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Chapter 6

ADMS 1000 Chapter 6 – Globalization.docx

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Administrative Studies
ADMS 1000
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ADMS 1000 Chapter 6 – Globalization What is globalization? There are several deffinitions Globalization is a process involving the integration of world economics the precense of trade blocs reflects the accelerating pace with which antions are integrating their economies for ex. NAFTA, EU, APEC Globalization is a process involving the integration of world markets , the notion that consumer preferences are differing around the world ex Nike, Mc Donalds etc. Globalization tends to include the elements of the following : -Globalization can be considered a process that is expanding the degree and forms of cross-border transactions among people, assets, goods and services. -Globalization refers to the growth in direct foreign investment in regions across the world -Globalization reflects the shift toward increasing economic interdependence: the process of generating one, single, world economic system oor a global economy Sources Encouraging Global Business Activity: -In recent years the drive towards global busiess has accelerated, a number of fundamental factors have encouraged the move to go global including PUSH and PULL factors Pull factors: are the reasons a business would gain from entering the international context - potential for sales growth - obtaining the needed ressources Push factors: these are forces that act upon all businesses to create an environment where competing sucessfully means competing globally - the force of competition - shift toward democracy - reuction in trade barriers - improvements in technology PULL factors: - potential for sales growth Increased sales are typically the central aim behind a company’s expansion into international business ex. Starbucks was doing well so they expanded to Vienna - Having access to foreign consumers also may mitigate the negative effects of domestic downturns. Ex. Avon was declinig in sales therefore went global to produce more Obtaning needed ressources - businesses may choose to engeg in global business activity in order to obtain ressources that are unavailable or too costly where they are located (within domestic borders) - Also inexpensive labor when making facotories in underdevelopped nations ex. Less expensive energry ressources, plants are located in Taiwan , China, Mexico - Both Canadian and U.S firms continue to expand their operations overseas because they canacheive higher rates of return on their investments PUSH factors- the force of competition - domestic economies are increasingly being filled with foreign competitors in many industries- competing against foreign competitors - a business may be PUSHED into becoming global by the simple fact that it is forced to compete with a foreign competitor - the notion of the first mover advantage is a philosophy that underscores the benefits of being among the first to establish strong positions in important world markets - alter entrants into a foreign market may have more difficulty establishing themselves, and may even be effectively blocked by competitors Shift toward democracy -societiesthat were foremerly economically and politically repressed have contributed to the creation of new market oppertunities, numberous total
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