boosting sales, and increasing revenues)
  • Cost Savings and Risk Diversification (reducing operational costs and spreading business risks)
  • Strategic Positioning (enhancing brand visibility and market positioning globally)
  • Reputation and Local Demand (improving company reputation and responding to specific local needs)

Key Factors in Entry Mode Decision-Making

  • Market size, growth potential, market share
  • Product type and marketing strategy
  • Time horizon and company involvement level
  • Target market characteristics

Entry Modes

  • Exporting (direct and indirect)
  • Licensing
  • Franchising
  • Joint Ventures/Strategic Alliances
  • Wholly Owned Subsidiaries

Determinants of Culture

  • Social Structure: Individuals vs. groups, social stratification
  • Religion and Ethical Systems: Shared beliefs and rituals about the sacred, ethical philosophies
  • Language: Spoken and unspoken communication
  • Education: Societal values, respect, and punctuality are taught
  • Political and Economic Philosophy: Influence individual freedoms, different types of economies (e.g., market vs. command)

Dimensions of Culture (Hofstede's Framework)

  • Power Distance: Equality vs. hierarchy
  • Individualism vs. Collectivism: Focus on self vs. group
  • Uncertainty Avoidance: Preference for certainty vs. ambiguity
  • Masculinity vs. Femininity: Traditional gender roles vs. equality
  • Long-Term vs. Short-Term Orientation: Future-oriented goals vs. tradition
  • Indulgence vs. Restraint: Freedom of gratification vs. discipline

Impact of Culture on Business

  • Cultural differences shape workplace interactions (greetings, communication styles, and negotiations), corporate structure (hierarchy, labor relations), and customer relations (marketing and product development).

Importance of Cross-Cultural Communication

  • Understanding and respecting cultural differences enhances global workforce management, effective negotiations, and customer satisfaction in international markets.

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Description

Explore the multifaceted concept of globalization, which includes the interaction and integration of economies, cultures, and politics on a global scale. This quiz covers the characteristics, market trends, and influences of globalization, highlighting key players and technological advancements. Test your understanding of how globalization shapes our world today.

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