Globalization & International Business: Overview of Transnational Corps & Strategies, Study notes of Economics

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GlobalizationGlobalization

International Business &International Business &

Globalization-An OverviewGlobalization-An Overview

1. 1. Past two decades has been thePast two decades has been the rapid,sustained growth of Internationalrapid,sustained growth of International BusinessBusiness
2. 2. Markets have become truly global for mostMarkets have become truly global for most goods and servicesgoods and services
3. 3. Emergence of Corporate Empires in theEmergence of Corporate Empires in the world economy-Their ownership andworld economy-Their ownership and management has become Transnationalmanagement has become Transnational

Art of Global DominanceArt of Global Dominance

 (^) Source raw materials whereverSource raw materials wherever they are cheapest.they are cheapest.  (^) Manufacture anywhere in theManufacture anywhere in the world where it is most costworld where it is most cost effective.effective.  (^) Sell in those global markets whereSell in those global markets where prices are highest.prices are highest.  (^) Raise finances globally.Raise finances globally.  (^) Make International StrategicMake International Strategic alliances.alliances.  (^) To manage all these, take on theTo manage all these, take on the best talent from all over the world.best talent from all over the world.

Need for InternationalNeed for International BusinessBusiness

WHY WHY

GOGO

INTERNATIONALINTERNATIONAL??

 (^) PULL FACTORSPULL FACTORS (Proactive Reasons)(Proactive Reasons)

 (^) PUSH FACTORSPUSH FACTORS (Reactive Reasons)(Reactive Reasons)

Drivers and Restrainers ofDrivers and Restrainers of

GlobalizationGlobalization

 (^) Driving ForcesDriving Forces

1.Liberalisation 1.Liberalisation

2.Technology2.Technology

3.Transportation &3.Transportation & Comm.revolutionComm.revolution

4.Competition4.Competition

5.Rising aspirations &5.Rising aspirations & wantswants

6.Regional Integrations6.Regional Integrations

 (^) Restraining ForcesRestraining Forces 1.External factors(Govt. 1.External factors(Govt. Policies,GlobalPolicies,Global Economy)Economy)

2.Internal factors(Within2.Internal factors(Within thethe Organization,ResourceOrganization,Resource Constraints)Constraints)

International OrientationsInternational Orientations

 The degree and nature ofThe degree and nature of

involvement in International Businessinvolvement in International Business

 EPRG FrameworkEPRG Framework

• (^) EthnocentrismEthnocentrism
• (^) PolycentrismPolycentrism
• (^) RegiocentrismRegiocentrism
• (^) GeocentrismGeocentrism

Polycentric OrientationPolycentric Orientation

 Host Country OrientationHost Country Orientation

 Subsidiaries are estd. in overseasSubsidiaries are estd. in overseas

marketmarket

 Environment of each market isEnvironment of each market is

consideredconsidered

 Emphasis put on local laws,custom &Emphasis put on local laws,custom &

cultureculture

 Employing local personnelEmploying local personnel

Regiocentric OrientationRegiocentric Orientation

 Different regions as different marketsDifferent regions as different markets

 Region with common mktg.Region with common mktg.

characteristics considered as singlecharacteristics considered as single

marketmarket

 Coordination between HQ andCoordination between HQ and

Regional HQRegional HQ

Multinational CompanyMultinational Company

 (^) A Multinational Company is anA Multinational Company is an

org doing business in more thanorg doing business in more than one country.one country.  (^) A MNC engages to variousA MNC engages to various

activities likeactivities like exporting,importing,manufactureexporting,importing,manufacture in different countries.in different countries.  (^) MNC’s take managerial decisionsMNC’s take managerial decisions

based on a global perspective.based on a global perspective.

Growth of MNC’s-CompetitiveGrowth of MNC’s-Competitive

AdvantageAdvantage

 (^) Product InnovationProduct Innovation

 (^) Financial SuperioritiesFinancial Superiorities

 (^) TechnologicalTechnological

SuperioritiesSuperiorities  (^) Marketing SuperioritiesMarketing Superiorities

 (^) Customer CaptivityCustomer Captivity

 (^) Proprietary TechnologyProprietary Technology

 (^) Economies of ScaleEconomies of Scale