What are the key issues in the Global Business Environment? (3)
(ITL, G, SED)
- International Trade Liberalization.
- Government’s impact on International Trade.
- Issues related to socio-economic development.
Drivers of Globalization (4)
(Td.Ri.Dt&ib.+COOP).
- Technological development.
- Rising incomes.
- Declining trade and investment barriers.
- More cooperative arrangements among countries.
What is an FDI?
(…that involves a l-t-r reflecting a lasting…in…)
(The d.i’s. purpose is to…of…on the…of the…resident in the…)
Investment that involves a long-term relationship reflecting a lasting interest in one’s economy. The direct investor’s purpose is to exert a significant degree of influence on the management of the enterprise resident in the other economy.
what are the 4 criteria to be an FDI?
(%+ / PoA / INSIDE / No)
- Involves minimum threshold equity stake of 10%+.
- Involves the transfer of packages of assets or intermediate products.
- Transfer occurs inside the investing company.
- No change of ownership.
What are some criticisms of globalization? (4)
(Ttns.iii.E&li.Nceg.)
- Threats to national sovereignty.
- Negative costs of economic growth.
- Increasing income inequality.
- Environmental & labor issues.
What are MNEs?
(… that engages in… and … or… value-adding…in more than…).
Enterprise that engages in FDI and owns or controls value-adding activities in more than one country.
Globalization effects? (2).
1. Breaks down (tb) to (t,c,c).
2. Allows (p,s,i) to flow more freely across (n.b).
- Breaks down traditional barriers to trade, communicate, and commerce.
- Allows products, services, and information to flow more freely across national borders.
Globalization of Market
(Market Integration). (2)
R.T.B. & C.S.
- Reduced Trade Barriers like tariffs and quotas through international agreements and trade liberalization policies.
- Common Standards to develop and adapt.
Globalization of Market (Global Consumer Culture). (2)
C.H. & C.C.
- Consumer Homogenization are shared global trends and preferences that contributes to the homogenization of consumer culture.
- Cultural Convergence which influence cultural elements and consumer behavior.
Globalization of Market
(Trade Agreements & Economic Blocs).
R.I.
Reginal Integration like trade agreements and economic blocs (e.g., EU or NAFTA), contribute to the globalization of markets by fostering economic cooperation within specific regions.
Globalization of Market
(Financial Integration).
G.C.F.
Global Capital Flow leads to financial markets interconnection and allows the movement of capital across borders through investments.
Globalization of Production
(It takes advantage of…like…l,l,c,e,e)
It takes advantage of factors of production like labor, land, capital, energy, and expertise.
Globalization of Production
(Outsourcing & Offshoring). (2)
(DM & O)
- Distributed Manufacturing which companies choose to outsource specific stage of the production because of cost advantages or specialized expertise.
- Offshoring offers relocation of certain production activities, such as manufacturing or services.
Globalization of Production
(Global Value Chains (GVCs)). (2)
(SP. C&I.)
- Sequential Production involves breaking down the production process into various stage in different locations.
- Coordination & Integration dispersed production activities to create a final product or service.
Globalization of Production
(Specialization & Comparative Advantage). (2)
(RO.S.)
- Resource Optimization seeks to leverage the comparative advantages in labor, raw materials, or technological expertise.
- Specialization are often allocated to locations with effective capabilities.
Globalization of Production
(Technological Advances). (2)
(CT.SCMS.)
- Communication Technology enable real-time coordination and management of production processes.
- Supply Chain Management Systems facilitates the monitoring complexity of a supply chain.
Globalization of Production
(Trade Liberalization). (2)
(RTB & TR).
- Reduced Trade Barriers policies to ease the movements of goods and services across borders.
- Tariff Reduction encourages cross-border trade and facilitates movement withing the global production networks.
