Globalization:

Globalization implies the opening of local and

nationalistic perspectives to a broader outlook of an
interconnected and interdependent world
with free transfer of capital, goods, and services across
national frontiers. However, it does not include
unhindered movement of labor and, as suggested by
some economists, may hurt smaller or
fragile economies if applied indiscriminately.

IMPLICATIONS OF GLOBALIZATIONS:
1. Gap between poorest and richest decreases.
2. Quality of life increases.
3. Countries open to free trade grow faster.
4. Increase in FOREX.
5. Wealth increase in a country.
6. More standardized products.
7. Better technology.
8. Wider markets for our products.
9. More sustainable development of products in the
sense that only required materials and input is used
to save for the future.
10. Sometimes they may stifle the economies of
developing or under developed countries.


Globalization of markets and
production:

Globalization of markets is the process of integrating
and merging distinct world markets into a single one.
Involves process of identification of a common norm,
form, product, tastes and preferences.
Company size need nod be large for going global.
Have different strategies for different markets.
Most of foreign markets are non-consumer goods
market like machinery, raw materials, etc.
Global firms compete with each other in global or
local markets.

1. Factors for production going global can vary from
country to country.


Drivers of globalization:
Market drivers
Cost drivers
Competitive drivers
Government drivers

Market drivers:
1. Convergence of per capita income, lifestyles, etc.
2. Global customer due to increased travel.
3. Increased global advertising.


Modes of entry into international business:
Decision for modes of entry is based on
the following reasons:
1. Ownership advantages
2. Location advantages
3. Internationalization advantages

Modes of entry:
1. Exporting
2. Licensing
3. Franchising
4. Special modes: BPO, Management
contracts.
5. FDI with/without alliance.
S.No International Business Domestic Business
1. It is extension of Domestic
Business and Marketing Principles
remain same.
The Domestic Business Follow
the marketing Principles
2. Difference is customs, cultural
factors
No such difference. In large
countries languages like India,
we have many languages.
3. Conduct and selling procedure
changes
Selling Procedures remain
unaltered
4. Working environment and
management practices change to
suit local conditions.
No such changes are necessary
5. Will have to face restrictions in
trade practices, licenses and
government rules.
These have little or no impact on
Domestic trade.
6. Long Distances and hence more
transaction time.
Short Distances, quick business
is possible.
7. Currency, interest rates, taxation,
inflation and economy have
impact on trade.
Currency, interest rates, taxation,
inflation and economy have little
or no impact on Domestic Trade.
8. MNCs have perfected principles,
procedures and practices at
international level
No such experience or exposure.
9. MNCs take advantage of location
economies wherever cheaper
resources available.
No such advantage once plant is
built it cannot be easily shifted.
10. Large companies enjoy benefits of
experience curve
It is possible to get this benefit
through collaborators.
11. High Volume cost advantage. Cost Advantage by automation,
new methods etc.
12. Global Standardization No such advantage
13. Global business seeks to create
new values and global brand
image.
No such advantage
14. Can Shift production bases to
different countries whenever there
are problems in taxes or markets
No such advantage and get
competition from some spurious
or SSI Unit who get patronage of
Government.





Multinational corporations:

An enterprise operating in several countries but managed from one
(home) country. Generally, any company or group that derives a
quarter of its revenue from operations outside of its home country
is considered a multinational corporation.

Organization of MNCs:
1. Subsidiaries
2. Joint venture
3. Franchise holders
4. Turn key projects

Subsidiaries:
Company whose voting stock is more than 50% controlled by
another company, usually referred to as the parent company or
holding company. A subsidiary is a company that is partly or
completely owned by another company that holds a controlling
interest in the subsidiary company. If a parent company owns a
foreign subsidiary, the company under which the subsidiary is
incorporated must follow the laws of the country where the
subsidiary operates, and the parent company still carries the foreign
subsidiary's financials on its books (consolidated financial
statements). For the purposes of liability, taxation and regulation,
subsidiaries are distinct legal entities.

STRUCTURE OF MNCs:
1. Horizontal
2. Vertical
3. Diversified.