Globalization and International Business Notes PDF

Globalization and International Business Notes KEY VOCABULARY ​ Globalization ○​ The process of exchanging goods, services, information, ideas, and culture across international borders for businesses to become more connected and interdependent ​ Tr...

Globalization and International Business Notes KEY VOCABULARY ​ Globalization ○​ The process of exchanging goods, services, information, ideas, and culture across international borders for businesses to become more connected and interdependent ​ Trade Barriers ○​ The government placed restrictions and regulations that limit international trade ○​ Tariffs, quotas, subsidies, and embargoes ​ Export and Import ○​ Exports are goods and services that a country produces and sells to other countries ○​ Imports are goods and services purchased by one country from another ​ Multinational Corporation (MNC) ○​ A company that operates across various countries around the world ○​ Amazon, Microsoft, Mcdonalds, Starbucks, Walmart, and Volkswagen Examples of Starbucks operated in different countries ​ Supply Chain Management (SCM) ○​ Monitoring the production and distribution of goods to find ways to improve them GLOBALIZATION The process of exchanging goods, services, information, ideas, and culture across international borders for businesses to become more connected and interdependent. Key Aspects of Globalization: 1.​ Economic Integration: Countries are more connected through trade and investment, allowing businesses to source materials, products, and labor from around the world. 2.​ Technological Advancements: Improvements in digital communication, transportation, and logistics have made international trade easier and cheaper. 3.​ Cultural Exchange: Globalization helps spread ideas, culture, and consumer preferences across borders. 4.​ Global Supply Chains: Companies get different parts of their products from various countries, creating complex supply chains. Impact of Globalization on Businesses: 1.​ Expanded Markets: ○​ Access to New Customers: Companies can reach consumers in foreign markets, boosting revenue and growth. ○​ E-commerce: Online platforms allow businesses to sell products worldwide, even from smaller or less accessible regions. 2.​ Increased Competition: ○​ More Global Rivals: Companies face competition not just locally, but globally, which can drive innovation, lower costs, and improve products. ○​ Price Pressure: Sourcing cheaper goods from other countries makes price competition fiercer, challenging profitability. 3.​ Branding and Marketing: ○​ Global Branding: Businesses can create a brand that appeals to many regions, often with tailored marketing strategies. ○​ Increased Exposure: Global visibility means managing a brand’s reputation across different markets, which can be tricky. Challenges and Risks: ​ Cultural Missteps: Not understanding local customs and preferences can alienate customers and damage a brand. ​ Economic Dependence: Relying on global supply chains can make companies vulnerable to disruptions like political tensions or pandemics. ​ Environmental Impact: Global businesses may face increasing pressure to adopt sustainable practices and reduce the environmental impact of their global operations. INTERNATIONAL BUSINESS International business refers to the trade of goods and services internationally but only operates facilities in its country of origin. This is in contrast to global companies, which operate in multiple countries and offer their services and goods in said countries. Key Aspects of an International Business: 1.​ Cultural Awareness: Cultural Differences are crucial for international businesses as understanding and respecting diverse cultures and traditions is important for success. 2.​ Cross-Border Operations: International Businesses participate in cross-border trade to expand their reach globally. Businesses can serve customers in places where there is a higher demand for services and goods. 3.​ Collaboration: The ability to collaborate and work together is necessary for an international business. Collaboration may increase domestic and international sales. Successful Business Example: 1.​ Apple ○​ Strong Brand Identity: Apple has a strong brand identity due to its focus on innovation, design, and customer experience. Employees are pushed to think outside the box and develop new ideas. ○​ Localization of Products: Apple products support up to 40 different languages and keyboard layouts to make their electronics easier to use for customers worldwide. They often add cultural elements such as cultural holidays and art styles. ○​ Global Supply Chain: To grow more internationally and become more efficient Apple partnered with manufacturers such as Foxconn and Pegatron in China. This also improved delivery time to international markets. HOW BUSINESSES ADAPT TO NEW MARKETS Continuous monitoring of market trends Monitoring trends will better your understanding of customers and meet consumer needs before the competition. Identifying threats or changes in the market like regulations and economic shifts can help save your business Consumer behaviours Consumer behaviours are how people decide what to buy based on their needs, preferences, and outside influences. This knowledge is crucial for businesses adapting to new markets because it enables companies to adjust their products and strategies to successfully become more popular internationally. Competitor Actions Competitor actions include changing prices, launching new products, running marketing campaigns, improving quality, and expanding into new markets. This is important for businesses launching in unfamiliar environments because it helps with understanding the market, consumer preferences, and potential threats. BENEFITS AND CHALLENGES OF GLOBAL TRADE Benefits of Global Trade: 1.​ Specialization and Efficiency: ○​ Comparative Advantage: Countries focus on producing what they do best, leading to better use of resources and higher productivity. ○​ Cost Reduction: Businesses can access cheaper materials and labor, lowering production costs and reducing prices for consumers. 2.​ Access to a Variety of Goods and Services: ○​ Product Diversity: Consumers enjoy a wider range of products from around the  world, improving choice and quality of life. ○​ Innovation and Technology Transfer: Countries can share new technologies, helping to improve products and services globally. Challenges of Global Trade: 1.​ Economic Disparities and Inequality: ○​ Unequal Benefits: Wealthier countries often benefit more, while poorer nations struggle to access global markets. ○​ Income Inequality: Trade can widen the gap between high- and low-skilled workers within countries, as some industries gain while others lose. 2.​ Environmental Degradation: ○​ Resource Overuse: Increased production and consumption can deplete natural resources, cause deforestation, and increase pollution. ○​ Carbon Emissions: Transporting goods globally creates significant carbon emissions, contributing to climate change. LOCAL VS. GLOBAL BUSINESS STRATEGIES Local Business Strategy Local Business Strategies: 1.​ Adaptation to Local Preferences: Products and services are customized to suit the tastes, cultural norms, and buying behaviors of the local market. For example, a fast-food chain may offer region-specific menu items in different countries. 2.​ Localized Marketing: Marketing campaigns, branding, and communications are customized to resonate with local audiences, taking into account language, cultural values, and local trends. 3.​ Focus on Local Resources: Local sourcing, hiring, and partnerships are emphasized to better integrate with the community and reduce logistical complexity. Global Global Business Strategies: 1.​ Standardization: Products, services, marketing, and branding are designed to appeal to a wide range of markets without significant adaptation. For instance, a tech company like Apple markets its products in similar ways around the world. 2.​ Economies of Scale: By standardizing products and processes, companies can achieve economies of scale, reducing unit costs and increasing efficiency. 3.​ Centralized Control: Global strategies typically involve centralized decision-making to ensure consistency in branding, operations, and management across different countries.