Globalization, in terms of business, is "the growing integration and interdependence of the world's economies." Otherwise, it can be defined as "the integration of the world's economies in terms of economics, sociology, and politics."
2. What are the indicators of Globalization? List 3.
- Higher levels of foreign direct investment.
- Greater cultural awareness and exchange, such as the export of cultural foods.
- Higher spending on international travel and tourism.
2008:
- Belgium
- Austria
- Sweden
- Switzerland
- Denmark
- Netherlands
- UK
- Czech Republic
- France
- Finland
2010:
- Belgium
- Austria
- Netherlands
- Switzerland
- Sweden
- Denmark
- Canada
- Portugal
- Finland
- Hungary
4. What are the factors contributing to the growth in globalization? Make sure you understand terms such as liberalization and deregulation.
- The liberalization of international trade (the removal of global trade barriers)
- Technological progress
- The deregulation of business activity (decrease in costs of transportation & distribution)
- Growth in cultural awareness and recognition
- Language (e.g. English as a business language)
- Increases the level of competition
- Meeting customer expectations and needs
- Benefits of economies of scale
- Greater choice of location (production facilities)
- Mergers, acquisitions and joint ventures
- Increased customer base
"A business organization that operates in two or more countries"
7. Why become a multinational?
- Widen their customer base
- Benefit from economies of scale (production levels must increase)
- Avoid protectionist policies
- Cheaper production costs (inexpensive labor)
- Spread risks
- Globalization of markets
- Lack of knowledge and/or experience
- Storage, transportation and distribution costs
- External factors
- Political and economic conditions in foreign countries
- Infrastructure may be less developed
- Creates jobs (benefit)
- Boost gross domestic product (benefit)
- Technology transfer (benefit)
- Competition (benefit/limitation)
- Unemployment (limitation)
It's the process of sharing skills, knowledge, technologies, methods of manufacturing, samples of manufacturing, and facilities among governments and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then develop and exploit the technology into new products, processes, applications, materials or services.
11. Which businesses are most at risk when an MNC sets up in a host country? Why is this?
Domestic businesses, particularly ones on a small scale, are at high risk when an MNC sets up in their country and they may find it difficult to compete with them. This can lead to profit loss within the business, or even the shutting down of the business completely.
