CHAPTER 2

GLOBAL VILLAGE: The world considered as a single community linked by

telecommunications.

GLOBILZATION IN BUSINESS:
The spread or flow of financial products, goods, technology, information and job across the border is
called globalization

SONY

OR The process by which businesses or other organizations start operating on international scale is
known as globalization

There are three types of globalization.

 Economic globalization.
 Political globalization.
 Cultural globalization.

BASIC ASPECTS
The International Monetary Fund (IMF) identified four basic aspects of globalization: trade and
transactions, capital and investment movements, migration and movement of people, and the spread
of knowledge.

HISTORY

Globalization is an historical process that began with the first movement of people out of Africa
into other parts of the world

What are the economic benefits of globalization?

1. Increased choice of good

No individual country could produce the sheer variety of goods that can be produced globally.
Through globalization, consumers in one country can have access to goods and services that they
would never otherwise have access to.

2. Higher quality goods

As each nation concentrates on its own specialty industries, there is far less ‘re-inventing the
wheel’. For example, every country does not need to waste its scarce resources producing its
own version of the Smartphone when one can be imported from a country that specializes in this
product.
3. Increased competition

The presence of increased competition in a country’s economy from foreign companies means a
more efficient market and lower prices for consumers. Suppliers of goods and services need to
keep their prices low to stay competitive.

4. Increased labor mobility

By allowing individual workers to move to other countries, the global economy can better match
supply and demand. Countries that are excellent in educating certain professionals can export
those professionals to other countries which do not have the same specialty. For example, New
Zealand must import a significant number of skilled agricultural workers every year to harvest its
crops.

5. Improved international relations

Countries that have a positive trade relationship with each other, have an incentive not to get into
conflict. On a global scale, this should reduce the likelihood of armed conflict between countries
.
6. Specific market opportunities

You may have identified specific countries where there is an opportunity to corner the
market with your product or service. Moving into that market can be an important growth
opportunity for your business;

7. Promotes economic growth

8. Access to New Markets

What are disadvantages

Control

1. While it may be possible for a business to operate directly in a foreign country (known as
opening a branch office), this is not the most common method of international expansion.
More commonly, the company opens a subsidiary or separate business entity which is no
longer in the direct ‘chain of command’ of the original business.
2. The lack of direct control of an overseas location of a business can lead to significant
compliance, business, and reputational risk
Inadequate Market Knowledge

Global expansion means understanding the market dynamics of each country of expansion.
Without in-depth knowledge of that market, it can be difficult to know whether it is an
appropriate target country for a product or service

Compliance (the action of saying yes)

Individual businesses will often be less familiar with the compliance environment overseas than
they are with the compliance environment in their own location.

KEYFEATURES
Its essential features include the cross-border connectivity or integration, free trade
environment and interdependency of nations.

FREE TRADE
A pact between two or more nations to reduce barriers for import and export among them

EXAMPLES

North America free trade agreement (NAFTA)

European free trade association (EFTA)

BARIERS TO INTERNATION TRADE
 1)Social and cultural difference
 Race.
 Religion.
 Language.
 Gender.
 Age.

Example . “People in Malaysia Use Their Thumb to Point”

Some countries regard pointing with the index finger as rude. While many cultures
probably think that pointing a finger isn’t very nice, some countries like Indonesia and
Malaysia view this gesture as incredibly offensive. There, it’s considered much more
polite to gesture toward things with the thumb. In many African countries, pointing is
appropriate for inanimate objects only, not people.

‘Using Your Left Hand Might Be Rude’

In some countries, the use of the left hand for eating or other activities is considered
insulting. People in these countries use their left hands for cleaning themselves after
using the toilet, and, therefore, the left hand is considered dirty. This custom applies to
much of the Middle East, India, Sri Lanka, and parts of Africa. When spending time in
these parts of the world, always use your right hand for greeting, exchanging money,
handling merchandise, and, of course, eating

ECNOMIC DIFFERENCE Economic inequality sometimes refers to income inequality,

wealth inequality, or the wealth gap

POLITICAL DIFFERENCE In a business context, political factors usually relate to laws and
regulations created and enforced by national governments and international bodies

1) Tariffs taxes on imports (and occasionally exports)

Example tariff on steel. This means that any steel imported from another country would incur a tariff—for example,
5% of the value of the imported goods—paid by the individual or business importing the goods.

2) Subsidy payments given to business , individual, institution to help them to

maintain their standard against foreign companies
3) Quotas government restriction on the number value of import
products
Example for pharmaceutical items
 4) Trade embargoes government actions that imposes complete ban on
import of product into a country
Example Oil embargoes on Iran

ENTREPRENEURSHIP
Entrepreneurship is the process of developing, organizing, and running a new business
to generate profit while taking on financial risk.
The word “entrepreneur” originates from a thirteenth-century French verb,
entreprendre, meaning “to do something” or “to undertake.” By the sixteenth
century, the noun form, entrepreneur, was being used to refer to someone who
undertakes a business venture.

CHARACTERISTICS OF SUCH PEOPLE

 Vision.
 Passion.
 Motivation.
 Risk-taking.
 Curiosity.
 Creativity.
 Confidence. .
Why entrepreneurship is important?
By creating new products and services, they stimulate new employment, which
ultimately results in the acceleration of economic development. So public policy that
encourages and supports entrepreneurship should be considered important for
economic

The Entrepreneurial Process

 Idea Generation: every new venture begins with an idea. ...
 Opportunity Evaluation: this is the step where you ask the question of whether
there is an opportunity worth investing in ...
 Planning: Once you have decided that an opportunity, you need a plan for
how to capitalize on that opportunity.
ADVANTAGES
1) social growth
2) EMPLOYMENT
 3) INNOVATION
4) FLEXIBILITY
5) INDEPENDENCE
6) WEALTH CREATION

Here are six of the most common challenges of entrepreneurship we've

encountered over the years and how to overcome them.
 Teamwork and delegation. ...
 Focus and productivity. ...
 Work-life balance issues. ...
 Developing good habits and achieving goals. ...
 Time management. ...
 Business growth and scaling.

The 4 Types of Entrepreneurs?

 Small business, scalable startup (A scalable startup is one that aims to become an extremely high
growth, profitable company but is only just beginning)., large company, and social.

Enterprise is all about finding new business opportunities

and taking advantage of them to make a profit. An
entrepreneur is an individual who takes a risk to start a
business.
Stakeholder
The individual or institution that has some interest in the company that
stand potentially gain or lose as of organization actions
Typical stakeholders are investors, employees, customers, suppliers,
communities, governments, or trade associations. The primary role of
stakeholders is to define business goals and develop plans that help them
achieve those goals. In addition, these stakeholders periodically review
business operations and strategies to find more efficient methods. They also
access employee performance to ensure they align with growth objectives
 A shareholder is someone who owns stock in your
company, while a stakeholder is someone who is impacted
by (or has a “stake” in) a project you're working on.

TRUST
A positive expectation from other that they will not act opportunistically.
FIVE DEMINIONS OF TRUST
Integrity the quality of being honest and having strong moral principles.
Competence the ability to do something successfully or efficiently.

Consistency acting or done in the same way over time, especially so as to be fair or
accurate

Loyalty the quality of being loyal.

Openness lack of restriction; accessibility.

Why trust is important in business?

Trust is important because it helps people feel safe and comfortable, knowing that their
trust won't be exploited. Without trust, any social interaction is difficult because you can't
know if someone has bad intentions. Trust also helps build better relationships. Without
trust, transactions cannot occur, influence is destroyed, leaders can lose teams and
salespeople can lose sales. The list goes on. Trust and relationships, much more than
money, are the currency of business. Trust is the natural result of thousands of tiny
actions, words, thoughts, and intentions. Be honest and transparent. There's no denying
that telling the truth can be tough. It's often easier to tell your employees what they want
to hear — especially during difficult times. By being honest with your employees while
being sensitive to their feelings, however, you can encourage them to trust you.

Eight of the most effective ways to build trust

1. Value long-term relationships. Trust requires long-term thinking. ...
2. Be honest. ...
3. Honor your commitments. ...
4. Admit when you're wrong. ...
5. Communicate effectively. ...
6. Be vulnerable. ...
7. Be helpful. ...
8. Show people that you care.

ETHICS
Moral principles that govern a person's behavior or the conducting of an activity.
There are two main types of ethical inquiry: Theoretical ethics and applied
ethics.
Unethical behavior is when a person, a professional, or an industry does anything that is
considered unacceptable because they are against the social norms.

Why is ethical behavior important in business?

Building on a foundation of ethical behavior helps create long-lasting positive
effects for a company. One such effect is the ability to attract and retain highly
talented individuals. Another is a positive reputation within the community.

There are seven principles of business ethics including accountability, care

and respect, honesty, healthy competition, loyalty, transparency, and
respect for the rule of law

Utilitarianism A theory of morality that advocates action that provide happiness

and oppose actions that causes harm or in business it means greater good for greater
numbers (provide good items if you charging good amount or an obligation for
businesses to do what they can to act in a way that maximizes happiness and
minimizes suffering. So, utilitarianism provides a basis for criticizing business
behaviours that cause harm to anyone at all.)
What is ethical utilitarianism example?
For example, if you are choosing ice cream for yourself, the utilitarian view is that
you should choose the flavor that will give you the most pleasure. If you enjoy
chocolate but hate vanilla, you should choose chocolate for the pleasure it will bring and
avoid vanilla because it will bring displeasure.

JUSTICE this emphazing making decisions which are fair and neutral
Justice as an ethical approach in the leadership and business practices is where
individuals receive equal treatment in the society regardless of their creed, racial
background, professional rank, or even their social classes.
RIGHTS
Rights are legal, social, or ethical principles of freedom or entitlement

CODE OF ETHICS

A business code of ethics is a A FORMAL DOCUMENT body of policies

based on laws and values that a company wants all employees to adhere to.
Different types of industries have differing regulatory requirements that
partially govern a company's code of ethics. All companies can set their own
value-based policies as part of the company brand. Use examples of code
of ethics to assist when creating your policies.
IMPORTANCE
A code of ethics is important for businesses to establish to ensure that
everyone in the company is clear on the mission, values and guiding
principles of the company
HOW IT MAKE BUSINESS SUCCESSFUL?
1) A code encourages discussions of ethics and compliance, empowering
employees to handle ethical dilemmas they encounter in everyday work.
2) The company's vision, values and mission should be clearly stated and
visible to both employees and clients so that the company can be held to
those standards. A code of ethics builds trust and credibility in an organization
and creates a culture of open and honest communication.
3) Provides a clear guideline of expected behavior in the workplace.
Outlines a company's vision, mission, values, and principles. Communicates
to employees what you want from them. Outlines a clear hierarchal structure,
roles of employees, and organizational structure

SOCIAL RESPONSIBILITES BY A BUSINESS

The obligation that a business have to follow to protect and enhance the
society in which it functions.

Social obligation the principle that in addition to pursing generating profit,

business should also work in such way that positively affects the society.

Social responsiveness social responsiveness is the manner in which a

person/ an entity can respond to a social need or change and contribute to the welfare
of the others as well as to the improvement of the society and the environment. Thus,
 social responsiveness happens as a result of social responsibility.
Carroll suggests four possible strategies: reaction, defense,
accommodation and pro action.
Social activism A firm acting to do things that make the society better not
do thing that make it worst
A famous example is the March on Washington for Jobs and Freedom,
which civil rights movement leaders organized. More than 200,000 people
attended the 1963 march in Washington, D.C. to push the federal government
to act on discrimination and injustice against Black Americans
TYPES
 Demonstrations and protests. Demonstrations are arguably the best-known
type of activism. ...
 Boycotts. Boycotts are designed to economically impact a “target,” like a
business that's engaging in exploitative practices. ...
 Strikes. ...
 Letter-writing and petitions. ...
 Social media campaigns.
DIVERSITY

Diversity in the workplace refers to an organization that intentionally employs

a workforce comprised of individuals with a range of characteristics, such as
gender, religion, race, age, ethnicity, sexual orientation, education, and other
attributes.
IMPORTANCE OF DIVERSITY
1. Greater Creativity and Innovation
Whenever a group of like-minded people are put together, they will generate similar
ideas. This is because their thinking patterns are very much alike. However, if you
change things up by mixing diverse individuals together, you’ll have a workforce
that’s more prone to creativity and innovation — two important ingredients for
success.
A heterogeneous workforce will be able to exchange unique perspectives and spark
fresh ideas. A good example here is the Disney brand, which boasts a highly
diversified enterprise with more than 200,000 employees worldwide.
2. Increased Productivity
Diversity and productivity go hand in hand. Research has found that diversifying your
team can boost productivity by 35%.. A diverse workforce is more likely to
understand your customers’ needs and come up with ideas to fulfill them. Diversity in
the workplace will also increase employee morale and instill a desire to be more
effective and work more efficiently. This will greatly increase the productivity of your
business.
3. Reduced Employee Turnover
A workplace that encourages diversity and inclusion will make employees feel valued
and accepted. This will ensure happiness among your workforce. Happy workers will
stay with your company for longer, meaning you’ll spend less money and time on
recruiting. By reducing your employee turnover, you’ll have more time and funds to
invest elsewhere in your business.
4. Connect to a Wider Range of Consumers
If you want to target a wide range of consumers, you’ll need a diverse workforce. By
hiring individuals of varying backgrounds, languages, etc. you can ensure that your
company appeals to a wider target market. Because your employees come from
different backgrounds, they’ll be able to connect with consumers from all walks of
life.
5. Increased Revenue

CHALLENGES
1. Unfair Prejudices
Unfortunately, there are individuals who cannot tolerate people who are different from
them. This can result in acts of racism, sexual harassment, or even religious
discrimination.
If these difficulties develop in your company, it can create an uncomfortable (and
even dangerous) work environment and damage your company’s reputation.
You will need to implement strict policies against any forms of discrimination in the
workplace and take immediate action against those who don’t adhere to the rules.
2. Communication Barriers
Having a diverse team could mean that some of the members speak foreign languages.
This could result in a communication gap between employees, which will negatively
impact your company’s productivity.
You can avoid this by hiring multilingual individuals to perform translations. There
are also various translation apps on the market that you can choose from. You can
even consider sending employees to educational courses to learn new languages. As a
side bonus, this will aid them in communicating with foreign customers.
Bridging the communication gap between employees will make your company grow
and open up more doors to success.
3. Different Interpretations of Professional Etiquette
Different cultures have different traditions. In addition to that, they also have different
values and etiquette when it comes to the workplace. This may cause
misunderstandings between team members and potentially lead to conflict.
For example, in Japanese culture, it’s customary when visiting someone else’s office
to wait until the host asks you to sit down. Therefore, a Japanese employee may find it
offensive when a U.S. colleague enters their office and immediately takes a seat.
To overcome this and prevent conflict in the workplace, make sure that your
employees understand and respect each other’s traditions.