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Chapter 7

Globalization - Managing Globalization - Chapter 7

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Administrative Studies
ADMS 1000
Peter Modir

GlobalizationA process involving the integration and interdependence of world marketseconomiesfacilitated by bodies such as NAFTA EU APEC ASEAN etcSources Encouraging Global Business ActivityPull Factorsthe reasons a business would gain from entering the international contextoPotential for Sales GrowthA significant portion of sales among the worlds largest firms are generated outside the home countryExample Avon in emerging marketsoObtaining Needed Resources Engage in global business to obtain resources that are either unavailable or too costly within the domestic bordersExample Canada expanding operations overseas to achieve higher rates of returns by taking advantage of lower labour costs overseas Push FactorsForces that act upon all businesses to create an environment where competing successfully means competing globallyoThe Force of CompetitionA business may be pushed into becoming a global business by the simple fact that it is forced to compete with a foreign competitor Other domestic competitors may already be expanding their markets overseas which create additional incentives for the business to follow suit The notion of first mover advantage is a philosophy which underscores the benefits of being among with first to establish strong positions in important world markets Later entrants into a foreign market may have more difficulty establishing themselvesoShift Towards DemocracyA shift towards democracy in many societies that were formally economically and politically repressed has contributed to the creation of new markets opportunities Russia AsiaMcDonalds entered the Russian marketplaceoReduction in Trade BarriersThe most powerful source of influence encouraging increased international business is the reduction in trade and investment restrictions
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