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IBT-Topic-3.2-Notes

The document provides an overview of globalization in international business and trade, highlighting its evolution through three phases: Globalization 1.0, 2.0, and 3.0. It outlines the benefits and disadvantages of globalization, including economic growth and cultural exchange, as well as challenges like inequality and environmental impact. Additionally, it introduces the concept of glocalization, emphasizing the need for businesses to adapt to local markets while maintaining a global strategy.

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9 views

IBT-Topic-3.2-Notes

The document provides an overview of globalization in international business and trade, highlighting its evolution through three phases: Globalization 1.0, 2.0, and 3.0. It outlines the benefits and disadvantages of globalization, including economic growth and cultural exchange, as well as challenges like inequality and environmental impact. Additionally, it introduces the concept of glocalization, emphasizing the need for businesses to adapt to local markets while maintaining a global strategy.

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mabbayadqueenel
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We take content rights seriously. If you suspect this is your content, claim it here.
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COURSE LECTURE

INTERNATIONAL BUSINESS AND TRADE

TOPIC 3: OVERVIEW OF INTERNATIONAL BISNESS AND TRADE

Globalization in International Business and Trade

Globalization is here. The traditional and orientation of companies working just


within national borders has declined tremendously. The world has come a long way, some
seven hundred generations ago, in 15,000 BC, there may have been 6000,000 polities
on Earth, each consisting of ten or hundreds individuals. Today, there are about 200
nations, consisting of millions/billions of people. We are in a rapid process of conquering
nature and we have embarked on process of massive morphing and expansion of our
moral circles. – Matt Martin

Globalization is a driving force in international business and trade, offering


significant opportunities for growth, innovation, and cultural exchange. By understanding
and leveraging the benefits of globalization, businesses and countries can enhance their
competitiveness and contribute to a more interconnected and prosperous world.
However, it is essential to address the challenges it presents to ensure sustainable and
equitable outcomes for all stakeholders.

According to the World Health Organization (WHO), globalization is generally


understood to include two interrelated elements:
▫ The opening of international borders to increasingly fast flows of goods,
services, finance, people and ideas
▫ The changes in institutions and polices at national and international levels
that facilitates or promotes such flows.

In our current global economy, no country is prepared to produce everything to satisfy


the needs of its people without establishing relations and cooperation with other countries.
Every country is involved in different types of trade, like the sale of finished goods or
services, the supply of materials or other resources that are lacking in a particular country,
manufacturing at lower costs or more efficient way of production. In today’s global
economy, everyone is accustomed to buying goods from other countries – electronics
from Japan and Korea, fruits from the Philippines, vegetables from Mexico,
Utensils/clothes from China, cars from Japan/Korea. Globalization of production happens
at the same time as globalization of trade.

Globalization According to Thomas Friedman (2005)


• Globalization 1.0
o Started with Columbus’ discovery of the New World and ran from 1492 to
about 1800.
o Driven by nationalism and religion, this lengthy stage was characterized by
how much industrial power countries could produce and apply.

• Globalization 2.0
o From 1800 to 2000, was disrupted by the Great Depression and two World
Wars and was largely shaped by the emerging power of huge multinational
corporations
o It grew with the European mercantile stock companies as they expanded in
search of new markets, cheap labor and raw materials
o It continued with subsequent advances in sea and rail transportation
o This period saw the introduction of modern communications and cheaper
shipping costs.

• Globalization 3.0
o Today’s globalization began around 2000, with advances in global
electronic interconnectivity that allowed individuals to communicate as
never before
o Local accountants who do tax services can easily outsource tax preparation
via computers/internet/sites remotely to a tax team in India
o Companies can outsource any service or business that can be broken down
to its key components and converted to computerized operations
o This includes almost everything from making restaurants reservations to
reporting corporate earnings to reading radiology results.

Key Aspects of Globalization

1. Technological Advancements
• Information and Communication Technology (ICT)
• Transportation Innovations
• Automation and Manufacturing Technologies

2. Economic Factors
• Trade Liberalization
• Capital Market Liberalization
• Global Supply Chains

3. Political and Regulatory Environment


• Government Policies
• International Trade Agreements
• Regulatory Harmonization

4. Social and Cultural Factors


• Increased Mobility
• Global Consumer Culture
• Education and Skill Development

5. Market Factors
• Emerging Markets
• Increased Competition
• Consumer Demand for Variety

The Benefits and Disadvantages of Globalization

Benefits of Globalization

1. Economic Growth and Development


• Increased Trade and Investment
• Job Creation

2. Access to Global Markets


• Market Expansion
• Economies of Scale

3. Innovation and Technology Transfer


• Access to New Technologies
• Research and Development

4. Cultural Exchange and Diversity


• Cultural Enrichment
• Global Collaboration

5. Improved Consumer Choices


• Variety of Products and Services

Disadvantages of Globalization
1. Economic Disparities, Inequality and Job Displacement
2. Cultural Homogenization
3. Environmental Impact Depletion, Pollution, Climate Change
4. Political, Loss of Sovereignty and Economic Interdependence
5. Regulatory and Ethical Challenges – Labor and Human Rights Issues

Key Drivers Of Globalization

1. Technological Advancements
• Information and Communication Technology (ICT)
• Transportation Innovations
• Automation and Manufacturing Technologies:

2. Economic Factors
• Trade Liberalization
• Capital Market Liberalization
• Global Supply Chains:

3. Political and Regulatory Environment


• Government Policies
• International Trade Agreements
• Regulatory Harmonization

4. Social and Cultural Factors


• Increased Mobility
• Global Consumer Culture
• Education and Skill Development

5. Market Factors
• Emerging Markets
• Increased Competition
• Consumer Demand for Variety

Implications of Being Part of Globalization

1. Market Expansion
2. Increased Competition
3. Supply Chain Optimization
4. Cultural Exchange
5. Economic Interdependence
6. Regulatory Challenges
7. Technology Transfer
8. Employment and Labor Practices

What is Glocalization?

A term that combines "globalization" and "localization." It refers to the practice of


conducting business according to both local and global considerations. The concept
highlights how global companies adapt their products, services, and marketing strategies
to fit local markets and cultures while still maintaining a cohesive global strategy.
It is also a 3-level system containing local, national and supranational (global)
levels. Glocalization points to increasing transnational (international) interactions among
local entities from different countries and to connect among local and global entities.

Key Aspects of Glocalization

1. Adaptation to Local Markets


• Product Customization
• Marketing and Branding

2. Maintaining Global Efficiency


• Standardization
• Centralized Control

3. Cultural Sensitivity:
• Understanding Local Cultures
• Community Engagement

Examples of Glocalization

1. McDonald’s:
• McDonald's adapts its menu to reflect local tastes and dietary preferences.
For instance, in India, it offers a range of vegetarian options and substitutes
beef patties with chicken or paneer (a type of cheese).
2. Coca-Cola:
• Coca-Cola maintains its core brand image worldwide but tailors its
marketing campaigns and packaging to reflect local languages, festivals,
and cultural themes.
3. Toyota:
• Toyota designs cars to meet local environmental regulations and consumer
preferences while maintaining its global standards for quality and efficiency.

Benefits of Glocalization

• Increased Market Penetration


• Enhanced Brand Loyalty

Challenges of Glocalization

• Balancing Act
• Complexity and Costs
• Cultural Missteps

References

Collinson, S & Rugman A., (2020), International Business, 8 th Edition, Pearson


Education Limited, England
Lopez-Mariano, N. D. (2023). International Business and Trade, First Edition, Rex Book
Store, Manila
Martin, M., (2021), International Business and Trade, Unlimited Books Library Services
and Publishing, Manila
Internet/Online Journals, Tutorials, Videos and Research Papers from trusted sources
(No blogs/chats)

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