ENVIRONMENT

OF GLOBAL
BUSINESS
GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 CLASSIFICATION OF INTERNATIONAL
BUSINESS ENVIRONMENT

• MICRO AND MACRO ENVIRONMENT

• DOMESTIC FOREIGN AND GLOBAL

ENVIRONMENT

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
MACRO and MICRO

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 MICRO ENVIRONMENT

• Micro environment can be defined as the

forces in the firm’s immediate environment
which directly influence the firm’s decisions
and operations.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 SUPPLIERS

CUSTOMERS
INTERMEDIARIES

COMPETITORS

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 MACRO ENVIRONMENT
• Macro environment consists of broader forces
which affect the firm as well as the other
forces in the firm’s micro environment.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
POLITICAL

SOCIO-CULTURAL

ECONOMICAL

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
TECHNOLOGICAL

LEGAL
ENVIRONMENTAL

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
DOMESTIC and FOREIGN

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
POLITICAL

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
POLITICAL SYSTEMS
500 BC Non-slave Citizens

Athenian Democracy

DEMOCRACY

Representative Democracy

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
Economic Systems

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
CAPITALISM
A. An economic system in which
factories, equipment, or
other means of production
are privately owned rather
than controlled by the
government.
B. Example – United State of
America

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
Capitalism Adam Smith

Profit Private Sector

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Laissez-Faire
• A. The idea that the free market,
through supply and demand, will
LET- ALO
regulate itself if government does NE
not interfere.
• B. Government should be “hands
off” with business
• C. Highest form of capitalism

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Goodness of Capitalism
• Freedom is a choice.
• You can work wherever, buy whatever, and
pretty much do whatever.
• If you’re successful, you can be very successful
• “Survival of the fittest”  only the strong
survive in capitalism!

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 “It’s Your money, not the
government’s”- President Ronald
Reagan

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 What’s bad about capitalism?
• No “safety net.”
– If you fail, you FAIL! The government is not going
to save you.
• If you’re unsuccessful, you can be very
unsuccessful.
• Big gap between rich and poor.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
COMMUNISM
An economic
system in which
the state owns all
property and the
means of
production.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
Command KARL MAX
Economy

Supply and demand

Private
Sector The government controls all
aspects of the economy

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 What’s good about communism?
• Security, basic needs met.
• Everyone would have a job, house, health
care, etc.
– NO SURVIVAL OF THE FITTEST PROBLEM HERE

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 What’s bad about communism?
• Lack of choice
• No reward for being a better worker,
lazybones get no punishment (lack of
incentives and consequences).
• Shadow/ illegal markets
• Cease to stay competitive in the world

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
SOCIALISM
A. A political and economic theory that advocates
ownership of the means of production, such as
factories and farms, by the people rather than by
capitalists and land owners.
B. Power belongs to the working class

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 SOCIALISM

Government tends to own major

industries like utilities, health care
and major manufacturing
industries

Individuals own most small businesses

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Capitalism Socialism Communism
(Market economy) (mixed economy) (Command economy)

Ownership and •Individuals control •Basic means of Government owns means

control means of production production owned and of production
•Market determines managed by government Government determines
what goods will be •Private ownership, with what goods will be sold at
sold at what price regulation, of businesses what price

Competition •Competition and

quality high Cooperation stressed No competition, lower
over competition quality goods

•high standard of •high standard of living

Standard of living and economic Goal is equality for
Living and economic security
security everybody, enforced by
•Individuals free to •High taxes provide free
the government
GLOBALIZATION IN BUSINESS
earn profits, but may health care and
CLIENT WILLIAM M. MALINAO, LPT, MBA
risk losses education Instructor
Creating a Visual Reminder – Supply & Demand

Supply $ Price $

Supply $ Price $

Demand $ Price $

Demand $ Price $

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 EXIT TICKET:
• Which combination of political and
economic system is better for
society/free trade ? Give 2-3 reasons
why you think this.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
Politics play an important role Managers need to

Y?
in shaping business worldwide know how to

H interact between

W
The political LEARDERSHIP in
business and
government and to
know how to react
each country CONTROLS to in interests
whether how international conflict SO
business will occur in that
country ?
GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Responsibilities of business towards
government
• Regular payment of taxes
• Voluntary programs
- Sponsoring social welfare programs
- Environmental preservation
- Promoting education
- Assistance in drought, flood etc.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Political Risk
• Risks Related to Government Trade policies:
– Tariffs,
– exchange-rate controls,
– quotas,
– export/import license requirements,
– other trade barriers (embargos, sanctions)
– Expropriation
– Confiscation

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 International Legal Environment

• Host Country Laws

• Home Country Laws
• Legal Systems:
– Common law
– Theocratic Law

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Intellectual Property
Creation of Mind / Product of intellectual Activity

Intellectual Property Rights

• Violation of intellectual property rights is a significant
threat to the competitiveness of international corporations.
• It is limited monopoly rights given by a nation to the
creator of intellectual property.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Intellectual Property Protection
• Patent
– Protection of the rights of the inventor or of the
firm to use and sell the invention for a specified
period of time (Product or Process).
• Copyright
– Rights of owner of original work of art (literature,
music, film) to reproduce, sell, perform, or film the
work.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Intellectual Property Protection
• Trademark
– Brand name, mark, symbol, motto, or slogan that
identifies a brand and distinguishes it from
competitors’ brands. (E.g. Rolex, Gucci, Fendi/
Design copying without the trademark is legal)
• Trade Secret
– Know-how, formulas, and special blends that are
not registered and are thus not protected by law.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
Counterfeiting

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Factors Influencing Intellectual Property
Violations
• Lack of appropriate legislation
• Lax enforcement
• Unavailability of authentic products and High prices for
authentic products that limit their accessibility to local
consumers
• Cultural Factors:
– Values that perceive imitation as a form of flattery
– Feelings of interpersonal distrust and not getting fair deal

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor
 Protecting Intellectual Property
• TRIPS Agreement

(Trade-Related Aspects of
Intellectual Property Rights)

Member countries of the World

Trade Organization, must sign the
TRIPS agreement.

GLOBALIZATION IN BUSINESS
CLIENT WILLIAM M. MALINAO, LPT, MBA
Instructor