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SESSION 7 Global Context I Overview.docx

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York University
Administrative Studies
ADMS 1000
Indira Somwaru

SESSION 7: Global Context I Globalization 1. Why might a North American company decide to go global? -Make more profit -Merge with other companies -Lower operation costs -Better trade agreements 2. What difficulties might they encounter? -Labour laws/safety -host country resistance/local competitors -adaptation of products -infrastructure? -education levels? -economic pov -price of products -communist government -bribery? Definition A process involving the integration of world economics(Economic interdependence) - Facilitated by various trade agreements (NAFTA, ETA) -Trade bodies(EU, APEC, ASEN) - Flow of goods/services & people across boarders - Shift to one global economic system Push Factors Pull Factors -competition -growth(larger markets) -more democracies/capitalist -need more resources/cheaper labour -reduced trade barriers -improved technology(easier to transfer info, capital, and g/s) Channels of Global Business 1. Outsourcing - hiring of external providers - Cheaper labour costs/production costs/expertise 2. Foreign Direct Investment(FDI) - company purchases physical plants/ownerships in another country - Gain direct management control/substitute of trade - avoiding tariffs - Secure resources/raw materials 3. Licensing/Franchising - Owner of a product is paid a fee from another party to either produce or distribute its products Why? - Low risk - Lower cost - Knowledge of local markets 4. Joint Ventures - A deal between two or more companies from different countries to produce g/s - Facilitates the entry of MNC(multinational country) in new markets 5. Subsidiaries -branch plants -be more responsive to local needs -head offic
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