Globalization and International Business PDF

INTERNATIONAL BUSINESS Globalization and International Business Course Content Deglobalization? Part 1: Introduction to Part 2: The context of Part 3: Competing in the International Business International Business Global M...

INTERNATIONAL BUSINESS Globalization and International Business Course Content Deglobalization? Part 1: Introduction to Part 2: The context of Part 3: Competing in the International Business International Business Global Market Topic 1: Globalization and Topic 3: Regional Economic Topic 5: Internationalization International Business Differences Decisions and Strategy The globalization of markets Political systems International strategy as a and production Economic systems framework The drivers of globalization Economic development and Basic decisions to enter Companies in a changing international business foreign markets global economy Entry methods Globalisation and society Topic 2: International Trade and FDI Topic 4: National Cultural Topic 6: Organizational Design Theories Differences The theory of international The concept of culture Organizational structures trade Social structures Cultural organization International business and Values and belief systems Global value chains foreign direct investment (FDI) Language and education Public policies regarding FDI Course Structure Main 01 To understand the term globalization Objectives 02 To identify its main drivers 03 To recognise the changing nature of the global economy 04 To consider the main points in the globalization debate 05 To understand the main challenges and opportunities for the international management of companies There are still ongoing debates... Globalization or Deglobalization? Globalisation is dead and we need to invent а new world order А book excerpt and interview with Michael O'Sullivan, author of "The Levelling" International Institute for Management Development, by Richard Baldwin, Simon J. Evenett, Fernando Martín Published 30 December 2023 in 2024 trends Additional articles or other resources suggested for this topic are available in Moodle Debates Are we experiencing a deglobalization process? Will globalization survive nowdays geopolitical, social, and economic uncertainty? Who are the winners in this process? You can structure your arguments considering different areas of impact (e.g. society/culture, economic, politics, etc.) GLOBALIZATION - the speedup of movements and exchanges of people, goods, services, capital, technologies, or cultural practices all over the planet* GLOBALIZATION - the increased interconnectedness and interdependence of peoples and countries (the World Health Organization) *https://youmatter.world/en/definition/definitions-globalization-definition-benefits-effects-examples/ Global Trends In 2023, international business transactions were valued at…. > 31 trillion US $ (goods and services) Trade growth: strongly negative for goods but still positive for services Sources: UNCTADstat; UNCTAD calculations based on national statistics. Note: Quarterly growth is the quarter over quarter growth rate of seasonally adjusted values. Annual growth refers to the last four quarters. Figures for Q3 2023 are estimates. Global Trends: Regional trade growth in goods during 2023 Sources: UNCTAD estimates based on national statistics. Note: Quarterly growth rates are relative to the previous quarter. Annual growth refers to the last four quarters. IR denotes intra-regional. Data is seasonally adjusted. Data does not include trade in services. Imports and exports exclude intra-EU trade.  Global trade trends at the sectoral level Among general declines, the trade of apparel and communication equipment rebounded in 2023 Sources: UNCTAD estimates based on national statistics of China, the European Union, and the United States. Note: Quarterly growth is the quarter over quarter growth rate of seasonally adjusted values. Annual States growth refers to the last four quarters.. Global Trends The decline in global trade is driven by developing countries and South-South trade Developing and developed countries’ trade growth in goods Sources: UNCTAD estimates based on national statistics Note: Quarterly growth rates are relative to the previous quarter. Annual growth refers to the last four quarters. Data is seasonally adjusted. Data does not include trade in services. Global Trends Merchandise trade has decreased across major economies Sources: UNCTAD estimates based on national statistics Global Trends Merchandise trade has decreased across major economies Sources: UNCTAD estimates based on national statistics Global Trends Volume of world merchandise trade, 2019Q1-2024Q4 Sources: WTO and UNCTAD for historical data, WTO Secretariat estimates for forecasts Global Trends Commercial services trade growth of selected economies in the first half of 2023 Sources: WTO and UNCTAD estimates  Changes in rankings for commercial services tradersamong the world’s top 100, 2020-22 Rank Changes in rankings for merchandise traders in the world’s top 100, 2019-22 Rank Sources: WTO and UNCTAD estimates Changing World Output and World Trade In the 1960s: The U.S. dominated the world economy, world trade, and global FDI U.S. multinationals dominated the international business scene About 50% of the world—the centrally planned economies of the communist bloc—was off- limits to the West U.S. - dominant industrial power accounting for about 40.3% of world manufacturing output (WMO) Changing World Output and World Trade By 2024: U.S. accounted for only 16,6% Other developed nations experienced a similar decline Rapid economic growth now in countries like China (28,4% of WMO), India (3.3% of WMO) So, companies may find both new markets and new competitors in the developing regions of the world Global Trends Leading merchandise traders China remained the top merchandise exporter in 2022 but its share in world exports declined to 14% (from 15% in 2021). The United States (8% of world trade) and Germany (7%) were ranked in second and third positions. Sources: WTO and UNCTAD estimates CHANGING FOREIGN DIRECT INVESTMENT (FDI) The share of world output generated by developing countries has been steadily increasing since the 1960s Cross-border flows of foreign direct investment have declined in the last years, even before COVID In 2023 the United States was the leading FDI recipient worldwide, followed by Brazil, Canada and Mexico. The United States was also the major investor worldwide, followed by China and Japan. Global foreign direct investment Source: UNCTAD World Investment Report 2024 (https://unctad.org/publication/world-investment-report-2024) Global foreign direct investment Investment trends by region, 2023 vs 2022 Source: UNCTAD, based on FDI/MNE database (www.unctad.org/fdistatistics and information from The Financial Times Ltd, fDi Markets (www.fDimarkets.com) and Refinitiv SA. THE CHANGING MULTINATIONAL ENTERPRISE Globalization has led to a slight decline in the dominance of U.S. firms in the global marketplace In 1973, 48.5 % of the world’s 260 largest MNEs were U.S. firms By 2022, 233 (46%) of the world’s 500 MNEs were from the U.S., 20 were from France, 18 from Germany, 21 were from Britain, 28 were from Japan and 44 were from China Small and medium-sized firms are now expanding internationally It has become easier to build international sales through the Internet Economic GLobalization: a more integrated global economic system The two sides of globalization Market Manufacturing Globalization Globalization Market globalization: the movement from national markets to a more global market place Globalization of manufacturing: the supply of goods and services from different locations around the world Sourcing for Dell Inspiration Notebook Computer Source: Freidman, T. (2005). The world is flat. New York: Farrar, Straus and Giroux, 488. Dell Inspiron600m Notebook: Key Components and Suppliers (From 'The World Is Flat' by Thomas Friedman ) THE EMERGENCE OF GLOBAL INSTITUTIONS To administrate, regulate and oversee the global market and to promote multinational treaties that control the global business system WTO was established in 1995. It is in charge of the standards that control trade between countries. It also oversees the compliance of the commercial treaties signed by its members. IMF was founded in 1944. Its mission is to maintain order in the international monetary system. G20 was created in 1999. The forum is made up of 19 countries and the EU. Its goal is to reach worldwide economic stability through the coordination of politics and the promotion of financial regulations. UN was created in 1945. Its goal is to maintain peace through international cooperation and collective safety. World Bank Group was created in 1944 to promote economic development. Its focus is on giving loans to troubled governments to build up basic infrastructures. COMPANIES IN A CHANGING GLOBAL ECONOMY Lenovo’s story begins in Beijing in 1984. In 2024 Lenovo led the PC market with a 24% market share Samsung Electronics Group, the largest South Korean chaebol, business conglomerate that is a a global leader in smartphones, semiconductors, and consumer electronics Toyota is expected to be the top automobile manufacturer by sales in 2024, ahead of Volkswagen (second) and Hyundai-Kia (third) TATA - India´s best-known global brand. Established in 1868, this family-owned company has expanded into over 100 countries and operates in sectors ranging from steel and automotive to IT services. In 2008 acquired the Jaguar Land Rover (from Ford) Largest public footwear company in Latin America. Perceived as a premium brand that collaborates with high-end designers and events like the Cannes Film Festival COMPANIES IN A CHANGING GLOBAL ECONOMY: CHERY China, a country with over 1.3 billion inhabitants, represents one of the world’s largest consumer markets China’s car market is forecasted to grow at an impressive 9% annually, reflecting the rapid urbanization The goal of most companies in the industry is to tap into China’s burgeoning demand for automobiles Local manufacturers have been rising rapidly to compete with international giants. Chery Automobiles, founded in 1997 in Wuhu, is a notable example Starting as a small state-owned enterprise, Chery has grown into one of China’s largest automobile exporters, with 25% of its vehicles sold internationally across more than 80 countries blending Italian design, Austrian engineering, and components from the US, all assembled in China  What specific objectives can be achieved through the globalization of manufacturing and markets? 01 Market Globalization 02 Manufacturing Globalization Drive down production cost Increase product quality Leverage global supply chains Design in one country, produce components in another Export around the world Assemble in different countries Expand global market share Enhance brand recognition Access technological advancements Diversify revenue streams  The Changing World Order 1 2 3 4 The collapse of communism Economic development Importance of Southeast Free market reforms and the in Eastern Europe > in China > Asia > spread of democracy in Latin export and investment huge opportunities despite growing consumer markets America > opportunities the continued control of the and manufacturing hubs new markets and new sources of Communist Party materials and production The Global Economy in the 21st Century New opportunities but, political for firms and economic A more disruptions can integrated throw plans into global economy disarray than ever The drivers of globalization What key strengths have driven and intensified the process of economic globalization? Reduction of barriers Speed up of to commerce and technological change investments Barrier reduction to commerce and investment International commerce: a company exports services or goods to consumers in another country Foreign direct investment (FDI): a company invests its resources in business activities outside its home country Western Search of countries work protection to eliminate Uruguay against outside barriers, Round, WTO competition GATT* Decades 20, 30 End WWII 1993 Intense acceleration in the volume of commerce and worldwide investment *GATT - General Agreement on Tariffs and Trade (1947) The role of technological change Important advances in communication, information processes and transport Impact of microprocessors on The development of commercial communication and airplanes, cargos and containers have coordination/control within global facilitated transports organizations Moore’s Law (1965) predicts that the power of microprocessor technology will double and its cost of production will fall in half every 18 months. As this happens, the cost of global communication plummets, lowering the cost of coordinating and controlling a global organization.  WHAT HAPPENS IN AN INTERNET MINUTE?* ** *Moore’s Law impact on the development of the data center sector **Google's Amazing Floating Data Centers https://www.stelliumdc.com/moores-law-impact-on-the-development-of-the-data-centre-sector/ https://www.youtube.com/watch?v=ZYNwIfCb440 The Drivers of Globalisation The Shrinking Globe 1500-1840 1850-1930 1950s 1960s 1990s The best average speed of Steam locomotives Propeller aircraft, Jet passenger Cyberspace horse-drawn coaches and average 65 mph. 300-400 mph. aircraft, information in sailing ships, 10 mph Steamships average 36 500-700 mph seconds mph The role of technological change Implications of technological change 01 Market Globalization 02 Manufacturing Globalization Reduced communication costs facilitate Economic opportunities from dispersed value the creation of global electronic markets chains including enhanced efficiency, flexibility, and contribute to the convergence of and integration, leading to more effective tastes and preferences responses to international clients' demands And future economical implications? Is future in balance? How are countries pursuing an advantage in AI?