Chapter 1Globalization: Micro set of interdependence relationship among people from different part of world divided in nation.Macro is to eliminate barriers to the international movement of trade, capital, technology, and people so as to integrate world economy International Business:Any transaction (trade) that take places between two or more countries. Globalization has influence on International Business and vice versa.Force driving Globalization:1.Increase in and application of technology for example Advance in communication like from landline to mobile phone, new machine, transportation cost reduced 2.Reduction of restrictions of law on cross border trade and resources movement example to reduce barriers by policy3.Development of service to support international business for example improve airport, transportation to strength the infrastructure to serve international business4.Increase in consumer’s demand variety of product and service5.Changing political situation and government policy for example china government policy change so US company started to established in china6.Expanded in cross national cooperation for example Australia will purchase oil from UAE in return UAE has to purchase meat, wheat and milk from them.Disadvantage of Globalization:1.Government is losing power and company is gaining power for example when establishing a new firm in US we have to go through lot of policy and procedure while if the company move to Mexico there are less policy and can be open faster.2.More transportation more pollution and that’s bad for environment3.Income inequalityfor example low pay job are outsourcing to othercountry and personal stressjob security as china is expanding its industrial industry and taking land of farmer so farmers have stress. Offshoring: transferring of production to abroad. Have both positive and negative effect that is positive it reduces cost and create better job in country and negative jobs move aboard.
Why companies engage in International Business:To expand sales: to increase market shareTo acquire resources: cheaper resources, new and better productTo reduce risk: if the company have head office in US and has other office in china and business in US is losing china is increasing profit and reduce risk.Modes of operations in International BusinessService export: that is service provider and payment receiver. Service import: that is service receiver and payment provider.for example, Travel and tourism, transportation services, Education and training services and banking financial and insurance service.Stages of International EvolutionDomestic: company is mainly domestically oriented, production and marketing located only at home thus small export but don’t focus on foreignmarket.