1.

1 Globalization and Facets of Globalization-2

Introduction

Globalization is a great phenomenon. It has influenced the lives of people and the way business is
conducted. People of the current generations live the life of global citizens. They were influenced by
how other people in other parts of the world live. People emulate fashion, entertainment, and even
the likes for food from other countries. According to Hill (2011), the world has started to be similar
concerning material culture. The photographs you see below are examples of the way of life of people in
the age of globalization. It reflects the fad in entertainment, food, leisure, and socialization.

Globalization and International Business World View

Globalization is the integration of world markets and where the global economy is linked and
dependent on each market (Hill, 2011). Globalization was observed both in manufacturing and service
operations. Business operations became globalized as firms continue to explore new markets and
sources of raw materials. Manufacturing plants were located strategically in countries were resources
used are available and abundant. Service-oriented operations were also outsourced in countries were
talents are numerous and inexpensive. These cross border service sector operations are serving foreign
clients and dealing with global customers also. Customers' support in the Philippines and Information
Technology support operations in India is a concrete example of this.

Globalization has indeed brought changes in the lives of people and the way business operates.
Globalization relative to business operations was able to break physical boundaries as well as time and
distance. Things that are difficult to access due to physical distance were made available thru online
selling. Customer Service Representatives were able to attend to customers and interact with them at
different time zones and locations. Firms established different manufacturing, industrial and service
sites across the globe to capture new markets and resources. It also enhances global value chains to
come up with a valuable product.

Facets of Globalization

The aspect of globalization according to Hill (2019) are many, and if you look at Globalization,
it refers to the shift toward a more integrated and interdependent world economy. Globalization has
several facets, including the globalization of markets and the globalization of production. The
globalization of markets refers to the merging of historically distinct and separate national markets into
one huge global marketplace. Consumer products such as Citigroup credit cards, Coca-Cola soft drinks,
video games, McDonald’s hamburgers, Starbucks coffee, IKEA furniture, and Apple iPhones are
frequently held up as prototypical examples of this trend. The firms that produce these products are
more than just benefactors of this trend; they are also facilitators of it. By offering the same basic
product worldwide, they help create a global market according to Hill (2019). The globalization of
production refers to the sourcing of goods and services from locations around the globe to take
advantage of national differences in the cost and quality of factors of production (such as labor, energy,
land, and capital). Companies hope to lower their overall cost structure or improve the quality or
functionality of their product offering, thereby allowing them to compete more effectively Hill (2019).

References
FE Online.(2018, October 5). The IT-BPM industry contributed 8% to the country’s GDP in the financial
year 2017-18..[image] image by IE. Financial Express. Link

Links to an external site.

Hill, C.W.L. (2019).International Business Competing in the Global Marketplace, 12th Edition [Ebook
Edition]. McGraw-Hill/Irwin.New York,NY.

Ke, B. (2019, September 12). The First All-Filipino K-Pop Boy Group is Crushing It Too Hard to Hear the
Haters [image of SB19]. NextShark.

KFC Menu, Menu for KFC, Bago Bantay, Quezon City [image]. (n.d). Zomato.

BPO's would still drive office space demand in 2019'[image]. (2018, December 13). Panay News.

Riaz, M.(2013, March 21). Chapter 1 International Business[lecture notes, PowerPoint slides].
SlideShare.

Uy, S.L. (2017, December 17). Do You Remember the First Starbucks in the Philippines? . Esquire.

1.2 Drivers of Globalization-2

Introduction

Now you already have gainful knowledge of globalization. The previous lesson taught you the
concepts of globalization including its dimension, the globalization of business, and how it relates to
other concepts like strategy, value chains, and business networks. Lastly, you learned the reason why
the world has moved towards globalization.

It is now time to move on to a new lesson that deals with the drivers of globalization. There are
numerous identified drivers of globalization. However, in this lesson, we will only tackle three of them.
The first two are known in the literature and the third involves philosophical ideas popular in time. The
first is the decline in trade barriers among countries. The second is technological change (Hill, 2011). The
third driver is the "paradigm shift in managing the global economy" (Johnson & Turner, 2003). These
drivers seem to be the cogent force that led towards the trend of globalization.

The protectionist policy was the dominant policy of most countries of the world after the war. The
aim of the protectionist policy is to favor domestic industry, especially infant industries against foreign
competition. Tariffs and import quotas of commodities which enter the countries were used as a tool to
conduct the said policy. However, raising trade barriers (in a form of high tariffs on imported goods)
produced negative consequences like retaliation between trading countries whose exports these
countries are blocking (Hill, 2011) (Rapley, 2002) . This experience led to the commitment of countries to
remove trade restrictions so that goods and services will be trading freely (Hill,2011). The result is the
eventual decline in trade barriers internationally.

The Basics of Tariffs and Trade Barriers [image] (n.d.) What Gets in the Way of Free Trade?
[image] (n.d).

The lowering of trade barriers by countries was a strong impetus to the theoretical realization of the
globalization of markets and productions. Technology, on the other hand, was the force that made the
globalization of markets and production a tangible reality according to Hill (2011). He stressed further
that the technological changes observed in the areas of telecommunications and transportation are the
significant ones. Telecommunications creates a global audience and transportation creates a global
village.

The inventions of the microprocessor, satellite, wireless technologies,internet, and the World Wide
Web have revolutionized global communications (Hill,2011). You will read below some brief
descriptions of the technological inventions which help improve telecommunications.

A Microprocessor

A microprocessor is an electronic component which is a chip found in a computer. It is the Central

Processing Unit (CPU) of the computer which functions as the brain. This chip performs a variety of tasks
coming from input and output devices as well as the software of the computer (Miller,2003). This task
conducted by the microprocessor is arithmetic and logical operations. The microprocessor was able to
improve the numerous tasks of computers in a split second and help improve the movement of data in
different memory locations (Microprocessor Advantages and Disadvantages, n.d.)

Microcontroller vs microprocessor: what’s the difference?

Image of a processor from Knerl (2019)

A Satellite

Satellites circle Earth

Satellite image from NASA (2014)

The photo that you see on the left are examples of satellites both natural and artificial. According to
NASA (2014), a "satellite refers to a machine that is launched into space and moves around Earth or
another body in space". Telecommunication signals were improved because of the satellite. The signals
of televisions and mobile devices according to NASA can be sent upward to the satellite and these
signals when sent back down to Earth can be spread to different locations. The utilization of satellite
help improves the reach and distribution of signals. The signal was able to travel far and evade some
possible blocking from mountains and tall buildings.

The World Wide Web and the Internet

The internet in a simple context is a large computer network where one computer network is
connected to other computer networks. Hence the term is said to be a "network of
networks"(Miller,2003). The ability of one computer to connect with other multiple computers led to its
ability to access internet services. These services can be utilized by the user. Among these services
include receiving email, community chats, and information services through the World Wide Web.

The World Wide Web is a simplified information dissemination platform used for information
sharing on the internet. The proliferation of information was also disseminated through the provision of
free Uniform Resource Locator (URL) and hypertext to the general public (Giandomenico,2017). The
World Wide Web facilitated the presentation of information in a highly visual format like multimedia
(Miller,2003)

World Wide Web

Giandomenico (2017)

The technological changes in telecommunications have improved connections globally. Information

was processed quickly using a computer which contains a processor. The processed information when
shared can be accessed by people in the internet through email, chat, and file sharing through a web
address. The access of people to the internet and information facilitated the exchange of information in
a fast-paced manner. This led to the interaction of people globally in different time zones unhampered
by geographical boundaries and physical presence. These global interactions created networks and
communities that facilitated globalization.
Transportation Technology

Innovation in transportation technology has contributed to globalization. According to Hill (2011),

the inventions which gave a major contribution are the development of commercial jet aircraft, super
freighters, and the introduction of containerization. Commercial jet travel reduced the travel time from
one location to another. The world becomes accessible in hours and days compared to many months
through maritime navigation. Japan, for example, can be traversed in just 4 hours and 14 minutes
assuming the flight speed of the commercial airline is 805 km/h (Flight time from the Philippines to
Japan, n.d, s.1 and 2).

The introduction of containerization revolutionized the transportation business. Prior to the period
when containerization is not yet existing, moving goods are said to be costly, lengthy, and very labor-
intensive. After containerization was introduced the container ship fleet has grown intensively and
became the preferred mode of transportation for goods. The volume of international trade has grown
also. Containerization also yielded efficiency gains like reduction in transportation cost and cheaper
payments in shipping goods around the globe. These efficiency gains helped drive the globalization of
markets and production (Hill,2011).

References

Flight time from Philippines to Japan.(n.d.). travelmath. Retrieved July 18, 2020 from LinkLinks to an
external site.

Giandomenico, A. (2017,August 4). How the world wide web has revolutionized key industries while
creating a land of opportunity for adversaries. Fortinet. LinkLinks to an external site.

Hill, Charles W.L. (2011) International Business Competing in the Global Marketplace, 8th Edition [Ebook
Edition]. McGraw-Hill/Irwin.New York,NY.

Johnson, D. & Turner, C. (2003). International Business Themes and Issues in the Modern Global
Economy [Ebook Edition]. Routledge. New York, NY.

Knerl, L. (2019). Microcontroller Vs Microprocessor : Whats the difference? [image]. HP. LinkLinks to an
external site.
Microprocessor Advantages and Disadvantages (n.d). Study Notes.Retrieved on July 14, 2020. from
LinkLinks to an external site.

Miller, M.(2003). Absolute Beginer's Guide to Computer Basics. [Ebook Edition]. Que Publishing.
Indianapolis, IND.

Stillman,D. (2014, February 12). What is a Satellite? NASA. LinkLinks to an external site.

The Basics of Tariffs and Trade Barriers [image] (n.d.). Investopedia. LinkLinks to an external site.

What Gets in the Way of Free Trade? [image] (n.d). World101-Council on Foreign Relations. Link

1.3 National Differences and Managing in a Global Market Place

Introduction

The globalization of the market and production has influenced the global economy. A look at some
global statistics revealed the importance of economic relations. The world output from 1960 to the
present has grown more than 50 times historically based on the World Bank Links to an external
site.data. In the early years of 1960, the world output is about 1.2 trillion US Dollars and has grown to
more than 80 trillion US Dollars. The United States was the dominant industrial power in the decades of
the 1960s. The country's output was almost 40 percent of the world output. This dominance was shared
with European countries like Germany, France, and Britain, countries that are first to industrialize.
However, as the years go by, the dominance of the United States has waned as its shares in world trade
has reduced. The decline of the United States' shares in world output was attributed to the increase in
the share of world output by emerging economies like China, India, and Brazil (Hill, 2011).

An international business is any firm that engages in international trade or investment. A firm does
not have to become a multinational enterprise, investing directly in operations in other countries, to
engage in international business, although multinational

enterprises are international businesses. As their organizations increasingly engage in cross-border trade
and investment, managers need to recognize that the task of managing an international business differs
from that of managing a purely domestic business in many ways.
 Differences among countries require that an international business vary its practices country by
country. Marketing a product in Brazil may require a different approach from marketing the product in
Germany; managing U.S. workers might require different skills from managing Japanese workers;
maintaining close relations with a particular level of government may be very important in Mexico and
irrelevant in Great Britain; the business strategy pursued in Canada might not work in South Korea; and
so on. Managers in an international business must not only be sensitive to these differences but also
adopt the appropriate policies and strategies for coping with them.

International Trade

The long time upward trend of world output was paralleled by the growth in international trade and
foreign direct investment. World Export Links to an external site.and Import Links to an external
site.data showed an upward trend based on World Bank data. The insight that can be gleaned from the
above sources is that gains from trade have helped the countries to be better off economically. The
changing demographics data of world output according to Hill (2011) showed that China's output will
exceed that of the United States' output on a PPP basis under a continuous trend assumption. He also
took cognizance of the forecast of the World Bank a decade ago which projected that 60 percent of the
world's economic activity is accounted for the developing nations and 38 percent to the rich nations in
the current year.

Foreign Direct Investment

The decline in trade barriers globally and the increase in the share of world output of emerging and
developing countries motivated non-US firms to engage in cross border business sometime in the 1970s.
It was said that the main motivations of these firms on their foreign direct investment were to spread
production to optimal location and to establish a direct presence on major foreign markets. Labor-
intensive manufacturing operations were established in developing nations where labor costs are
cheaper than that of the home market. In the case of Japanese firms, it was said that these firms took
cognizance of the hedge against unfavorable currency movements and possible imposition of trade
barriers (Hill,2011).
The recent statistics on world FDI inflows showed an increase. Positive percent growth inflows
were observed in Developed Economies, Europe, Latin America, and the Caribbean and
Transition Economies. Negative growth in percent was observed in Developing Economies,
Africa, and Asia. No growth was observed for North America. The inward investment growth
and decline are caused by multi-factor determinants like economic performance, demand for
goods, and non-economic factors. The advantage or spillover effects of FDI inflows are
technology transfers and the improvement of human resources. It is perceived as well that
sustained FDI inflows are a sign of an improving or stable investment climate.
Managing the Global Marketplace
It was already established that there are gains and opportunities when firms decide to engage
in cross border business. Expanding production and capturing directly foreign markets also
introduces a new and perhaps additional problems for managers. Managers need to recognize
that managing the domestic market is totally different from managing international business.
Managing an international business has greater complexity than managing the domestic business.
The basic problem with IB operation is the fact that countries are totally different from each
other. In this sense, the conduct of business must have variations and also country-specific.
According to Hill (2011,p.87), there are four reasons for the difference in managing
international business compared to domestic business.

1. "countries are different"

 2. the range of problems confronted by the managers of international business is wider and
more complex
3. "international business need to look for ways to work within the limits imposed by
government intervention in the international trade and investment system"
4. "international transaction involves converting money into different currencies"

The reasons for the difference in managing IB vs domestic business indicate the sources of
complexities. The level of difficulty in managing IB is wider because of the differences in
countries with respect to culture, political system, economic system, and legal system. Firms that
wish to conduct business operations in foreign countries must adhere to the host's country
policies in business operations. The business operations must conform to the cultural taste and
regulatory framework set by the government of the host country in order to avoid sanctions. Last,
the financial aspect of business operations must also be considered. The operation must meet the
financial and monetary requirements as it involves different currency conversions.
References
FDI Inflows, by region, 2018, and 2019 (Billions of dollars and percent). Adapted from World
Investment Report 2020 International production beyond pandemic", United Nations Conference
on Trade and Development.2020, Link Links to an external site..
GDP (current US$)[image].(n.d.) .World Bank national accounts data, and OECD National
Accounts data files. Link.Links to an external site.
Goods export (BoP, current US$) [image]. (n.d.) .World Bank national accounts data, and OECD
National Accounts data files. Link.Links to an external site.
Import of goods and services (BoP, current US$) [image]. (n.d.). World Bank national accounts
data, and OECD National Accounts data files. Link.Links to an external site.
Hill, Charles W.L. (2011) International Business Competing in the Global Marketplace, 8th
Edition [Ebook Edition]. McGraw-Hill/Irwin.New York, NY.
Hill, Charles W.L. (2019) International Business Competing in the Global Marketplace, 12th
Edition [Ebook Edition]. McGraw-Hill/Irwin.New York, NY.

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