1) What is globalization? Impact on business. Support? Why?
Interaction and integration amongst people, companies, governments of
different nations
Driven by international trade, investment aid by information technology
Effect on the environment, culture, politic, economic development
Ex: The Silk Road is a trade route between China and Mediterranean Sea
area has exchanged not only goods but culture and knowledge
– Consumption:
Provide products for consumers around the world through internet
Broaden the empire of trade leader’s product in prospective market such
as Asian
Ex: McDonalds, Coca Cola, Starbucks
Products can be consumed of everyone despite the geographical distance
Ex: iPhone
– Production: Reduce the manufacturing price by having parts or the
whole products done by countries overseas ( outsourcing) , particularly
developing countries where have low cost labor
Ex: Uniqlo sweater is made in Vietnam although this is the Japanese
brand
– Technology: Easy accessible website through Internet create an
enormous supply chains for everyone
Ex: Amazon.com
Multinational company (MNC) whose has branches around the world
will be benefited through hi tech software such as Skype when having a
meeting.
Able to control database information of branches
Link employees, suppliers and customers by network
– Services: Most of the activities are occurred off shore.
Ex: People who has cancer may find a hospital in foreign to have a
medically treatment.
– Support
Increase the size of economies of scale
➔ Consumers will have to pay less
Exportation & importation will be improved
➔ Greater choices of goods
More investment in domestic market
➔ More opportunities to work abroad
2) Advantages and disadvantages difference in international market entry
modes
– Export: Shipping of goods from the home market to markets outside
the home country.
+ Direct export:
Directly contact with foreign company
Use sales representatives, foreign distributors, foreign retailers
May able to set up their branch offices
Ex: Suppliers sends the goods by post
+ Indirect export:
Use intermediary firms to export
Export management company (EMC)- specialize in countries and
products for a commission provides access to an exporter
Export trading company (ETC) – buys the products from the exporter and
