Bsb119 Study Guide
1
BSB119 – GLOBAL BUSINESS LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS
Lecture Outline 1. Globalisation – nature and factors 2. Driving forces of Globalisation
3. Globalisation and limitations 4. Globalization: Prosperity or Impoverishment?
FOCUS QUESTIONS • What is International Business? o There are papers that are up to 20 pages long which try to define these two words. o Basically, any firm that engages in international trade or investment
• What is globalisation? o Globalisation refers to the shift towards a more integrated and interdependent world economy o The nature of globalisation: national economies are increasingly integrated and interdependent – but diversity remains!! o Barriers to cross-‐border trade and investment are declining; perceived distance is shrinking due to advances in transportation and communication technology and national economies are merging into an interdependent, integrated global economic system. o Includes several facets including political, cultural, economic, ecological issues – business tends to focus on the globalisation of markets and production
• Is domestic business immune to the forces of globalisation? o Businesses respond to and are the engine of globalisation – the multinational enterprise (MNE)
• Globalisation of production, markets and emergence of global institutions.
o Markets § Many industries historically distinct and separate national markets are merging into one huge global marketplace in which the tastes and preferences of consumers in different nations are beginning to converge
§ Implications: • Today's firm operates in an environment that offers more opportunities, but is also more complex and competitive than that faced a generation ago
o Production § Tendency among many firms to source goods and services from different locations around the globe in an attempt to take advantage of national differences in the cost and quality of factors of production, thereby allowing them to compete more effectively against their rivals. § Implications: • Improvements in transportation technology, including jet transport, temperature controlled containerized shipping, and coordinated ship-‐rail-‐ truck systems have made firms better able to respond to international customer demands
_______________________________________________________________________________________ Jessica King BSB119 – Global Business 07187696
LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS
2
Sourcing goods and services from different locations around the globe in an attempt to take advantage of national differences in the cost and quality of factors of production, thereby allowing them to compete more effectively against their rivals
Example of globalisation of production: Boeing’s 777 and 787 commercial aircrafts •
§
•
•
o Global Institutions § Over the past half century, a number of important global institutions have been created to:
• help manage, regulate and police the global marketplace • And ... which will be covered further in week 12.
What are the causes/factors facilitating the growth of international business? o Environmental § Liberalisation -‐ reduction in the barriers to trade and foreign investment (cooperation among nations: GATT, WTO and regional trade agreements)
§ Political environment – changing ideologies, privatisation and the emerging market economies § Rising disposable incomes – economic development and demand for greater variety of products § Technological change – transportation, communication, information processing and the Internet
§ Moore’s Law –power of microprocessor technology doubles and its costs of production falls in every 18 months
§ Virtual organisation, virtual workforce (global outsourcing) §
How internationally integrated have economies become? o The average yearly outflow of FDI increased from US$25 billion in 1975 to a record US$1.2 trillion in 2000, before falling back to an estimated US$897 billion in 2005.
o The flow of FDI accelerated faster than the growth in both world trade and world output.
_______________________________________________________________________________________ Jessica King BSB119 – Global Business 07187696
LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS
BSB119 – GLOBAL BUSINESS LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS
Lecture Outline 1. Globalisation – nature and factors 2. Driving forces of Globalisation
3. Globalisation and limitations 4. Globalization: Prosperity or Impoverishment?
FOCUS QUESTIONS • What is International Business? o There are papers that are up to 20 pages long which try to define these two words. o Basically, any firm that engages in international trade or investment
• What is globalisation? o Globalisation refers to the shift towards a more integrated and interdependent world economy o The nature of globalisation: national economies are increasingly integrated and interdependent – but diversity remains!! o Barriers to cross-‐border trade and investment are declining; perceived distance is shrinking due to advances in transportation and communication technology and national economies are merging into an interdependent, integrated global economic system. o Includes several facets including political, cultural, economic, ecological issues – business tends to focus on the globalisation of markets and production
• Is domestic business immune to the forces of globalisation? o Businesses respond to and are the engine of globalisation – the multinational enterprise (MNE)
• Globalisation of production, markets and emergence of global institutions.
o Markets § Many industries historically distinct and separate national markets are merging into one huge global marketplace in which the tastes and preferences of consumers in different nations are beginning to converge
§ Implications: • Today's firm operates in an environment that offers more opportunities, but is also more complex and competitive than that faced a generation ago
o Production § Tendency among many firms to source goods and services from different locations around the globe in an attempt to take advantage of national differences in the cost and quality of factors of production, thereby allowing them to compete more effectively against their rivals. § Implications: • Improvements in transportation technology, including jet transport, temperature controlled containerized shipping, and coordinated ship-‐rail-‐ truck systems have made firms better able to respond to international customer demands
_______________________________________________________________________________________ Jessica King BSB119 – Global Business 07187696
LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS
2
Sourcing goods and services from different locations around the globe in an attempt to take advantage of national differences in the cost and quality of factors of production, thereby allowing them to compete more effectively against their rivals
Example of globalisation of production: Boeing’s 777 and 787 commercial aircrafts •
§
•
•
o Global Institutions § Over the past half century, a number of important global institutions have been created to:
• help manage, regulate and police the global marketplace • And ... which will be covered further in week 12.
What are the causes/factors facilitating the growth of international business? o Environmental § Liberalisation -‐ reduction in the barriers to trade and foreign investment (cooperation among nations: GATT, WTO and regional trade agreements)
§ Political environment – changing ideologies, privatisation and the emerging market economies § Rising disposable incomes – economic development and demand for greater variety of products § Technological change – transportation, communication, information processing and the Internet
§ Moore’s Law –power of microprocessor technology doubles and its costs of production falls in every 18 months
§ Virtual organisation, virtual workforce (global outsourcing) §
How internationally integrated have economies become? o The average yearly outflow of FDI increased from US$25 billion in 1975 to a record US$1.2 trillion in 2000, before falling back to an estimated US$897 billion in 2005.
o The flow of FDI accelerated faster than the growth in both world trade and world output.
_______________________________________________________________________________________ Jessica King BSB119 – Global Business 07187696
LECTURE 1: INTRODUCTION TO GLOBAL BUSINESS