Drivers of International Business

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

1. Technological drivers

• The dramatic and unprecedented change in technology after the 1980s played a
major role in this transformation of globalization.
 Fast spread of latest technology globally
 Development in Information Technology
 Spread of internet worldwide
 Transportation & logistics technologies
• Rapid advancements in technology, especially in communication and
transportation, have made it easier and faster for people, goods, and information
to move across borders. This has led to an increase in international trade,
investment, and cultural exchange.
• The internet and digital communication have made it easier for people and
businesses to connect with each other across borders, leading to increased trade,
investment, and the transfer of knowledge and ideas. These are the technological
drivers of globalization.
Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH
2. Political Drivers

(i) Regional Integration

• Regional integration is a process in which neighboring countries agree to
improve cooperation through shared institutions and rules.
• Examples: European Union (EU), SAARC, NAFTA, ASEAN, EFTA, etc.
• Regional integration helps to –
• Increase the size of market
• Increases demand
• Generates employment
• Increases production quantity
• Cost affordability
Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH
• (ii)Government policies
• Governments around the world have played a role in driving
globalization by adopting policies that promote free trade, foreign
investment, and economic liberalization.
• A.Reduced Trade Barriers
• This is an another important driver of globalisation. Many countries have
reduced tariffs and other trade barriers, making it easier for businesses
to sell goods and services across borders. Advanced countries after world
war II reduced tariffs to encourage free flow of goods & services.
• Example: General Agreement on Tariffs and Trade (GATT)

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

• Declining Investment Barriers
• After 1990s various countries started removing foreign investment
barriers in order to encourage the growth of international business.
Companies can invest in other countries or set up operations there,
and investors can buy stocks or bonds from companies located in
different countries.

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

3. Economic Drivers

• (i)Economic liberalization
• Many countries have adopted policies that promote free markets and
open economies, which has encouraged foreign investment and
trade.
• (ii)Globalization of financial markets
• The globalization of financial markets has made it easier for
businesses to access capital from around the world and has facilitated
the flow of investment across borders.

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

4. Market drivers

• Changing consumer preferences

• Consumers are becoming more global in their tastes and preferences, and
businesses are responding by developing products and services that can be
sold in multiple markets.
• Access to new markets
• Globalization has provided businesses with access to new markets, which has
helped them to grow and expand their operations.
• Global supply chains
• Companies can now source raw materials, components, and labor from
different countries to create a final product, leading to increased efficiency
and cost savings.
Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH
5. Competitive Drivers

• Increased competition
• Globalization has led to increased competition, which has driven
businesses to innovate and become more efficient in order to remain
competitive.
• Growth of Multinational Companies (MNCs)
• MNC is a company or organization doing business in more than one
country. Growth of MNCs contributed to internationalization of
businesses.

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

Conclusion

 Overall, these drivers of globalization have transformed the world

economy, making it more interconnected and creating new
opportunities for businesses and consumers alike.
 However, globalization has also created challenges, such as increased
inequality and environmental degradation, that must be addressed in
order to ensure a sustainable and equitable future for all.
 This is all about various important Drivers of Globalisation or
internationalisation.

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

References:
• Hill, Charles W.L., Hult Thomas M. G. Rohit Mehtani (2019).
International Business: Competing in the Global Marketplace, 11/e;
New Delhi: McGraw Hill Education
• Daniels, John D and Radebaugh, Lee H et.al. (2014). International
Business: Environments and Operations, 12/e; New Delhi: Pearson
Education

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH

Activity
 Explore the India’s globalization policy.
 Explore about the liberalization of Indian financial Markets.
 Explore about Indian FDI policy
 Explore about FII policy

Dr.R.K.Sudhamathi, Associate Professor, MBA, NGPiTECH