International Business

Environment
– Concept & Some facts

Dr. Ravikesh Srivastava

 Globalization: the concept at a glance
 Globalization is a Multi-dimensional concept
(political, cultural, social, economic)

 Globalization means:
Increased interactions and exchanges at the
global scale (world as “global village”)
 Standardization of goods, services, norms,
values
 Transnationalism, decreasing importance of the
state and national boundaries etc.
Concept of
‘INTERNATIONAL’, ‘MULTINATIONAL’ ‘GLOBAL’,
‘TRANSNATIONAL’, Corporation.
•
MNCs is usually defined as a firm that controls operations or
income generating assets in more than one country.

• The scholars differ from each other in charecterising

multinational enterprise.
• Some scholar suggested that multinationality requires
operation in minimum number of countries usually five or six or
that farm which is active across borders should be a certain
size before it can called MNCs.
 Concept of MNC:
1. MNCs can be defined as firms having
operations in more than one country,
international sales and nationality mix of
managers and owners.
2. The multinational company has been defined as
"a national company in two or more countries
operating in association, with one controlling
the other in whole or part”.
 GLOBALISATION
 The adjective "Global" means world wide or
more loosely the whole.
 Basically "GIobalisation" refers to the
compression of the world and the
intensification of consciousness of the world
as single place.
 In business "GIobalisation" is conceived
exclusively by economic activities, (e.g.
Global market place.)
Organisational Structure
Transntional Multinational Global

National Decentralised It permits retaining

corporation with organizational local flexibility
tightly controlled structure diverse and while achieving
foreign operations. perhaps on co­ global integration.
ordinated set of
(Ethnocentric strategies world
management wide.
style.) (Charecterised by
polycentric
management style)
 Measuring globalization:
declining cost of communication
Graphs by Benjamin
Holt, July 1999
Source: IMF
 Measuring globalization:
timing the spread of technologies
Graphs by Benjamin
Holt, July 1999
Source: Vital Signs1999,
Worldwatch Institute
 Measuring globalization:
timing the spread of technologies
Source: Vital Signs 2003
Worldwatch Institute
Measuring Globalization: the
number of Internet users
 DEFINING AND MAPPING TRADE:

 TRADE (EXPORTS+IMPORTS/GDP) provides as key

measure of each country's integration with the world
economy.

 The maps show changes in the ratio of international trade

(exports plus imports) to the output (GDP) of an economy.

 SUPPORTERS OF TRADE: greater openness to international

trade will bring economic growth and may reduce poverty.

 OPPONENTS TO TRADE: international trade leads to greater

inequality and increased power for transnational corporations.
 Globalization Index
 ECONOMIC INTEGRATION – trade, FDI, and portfolio
capital flow and income payments and receipts

 PERSONAL CONTACT – International travel and

tourism, International telephone traffic and cross-border
transfers

 TECHNOLOGY - Number of Internet users, Internet

hosts and secure servers

 POLITICAL ENGAGEMENT – Number of memberships

in international organizations, UN Security council
missions and foreign embassies that each country hosts
 Globalization Index Ranking
1. Ireland 11. Norway
2. Switzerland 12. USA
3. Singapore 38. Japan

4. Netherland 49 India

5. Sweden 53 China

6. Finland
7. Canada
8. Denmark Source:
A. T. Kearney,
9. Austria Foreign Policy
Jan/Feb 02
10. UK
 MAPPING ECONOMIC
GLOBALIZATION: TRADE (1)
 MAPPING ECONOMIC
GLOBALIZATION: TRADE (2)
 Defining and mapping FDI
 Foreign direct investment (FDI) is a measure of foreign
ownership of productive assets, such as factories, mines
and land. Increasing foreign investment can be used as one
measure of growing economic globalization (MAP = FDI
AS % OF GDP)

 This expansion of foreign investment into the global South

indicates increasing global economic integration. However,
FDI is heavily concentrated in only a few, industrializing
nations.

 In 1997 nearly 71% the foreign direct investment in

developing countries (the global South) went to just 9 nations,
and of that over 30% was invested in China alone.
 MAPPING ECONOMIC
GLOBALIZATION: FDI (1)
 MAPPING ECONOMIC
GLOBALIZATION: FDI (2)
 GLOBALIZING WHAT?
WEALTH ACROSS NATIONS
 GLOBALIZING WHAT?
WEALTH ACROSS NATIONS