Globalization Theorytical Base PDF

I. GLOBALIZATION.................................................................................................................................... 1 1.1. What is GLOBALIZATION?......................................................................................................

I. GLOBALIZATION.................................................................................................................................... 1 1.1. What is GLOBALIZATION?............................................................................................................. 1 1.2. Level of GLOBALIZATION.............................................................................................................. 3 1.2.1. The Globalization of markets................................................................................................... 3 1.2.2. The Globalization of Production.............................................................................................. 3 1.3. Drivers of GLOBALIZATION........................................................................................................... 3 1.3.1. DECLINING TRADE AND INVESTMENT BARRIERS.................................................................... 3 1.3.2. ROLE OF TECHNOLOGICAL CHANGE:........................................................................................ 4 1.4. Opportunities and challenges...................................................................................................... 4 1.5. International economic organizations......................................................................................... 4 II. INTERNATIONAL BUSINESS.................................................................................................................. 5 2.1. Concept......................................................................................................................................... 5 2.2. Types of International Business................................................................................................... 6 2.3. The Participants in International Business.................................................................................. 9 2.4. The Motivations Behind Engaging in International Business................................................... 10 2.4.1. Increase Revenue (push)........................................................................................................ 10 2.4.2. Resources (Pull)...................................................................................................................... 10 Labour cost]............................................................................................................................................ 10 CHAPTER 1: OVERVIEW OF INTERNATIONAL BUSINESS I. GLOBALIZATION 1.1. What is GLOBALIZATION? Globalization is a term used to describe the increasing connectedness and interdependence of world cultures and economies. Globalization is the connection between different countries around the world. - Classification: Economic globaization, Cultural Globalization, Political Globalization + Economic globalization refers to the widespread international movement of goods, capital, services, technology and information. It is the increasing economic integration and interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods, services, technologies and capital + Cultural globalization refers to the transmission of ideas, meanings and values around the world in such a way as to extend and intensify social relations. E.g. Cultural exchange + Political globalization is the growth of the worldwide political system, both in size and complexity. E.g. United Nations  Internationalization Globalization Content It refers to the expanding an It refers to the strengthening of organization beyond its initial connectivity, interaction and national boundaries. interdependence between nations, cultures and peoples Key Expanding business activities The fast flow of goods and point services, people and capital. Results Increasing the brand of company Removal trade barriers, emergence and promoting the world of open and free markets, economy towards globalization increased migration,… Expanding business activities The Features of Globalization 1. Economy: allowing economic groups to take advantage of their strengths to cooperate with other countries→ Reducing the production costs, labor, fuel sources... 2. Society: leads to greater connectivity among residents in different economic areas. 3. Political: creating many big political organizations to protect the rights of investing units and invested units. 4. Legal: changing the way international law is created and enforced 5. Cultural: creating cultural exchanges, showcasing the distinctive artistic traits of music, cuisine, and more from countries around the world. ROLE OF GLOBALIZATION 1. Promote the complementary strengths of the both sides 2. The investment trade market has been expanded and increased in competitiveness. 3. Increase income, create jobs 4. Improve living standards and living conditions of residents and build residential culture 5. Use each country's resources wisely 6. Improve the level of scientific and technological expertise 7. Make a wide range of jobs that are appropriate for the current economic status Globalisation Manifestation Integration: Integration and cooperation between countries Economic Union: The Economic Unions increase quickly Finance: The increase of global investment and financial flows Assimilation: The trends in consumer assimilation of lifestyle and preferences  Globalization: The trend of globalization of companies' production activities 1.2. Level of GLOBALIZATION 1.2.1. The Globalization of markets The process of integrating separate national markets into a unified market. Global products are products that have been sold in all countries without any significant changes in their essence.. → The global market is becoming increasingly unified in terms of "taste." 1.2.2. The Globalization of Production The sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital). The stages in the product's value creation chain are increasingly globalized to create the best quality for the product at the cheapest cost. 1.3. Drivers of GLOBALIZATION 1.3.1. DECLINING TRADE AND INVESTMENT BARRIERS - What is Trade barriers: Trade barriers are restrictions or limitations faced by parties involved in a trade. Restrictions caused by trade barriers hinder the transfer of goods Trade barriers are legal measures put into place primarily to protect a nation’s home economy. They typically reduce the quantity of goods and services that can be imported. Types of Trade Barriers: Tariffs and Non-tariffs + Tariffs (thuế quan-thuế xuất nhập khẩu) are monetary barriers in the form of taxes imposed on imported or exported goods. + Nontariff barriers (phi thuế quan – phi thuế xuất nhập khẩu) consist of a range of non-monetary measures, such as: regulations, requirements, conditions…. Nontariff barriers (hàng rào phi thuế quan): LICENSES, QUOTA, EMBARGOES (LỆNH CẤM VẬN), IMPORT DEPOSIT o examples: o CPTPP (hiệp định đối tác toàn diện và tiến bộ xuyên thái bình dương) members will eliminate import duties of 97% - 100% tariff lines for goods originating from Viet Nam o EU will eliminate tariffs for 77,3% of Vietnam's exports A quota (hạn ngạch xuất nhập khẩu) is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period. đại lượng thể hiện giới hạn tối đa (về khối lượng hoặc giá  trị) của hàng hóa được phép xuất hoặc nhập khẩu trong các hợp đồng ngoại thương. Thông thường Quota sẽ giới hạn theo thị trường xuất nhập khẩu và thời gian. 1.3.2. ROLE OF TECHNOLOGICAL CHANGE: Communications: - Since World War II has been the development of the microprocessor (bộ vi xử lý), which enabled the developments in satellite, optical fiber, wireless technologies, and of course the Internet. - Transportation Technology Advances in transportation are helping to globalize markets and production. The cost of shipping has been cut by 80% The speed of transportation has increased by 90% 1.4. Opportunities and challenges OPPORTUNITIES CHALLENGES o Increase sales and profits o There are differences between o Access to external resources countries o Reducing the risk of competition o The problems that arise in o Dispersing consumption markets international business are much and sources of supply more complex o Regulated by other countries' governments o Problems arise regarding the use of different currency systems 1.5. International economic organizations o Organizations o Help manage, regulate, and police the global marketplace o Promote the establishment of multinational treaties to govern the global business system ▪ the General Agreement on Tariffs and Trade (GATT)” Hiệp ước chung về thuế quan và mậu dịch” ▪ the World Trade Organization (WTO) ▪ the International Monetary Fund (IMF) ▪ the World Bank ▪ the United Nations (UN) o The International Monetary Fund (1944) maintains order in the international monetary system  o The World Bank (1944) promotes economic development o The United Nations (1945) ▪ maintains international peace and security ▪ develops friendly relations among nations ▪ cooperates in solving international problems and in promoting respect for human rights ▪ is a center for harmonizing the actions of nations II. INTERNATIONAL BUSINESS 2.1. Concept International business refers to economic activities across the boundaries of nation–states, of which trade and foreign investment are the most important. + more than 2 countries + Implement the investment process, from production to product consumption for profit purposes. Meaning Business transactions are Business transactions with one conducted within the country’s or many countries all over the boundary world Active area Domestics Global Quality standard Quite low High Currency Fewer Variety of currency systems Capital investment Less Huge Drawback Few Many Customers’ characteristics Homogeneous Not homogeneous Business research Easy to conduct Hard to conduct Shift of production factors Free Restricted CHARACTERISTICS OF INTERNATIONAL BUSINESS 01. The activity of business take place between countries 02. Conducted abroad, so it faces more risks than domestic business. 03. Taking place in a new business environment, businesses must adapt 04. Create conditions for businesses to increase profits by expanding markets 2.2. Types of International Business International Trade Contract Investment Export: Selling  Licensing (hợp đồng Foreign Direct products and services cấp phép): Licensing is Investment (FDI) is a to other nations defined as the granting form of investment Import: Buying goods of permission by the where capital or and services from licenser to the licensee assets are transferred other countries to use intellectual to another country for property rights, such as International the purpose of trademarks, patents, Processing (gia công conducting business, brand names, or quốc tế): The party technology for a which is directly ordering the specified payment. managed and outsourcing puts in The Licensee(bên operated by the raw materials or sells nhận phép): “DO YOU investor. They are finished products to GIVE ME PERMISSION fully responsible for the outsourcing TO USE YOUR the business results of recipient. After some TRADEMARK?” the project. time, the outsourcing The Licenser (bên cấp Indirect Foreign recipient either phép): “OK! YOU HAVE Investment (IFI) is a submits or resells the TO PAY ME A SUM OF form of foreign products to the party MONEY.” investment where that ordered the Franchise (nhượng capital is brought into outsourcing and earns quyền kinh doanh): A another country for a processing fee. franchise is a type of investment purposes Re-export (tái xuẩt- license that grants a without direct franchisee access to a liên quan đến tạm participation and franchisor's proprietary nhập): abroad goods management of the business knowledge, that were previously processes, and investment target, or imported but not trademarks, thus through purchasing processed. Tái xuất là allowing the franchisee shares in foreign quá trình tiếp nối của to sell a product or countries or lending. hoạt động tạm nhập. service under the E.G. Foreign Direct Investment Sau khi làm thủ tục franchisor's business –FDI thông quan nhập name. In exchange for - The capital is invested by khẩu vào Việt Nam, acquiring a franchise, Coca Cola Company in the hàng hóa sẽ được the franchisee usually United States for Coca Cola pays the franchisor an Company in Vietnam  xuất đi một quốc gia initial start-up fee and - The capital is invested by khác. annual licensing fees. Nestle Company in the Transshipment The Franchisee (bên SWITZERLAND for Nestle (chuyển tải): The nhận quyền): “CAN Company in Vietnam purchase of goods from YOU FRANCHISE ME Foreign Institutional a country to sell to YOUR BRAND?” Investment –FII/ Foreign another country outside The Franchisor (bên Portfolio Investment -FPI of Vietnam without nhượng quyền):” OK! I Foreign companies/funds going through the WILL ADVISE YOU IN YOUR BUSINESS invest in Vietnamese import procedures into ACTIVITIES. YOU HAVE enterprises with a ownership Vietnam and without executing the export TO GIVE ME A SUM OF ratio of less than 50%. procedures out of MONEY” Vietnam. Chuyển tải,  Exclusive/sole agent chuyển hàng hay (đại lý độc quyền): Là chuyển tải là việc vận đại lý duy nhất được chuyển hàng hóa hoặc giao thực hiện một công-te-nơ đến một công việc nào đó trên điểm đến trung gian, một vùng lãnh thổ sau đó đến một điểm nhất định. đến khác. sự khác nhau cơ bản On-spot export (xuất giữa hợp đồng cấp khẩu tại chỗ): Goods giấy phép và hợp produced in Vietnam đồng đại lí đặc quyền for sale to foreign là ở chỗ người đưa ra traders but delivered đặc quyền không chỉ to other enterprises tạo cho người đại lí based in Vietnam and đặc quyền việc sử designated by foreign dụng tài sản vô hình traders. là một hình của mình mà còn thực thức doanh nghiệp hiện tiếp tục sự giúp Việt Nam bán hàng đỡ đối với người nhận hóa cho doanh nghiệp đại lí đặc quyền trong nước ngoài ngay tại hoạt động kinh trên lãnh thổ Việt doanh. Nam  The order: A order- based contract (hợp đồng theo đơn đặt hàng) is a type of contract commonly used in large and diverse projects that have detailed components, often involving very  complex issues related to capital and management technology. The parties are unable to manage these challenges on their own and must sign a contract based on the purchase order for each phase and stage of the project.  Build and transfer(hợp đồng xây dựng – chuyển giao, hợp đồng BT: A Build operate transfer is an contract in which a foreign investor invests capital to build a project and operate it for a specified period of time, after which the project is transferred back to the host country in a well-functioning state, with the host country not having to compensate the foreign party for the assets.  Product division (agreement) thoả thuận phân phối sản phẩm– is a type of contract in which two or more parties sign an agreement to contribute capital in order to carry out business activities, and the products will be distributed among  the parties according to their contribution ratios or mutual agreements.  Management contracts: Management contract refers to a system of outsourcing the operational control of a firm to a different firm for it to perform all the managerial functions in exchange for certain fees under a legal agreement A FIRM:” I DON’T KNOW HOW TO MANAGE MY JOBS!” Management Company: “OK! I’LL SEND MY EMPLOYEES TO YOU.” 2.3. The Participants in International Business 01. Enterprise small and medium-sized enterprises Multinational Company (MNC/ MNE) (SMEs) A multinational corporation (MNC) is a Small and midsize enterprises are company that has business operations in at businesses that maintain revenues, assets, least one country other than its home or a number of employees below a certain country and generates revenue beyond its threshold. Each country has its own borders. definition of what constitutes a small and Eg: Sony (Japan), Coca Cola, Samsung midsize enterprise. Certain size criteria must Electronics … be met, and occasionally, the industry in which the company operates is taken into account as well 02. Consumer: have a demand for high-quality products from international companies. 03. Finance Institutions: assist companies engaged in international business activities through financial investment, currency exchange, and global transfers. 04. Government: regulate the flow of goods, services, labor, and capital across national borders.  05. Employee 2.4. The Motivations Behind Engaging in International Business 2.4.1. Increase Revenue (push) 05. Small Market Size 06. Decreased Demand 07. The saturated market. 08. The product is entering a stage of decline. 09. The fierce competition. 10. Low profit margin 11. Business conditions, limited resources. 12. Excess capacity 13. The pressure to exploit economies of scale/location. 2.4.2. Resources (Pull) 01. Large Market Size 02. Increased Demand 03. beneficial conditions 04. High profit margin 05. Government incentive policy. 06. Comparative advantage, available resources  Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is used to explain why companies, countries, or individuals can benefit from trade.  Opportunity cost represents the potential benefits that a business, an investor, or an individual consumer misses out on when choosing one alternative over another e.g RONALDO: Painting a house during 8h Mr A paints a house during 10h Advertise 8h= 50.000 USD With 100 USD  RONALDO’s Opportunity Cost : 49.900 USD Labour cost] Table 1 – Labour Cost of Production  Product England (hours) Portugal (hours) Wheat 10 15 Wine 15 30 PORTUGAL ANH 1 wine = 2 Wheat 1 wine = 1,5 Wheat 1 wheat = 0.5 wine 1 wheat= 2/3 Wine WHEAT WINE Bảng 2 - Trước khi có thương mại Quốc gia Số đơn vị lúa mì Số đơn vị rượu vang Bồ Đào Nha 8 5 Anh 9 6 Tổng cộng 17 11 Nếu Bồ Đào Nha chỉ sản xuất lúa mì còn Anh chỉ sản xuất rượu vang rồi trao đổi thương mại với nhau thì số lượng sản phẩm được sản xuất ra sẽ là: Bảng 3 - Sau khi có thương mại Đất nước Số đơn vị lúa mì Số đơn vị rượu vang Bồ Đào Nha 18 0 Anh 0 12 Tổng cộng 18 12