Absolute advantage

Geographical loction

Technology

Wealth capital

Education

Globalization, simply stating, is the ability of the individuals and firms to produce anything anywhere and
sell anything anywhere across the world. It also means that resources (people and capital) will flow to
the places where they produce best and earn best. World is becoming flatter with less and less entry
barriers with an objective to optimize the output of resources. Economies are realizing that protective
attitude would not take them long and they need to open up economies to the world to progress and
allocate resource to the maximum output. Accordingly, many countries including the developing ones
have embraced globalization by opening up their economies. However, there is no compulsion for any
economy to do so each country decides on the subject on its own based on its assessment of the
perceived advantages. Globalization is good or bad for economies has always been a debatable issue.
Here is a big picture on positives and negatives of globalization:

Positives of Globalization:  Best allocation of global resources as they are able to flow where they
produce best and earn best.  Integration of developing economies with the developed world and
opportunities for them to learn and grow, access new products and services, exposure to new
technologies etc.  Benefits to end consumers through global competition, which encourages creativity
and innovation and keeps prices for goods and services under check.  Greater access to foreign culture
in the form of art, movies, music, food, clothing etc. In other words, the world has more choices today.

Creates employmenr oppo

Increases purchasing power and enhances standard of living

Negative of Globalization:  Increasing divide between the rich and the poor - the rich are getting richer
and the poor are becoming poorer.  Competition results in survival of the fittest. As jobs can move to
the most competitive countries, countries with less competent talent may be left without opportunities.
 Integrated economies mean that problem in one part of the world would affect the other parts of the
world. For example, credit crisis in U.S. in 2008 created havoc across the world.

Reduction in social welfare

Less developed depend on developed

Leads to harmful comerisation

Over exploitation of global resources

Drivers

Technological

Political

Market

Cost

Scope of international busniness

1. Foreign investments
2. Exports and imports of merchandise
3. Licensensing and franchising
4. Xports and imports of services
5. Growth opportunities
6. Benefitting from cureency exchange
7. Limitations of the domestic market

Greenfield investments

Greenfield investments are complex market entry strategies that some companies
choose to use. These investments involve buying the land and resources to build a
facility internationally and hiring a staff to run it. Greenfield investments may
subject a company to high risks and significant costs, but they can also help
companies comply with government regulations in a new market. These
investments typically benefit large, established organizations as opposed to new
enterprises.

Acquisition

If your company plans to sell a product internationally without managing the

shipment and distribution of the goods you produce, you might consider
purchasing an existing company in the country in which you want to do business.
Owning a company established in your international market gives your
organization credibility as a local business, which can help boost sales. Company
ownership costs more than most market entry strategies, but it has the potential
to lead to a high ROI