BU491 Chapter Notes - Chapter 2: Transnationality, Consumerism

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22 Jun 2018
BU 491 Chapter 2 – Understanding the International Context:
Responding to Conflicting Environmental Forces
Forces for Global Integration and Coordination
Forces of change:
Big operations that produced a lot of products to achieve economies of scale
had to begin looking at markets outside of their domestic land
Handling a variety of products builds economies of scope
For example, picture a courier who ships many different products from different
countries… they can do it cheaper than if every individual company was to ship
it themselves
oFactor Costs
People wanted to have access to the best possible prices for resources, which
made factor costs a huge piece of globalization
i.e. labour intensive markets turned to foreign markets for cheap labour
oFree Trade
There’s been a trend of reducing trade barriers, which has opened up the whole
world to globalization
This allowed MNEs to gain maximum benefits from global coordination
Driving an Expanding Spiral of Globalization
oi.e. when GM went bankrupt in 2008, Kia and Hyundai bumped up their market share in
the US
oThey operated a much leaner operation, and this global company allowed US customers
to continue buying cars even during the financial crisis
Global Competitors as Change Agents
oMany companies go global as a result of external factors, but sometimes it’s internal
When a company realizes that they can gain a competitive advantage by going
global, they do it!
This caused a reaction that would globalize entire industries
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