Q.1 What is globalization? What are its benefits? How does globalization help in international business?

Give some instances.

globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and financial flows. The term sometimes also refers to the movement of people (labor) and knowledge (technology) across international borders. There are also broader cultural, political and environmental dimensions of globalization that are not covered here. At its most basic, there is nothing mysterious about globalization. The term has come into common usage since the 1980s, reflecting technological advances that have made it easier and quicker to complete international transactions both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity village markets, urban industries, or financial centers. Benefits of globalization

We have moved from a world where the big eat the small to a world where the fast eat the slow, as observed by Klaus Schwab of the Davos World Economic Forum. All economic analysts must agree that the living standards of people have considerably improved through the market growth. With the development in technology and their introduction in the global markets, there is not only a steady increase in the demand for commodities but has also led to greater utilization. Investment sector is witnessing high infusions by more and more people connected to the worlds trade happenings with the help of computers. As per statistics, everyday more than $1.5 trillion is now swapped in the worlds currency markets and around one-fifth of products and services are generated per year are bought and sold.

Buyers of products and services in all nations comprise one huge group who gain from world trade for reasons encompassing opportunity charge, comparative benefit, economical to purchase than to produce, trades guidelines, stable business and alterations in consumption and production. Compared to others, consumers are likely to profit less from globalization.

Another factor which is often considered as a positive outcome of globalization is the lower inflation. This is because the market rivalry stops the businesses from increasing prices unless guaranteed by steady productivity. Technological advancement and productivity expansion are

the other benefits of globalization because since 1970s growing international rivalry has triggered the industries to improvise increasingly.

Some other benefits of globalization as per statistics Commerce as a percentage of gross world product has increased in 1986 from 15% to nearly 27% in recent years. The stock of foreign direct investment resources has increased rapidly as a percentage of gross world product in the past twenty years. For the purpose of commerce and pleasure, more and more people are crossing national borders. Globally, on average nations in 1950 witnessed just one overseas visitor for every 100 citizens. By the mid-1980s it increased to six and ever since the number has doubled to 12. Worldwide telephone traffic has tripled since 1991. The number of mobile subscribers has elevated from almost zero to 1.8 billion indicating around 30% of the world population. Internet users will quickly touch 1 billion.

Impact of globalization in international business: Trade: Developing countries as a whole have increased their share of world trade from 19 percent in 1971 to 29 percent in 1999. But Chart 2b shows great variation among the major regions. For instance, the newly industrialized economies (NIEs) of Asia have done well, while Africa as a whole has fared poorly. The composition of what countries export is also important. The strongest rise by far has been in the export of manufactured goods. The share of primary commodities in world exports such as food and raw materials that are often produced by the poorest countries, has declined. Capital movements: Chart 3 depicts what many people associate with globalization, sharply increased private capital flows to developing countries during much of the 1990s. It also shows that: The increase followed a particularly dry period in the 1980s; Net official flows of aid or development assistance have fallen significantly since the early 1980s; and

 The composition of private flows has changed dramatically. Direct foreign investment has become the most important category. Both portfolio investment and bank credit rose but they have been more volatile, falling sharply in the wake of the financial crises of the late 1990s. Movement of people: Workers move from one country to another partly to find better employment opportunities. The numbers involved are still quite small, but in the period 1965-90, the proportion of labor forces round the world that was foreign born increased by about one-half. Most migration occurs between developing countries. But the flow of migrants to advanced economies is likely to provide a means through which global wages converge. There is also the potential for skills to be transferred back to the developing countries and for wages in those countries to rise. Spread of knowledge (and technology): Information exchange is an integral, often overlooked, aspect of globalization. For instance, direct foreign investment brings not only an expansion of the physical capital stock, but also technical innovation. More generally, knowledge about production methods, management techniques, export markets and economic policies is available at very low cost, and it represents a highly valuable resource for the developing countries

MB0053 Q.1 What is globalization? What are its benefits? How does globalization help in international business? Give some instances. Economic "globalization" is a historical process, the result of human innovationand technological progress. It refers to the increasing integration of economiesaround the world, particularly through trade and financial flows. The termsometimes also refers to the movement of people (labor) and knowledge(technology) across international borders. There are also broader cultural, politicaland environmental dimensions of globalization that are not covered here.At its most basic, there is nothing mysterious about globalization. The term hascome into common usage since the 1980s, reflecting technological

advances thathave made it easier and quicker to complete international transactions both tradeand financial flows. It refers to an extension beyond national borders of the samemarket forces that have operated for centuries at all levels of human economicactivity village markets, urban industries, or financial centers. Markets promote efficiency through competition and the division of labor the specialization that allows people and economies to focus on what theydo best. Global markets offer greater opportunity for people to tap into more andlarger markets around the world. It means that they can have access to more capitalflows, technology, cheaper imports, and larger export markets. But markets do notnecessarily ensure that the benefits of increased efficiency are shared by all.Countries must be prepared to embrace the policies needed, and in the case of thepoorest countries may need the support of the international community as they doso.Globalization is not just a recent phenomenon. Some analysts have argued that theworld economy was just as globalized 100 years ago as it is today. But todaycommerce and financial services are far more developed and deeply integrated thanthey were at that time. The most striking aspect of this has been the integration of financial markets made possible by modern electronic communication. The 20 th The story of the 20century saw unparalleled economic growth, with global per capita GDPincreasing almost five-fold. But this growth was not steady the strongestexpansion came during the second half of the century, a period of rapid tradeexpansion accompanied by trade and typically somewhat later, financial liberalization. Chart 1 break the century into four periods. In the inter-war era, theworld turned its back on internationalism or globalization as we now call it andcountries retreated into closed economies, protectionism and pervasive capitalcontrols. This was a major factor in the devastation of this period, when per capitaincome growth fell to less than 1 percent during 1913-1950. For the rest of thecentury, even though population grew at an unprecedented pace, per capita incomegrowth was over 2 percent, the fastest pace of all coming during the post WorldWar boom in the industrial countries. th Globalization means that world trade and financial markets are becoming moreintegrated. But just how far have developing countries been involved in thisintegration? Their experience in catching up with the advanced economies hascentury was of remarkable average income growth, but it isalso quite obvious that the progress was not evenly dispersed. The gaps betweenrich and poor countries, and rich and poor people within countries, have grown.The richest quarter of the worlds population saw its per capita GDP increasenearly six-fold during the century, while the poorest quarter experienced less than

athree-fold increase (Chart 1). Income inequality has clearly increased. But, asnoted below, per capita GDP does not tell the whole story. Globalization means that world trade and financial markets are becoming moreintegrated. But just how far have developing countries been involved in thisintegration? Their experience in catching up with the advanced economies has been mixed. Chart 2 shows that in some countries, especially in Asia, per capitaincomes have been moving quickly toward levels in the industrial countries since1970. A larger number of developing countries have made only slow progress orhave lost ground. In particular, per capita incomes in Africa have declined relativeto the industrial countries and in some countries have declined in absolute terms.Chart 2b illustrates part of the explanation: the countries catching up are thosewhere trade has grown strongly.Consider four aspects of globalization: Trade: Developing countries as a whole have increased their share of world trade from 19 percent in 1971 to 29 percent in 1999. But Chart 2b shows greatvariation among the major regions. For instance, the newly industrializedeconomies (NIEs) of Asia have done well, while Africa as a whole has faredpoorly. The composition of what countries export is also important. The strongestrise by far has been in the export of manufactured goods. The share of primarycommodities in world exports such as food and raw materials that are oftenproduced by the poorest countries, has declined. Capital movements: Chart 3 depicts what many people associate withglobalization, sharply increased private capital flows to developing countriesduring much of the 1990s. It also shows that: the increase followed a particularly "dry" period in the 1980s; net official flows of "aid" or development assistance have fallen significantlysince the early 1980s; and the composition of private flows has changed dramatically. Direct foreigninvestment has become the most important category. Both portfolio investment andbank credit rose but they have been more volatile, falling sharply in the wake of the financial crises of the late 1990s. Movement of people: Workers move from one country to another partly to findbetter employment opportunities. The numbers involved are still quite small, but inthe period 196590, the proportion of labor forces round the world that was foreignborn increased by about one-half. Most migration occurs between

developingcountries. But the flow of migrants to advanced economies is likely to provide ameans through which global wages converge. There is also the potential for skillsto be transferred back to the developing countries and for wages in those countriesto rise. Spread of knowledge (and technology): Information exchange is an integral,often overlooked, aspect of globalization. For instance, direct foreign investmentbrings not only an expansion of the physical capital stock, but also technicalinnovation. More generally, knowledge about production methods, managementtechniques, export markets and economic policies is available at very low cost, andit represents a highly valuable resource for the developing countries.Growth in living standards springs from the accumulation of physical capital (investment) and human capital (labor), and through advances intechnology (what economists call total factor productivity). 3 Many factors can helpor hinder these processes. The experience of the countries that have increasedoutput most rapidly shows the importance of creating conditions that are conduciveto long-run per capita income growth. Economic stability, institution building, andstructural reform are at least as important for long-term development as financialtransfers, important as they are. What matters is the whole package of policies,financial and technical assistance, and debt relief if necessary.

Q2 What is culture and in the context of international businessenvironment how does it impact international business decisions? Organizational culture is the set of values, beliefs, behaviors, customs, andattitudes that helps the members of the organization understand what it stands for,how it does things, and what it considers important. When the people comprisingan organization represent different cultures, their differences in values, beliefs,behaviors, customs, and attitudes reflect multiculturalism. Diversity exists in acommunity of people when its members differ from one another along one or moreimportant dimensions.Organization culture is an important environmental concern for managers.Managers must understand that culture is an important determinant of how welltheir organization will perform. Culture can be determined and managed in anumber of different ways. Diversity and multiculturalism are increasing in organizations today because of changing demographics, the desire by organizations to improve their

workforce,legal pressures, and increased globalization. There are several importantdimensions of diversity, including age, gender, and ethnicity. The overall age of the workforce is increasing. More women are also entering the workplace, although there is still a glass ceiling in many settings. In the United States, moreHispanics are also entering the workplace as the percentage of whites graduallydeclines.Diversity and multiculturalism can impact an organization in a number of differentways. For example, they can be a source of competitive advantage (i.e., cost,resource acquisition, marketing, creativity, problem solving, and systemsflexibility arguments). On the other hand, diversity and multiculturalism can alsobe a source of conflict in an organization.Managing diversity and multiculturalism in organizations can be done by bothindividuals and the organization itself. Individual approaches includeunderstanding, empathy, tolerance, and willingness to communicate. Majororganizational approaches are through policies, practices, diversity training, andculture.Few, if any, organizations have become truly multicultural. The major dimensionsthat characterize organizations as they eventually achieve this state are pluralism,full structural integration, full integration of the informal network, an absence of prejudice and discrimination, no gap in organizational identification based oncultural identity group, and low levels of inter-group conflict attributable todiversity.