GMS 724 Study Guide - Final Guide: International Business Company, U.S. Bancorp, Socalled
11 Nov 2018
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Chapter 1 - The Forces Driving Globalization - Part 2
Advances in Communications and Technology
• Studies in communications and transportation now permit us to learn about and
want products and services developed in other parts of the world
o Moreover, the costs of these improvements have risen more slowly in
most years than costs in general
o A three-minute phone call from New York to London that cost $10.80 in
1970 costs less than $0.20 today, while a call using Voice over Internet
Protocol (VoIP) is virtually free
• Innovations in transportation mean that more countries can compete for sales to
a given market
o For example, the sale of foreign-grown flowers in the United States used
to be impractical; today, however, flowers from as far away as Ecuador,
Israel, the Netherlands, and New Zealand compete with each other for the
U.S. market because growers can ship them quickly and economically
• Improved communications and transportation not only speed up interactions,
they also enhance a manager's ability to oversee foreign operations
o Thanks to the internet, even small companies can reach global customers
and suppliers
o Atlanta's Randy Allgaier, for example, has established a partnership in
Taiwan that contracts a Chinese factory to manufacture lighting fixtures for
him---all this without his need for costly onsite contact with people in either
Taiwan or China
Liberalization of Cross-Border Trade and Resource Movements
• To protect its own industries, every country restricts the movement across its
borders of not only goods and services but also the resources---workers, capital,
tools, and so on---needed to produce them
o Such restrictions, of course, set limits on international business activities
and , because regulations can change at any time, contribute to a climate
of uncertainty
o Overtime, however, most governments have reduced such restrictions,
primarily for three reasons:
1. Their citizens want a greater variety of goods and services at lower
prices
2. Competition spurs domestic producers to become more efficient
3. They hope to induce other countries to lower their barriers in turn
Development of Services that Support International Business
• Companies and governments have developed a variety of services that facilitate
international business
o Take the sale of goods and services in a foreign country and currency
