FUNDAMENTALS OF

INTERNATIONAL BUSINESS
By:
Puneet Lokwani
Mayank Kishore Sharma
 ELEMENTS OF GLOBALIZATION

 Globalization is the process of increasing inter-connectedness in the global

economy, such that events in one part of the world have an effect on people and
societies in various other corners of the globe.
 Globalization does not have a single unified form. It comprises of inter-connected,
interdisciplinary and diverse elements, which are as follows:

ELEMENTS OF GLOBALIZATION

ECONOMIC CULTURAL POLITICAL

GLOBALISATION GLOBALIZATION GLOBALISATION
 ECONOMIC GLOBALIZATION

 Economic Globalization is characterized by the emergence of increased global

flows of international trade and investment.
 Its main agents are: companies, investors, banks, financial institutions, private
sector industries, nation states and international institutions.
 Economic Globalization has led to the growth and development of international
business through the creation of globalized business corporations which are
known by various names like:
MNE (Multinational Enterprise)
MNC (Multinational Corporation)
TNC (Transnational Corporation)
 CULTURAL GLOBALIZATION

 The phenomena of Cultural Globalization consists of two issues:

Cultural Globalization

Cultural Homogenization Cultural Hybridization

 Cultural Homogenization is the outcome of the impact of ideas and images that
travel globally due to development in telecommunication and the Internet and
develop a common global preference for product such as McDonald’s burger,
Nike shoes, Apple iPhone, etc.
 Cultural Hybridization is the adaptation of global products and ideas according to
local tastes and preferences. It assigns a local flavor to global products and hence
is also termed as “Glocalization”. Examples: Vegetarian McD’s burger, Cell phones
with vernacular keys, Hollywood Movies dubbed in Hindi, etc.
 POLITICAL GLOBALIZATION

 Political Globalization refers to processes of changes in the rules and structures of

global governance.
 The global economy has seen several changes in political structure and ideology
after the end of the two world wars. These include:
The rise and fall of socialism,
The emergence of global institutions of governance like IMF, WTO and World Bank,
Move towards both trade and investment liberalization, and
The emergence of regional trading blocks such as EU and NAFTA.
 INTERNATIONAL BUSINESS
 International Business is the process of conducting business across national
boundaries through international trade, international investment and
international contracts and strategic alliances.
 International Business has grown due to economic, political and technological
factors.
 GROWTH OF INTERNATIONAL BUSINESS
 Economic Forces:
Economic Liberalization in developing nations.
Economic System movement from socialism towards free market principles.
Globalization of Supply chains to take advantages difference of cost and quality.
Globalization of Demand due to increasing demand for global brands like Coca-Cola, Apple, Nike, etc.
Emergence of Regional Trading Blocs such as EU, NAFTA, etc.
• Political Forces:
Rise and Fall of Socialism after World War II.
Global Financial Crisis, 2008 which reinforced the role of government even in capitalist economies.
Hybrid Models of socialism and capitalism as in the case of China and India.
• Technological Forces:
Discovery of Microchip in 20th century which enabled an information revolution in global economy.
Development in Transportation and the introduction of containerization.