CHAPTER: 02

GLOBALIZATION OF MARKETS AND THE

INTERNATIONALIZATION OF THE FIRM

Q: How international business contribute to improving business method

International business improves methods by promoting cross-cultural collaboration, fostering
innovation through diverse perspectives, and encouraging companies to adapt and optimize
strategies to meet global market demands. The competition on a global scale also drives
continuous improvement, pushing businesses to adopt best practices and invest in advanced
technologies to stay competitive.
Q: Provide example on socialization and actualization
Socialization:
Socialization is the process through which individuals learn and internalize the values, norms,
and behaviors of their society.
Consider an employee joining a new company and adapting to its organizational culture through
interactions with colleague and training programs.
Actualization
Occurs when individuals or groups from one culture come into contact with another culture and
adopt some of its elements.
Example of acculturation is when someone moves to a new country and begins to celebrate local
holidays or adopts certain customs from the new culture while retaining aspects of their own.
Q: Difference between Relativism and Normativism
Relativism:
• Values are subjective and vary across cultures.
• Emphasizes cultural diversity.
• Ethical standards are context-dependent.
• Encourages tolerance for diverse moral perspectives.
• Opposes absolute moral judgments.
Normativism:
• Advocates for universal values.
• Emphasizes certain norms apply universally.
• Asserts the existence of objective ethical standards.
• Posits universal principles guiding behavior.
 • Supports absolute moral judgments.
Q: Globalization of markets
Refers to the process where businesses operate on a worldwide scale, selling and buying goods
and services internationally. It involves breaking down traditional barriers, allowing companies
to reach customers in different countries, leading to a more interconnected and interdependent
global economy.
Q: value chain
A value chain is like a step-by-step journey that a product takes from raw materials to the hands
of the customer. It includes all the activities involved in making, selling, and delivering a
product. Each step adds value to the product, making it better or more useful, until it reaches the
customer. It helps companies understand where they can improve and be more efficient in
creating and delivering their products or services.
Q: Phases of Globalization
First Phase (Pre-1800s):
Limited international trade, mainly local or regional.
Second Phase (1800s - Mid-20th Century):
Industrial Revolution boosts global trade; rise of multinational corporations.
Third Phase (Mid-20th Century - Present):
Post-WWII technological advancements; liberalization of trade; global interconnectedness.
Q: The Drivers of Market Globalization

Q: Technological Advances & Globalization in context of:

1. Information Technology:
• Advances: Rapid growth of computers, internet, and data processing.
• Example: Global access to information through the internet and instant communication.
2. Digitalization:
• Advances: Transformation of analog data into digital formats.
• Example: Digital payment systems replacing traditional cash transactions globally.
3. Manufacturing:
• Advances: Automation, robotics, and 3D printing revolutionizing production.
• Example: Global supply chains using automation for efficient and cost-effective
manufacturing.
4. Communication:
• Advances: Instant global communication through smartphones and social media.
• Example: Real-time collaboration among people worldwide using messaging apps and
video calls.
5. Transportation:
• Advances: Faster and more efficient modes of global transportation.
• Example: Air cargo enabling swift movement of goods between continents, reducing
shipping times.
Q: Dimensions of Market Globalization
1. Integration and Interdependence of National Economies:
• Description: Increased connections between economies, fostering interdependence.
• Example: Global supply chains where components are sourced from different countries.
2. Rise of Regional Economic Integration Blocs:
• Description: Formation of groups of countries cooperating economically.
• Example: European Union (EU) facilitates trade and economic cooperation among
member nations.
3. Growth of Global Investment and Financial Flows:
• Description: Increase in cross-border investments and financial transactions.
• Example: Foreign direct investment (FDI) from one country into businesses in another.
4. Convergence of Consumer Lifestyles and Preferences:
• Description: Similarities in consumer behaviors and preferences worldwide.
• Example: Global popularity of smartphones and international fast-food chains.
5. Globalization of Production:
 • Description: Manufacturing processes spread across different countries.
• Example: Car components manufactured in various countries, then assembled globally.
6. Globalization of Services:
• Description: Internationalization of service-based industries.
• Example: Outsourcing customer support to a call center in another country.
Q: Societal Consequences of Globalization
1. Contagion: Rapid Spread of Monetary and Financial Crises:
• Description: Financial issues in one country quickly impacting others.
• Example: The 2008 financial crisis originating in the U.S. affecting global markets.
2. Loss of National Sovereignty:
• Description: Reduced control and influence of individual nations.
• Example: Adherence to global trade agreements limiting policy autonomy.
3. Offshoring:
• Description: Shifting business operations to other countries.
• Example: A company in the U.S. moving its customer service to a call center in India.
4. Reshoring:
• Description: Bringing previously offshored activities back to the home country.
• Example: A company relocating manufacturing back to the U.S. for quality control.
5. Effect on the Poor:
• Description: Impact on income inequality and job opportunities.
• Example: Job loss in local industries due to global competition affecting lower-income
workers.
6. Effect on Sustainability and the Natural Environment:
• Description: Environmental impact of global production and consumption.
• Example: Increased carbon emissions from long-distance transportation of goods.
7. Effect on National Culture:
• Description: Influence of global trends on local traditions and values.
• Example: Adoption of Western lifestyles impacting traditional cultural practices.