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Objective of Session To define globalization and international business and show how they affect each other To discuss the major advantages and disadvantages of globalization To understand why companies engage in international business

The Globe Continents: Asia, Africa, N America, S America, Europe, Oceania,Antartica..en_continents.gifen_continents.gif Continents are landmasses divided by oceans.. Oceans.. Pacific, Atlantic, Indian, Southern (Antarctic), and Arctic Oceans..world-oceans-map.jpgworld-oceans-map.jpg

Globalization Derived from the word globalize, which refers to ‘emergence of an international network of social and economic systems’ One of the earliest known usages of the term as the noun was in 1930 in a publication entitled Towards New Education where it denoted a holistic view of human experience in education Sociologists Martin Albrow and Elizabeth King define globalization as: …all those processes by which the people of the world are incorporated into a single world society In ‘The Consequences of Modernity’, Anthony Giddens used following definition ‘The intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa’

Globalization Definition: ‘emergence of interdependent relationships among people from different parts of a world’ Set of relationships Between different nations Globalization related relations… Aid to a poor country Fashion show paegent Football match Leisure trip Your SIP

How Globalized are you Globalization_ You're living IT_(360p).flv Globalization_ You're living IT_(360p).flv Global brands in India Indian brands in global business Globalization:

Factors contributing to Globalization Increased used of technology Liberalization of cross-border trade and resource movements Development of services that support international business Growing consumer pressures Increased global competition Changing political situations Expanded cross-national cooperation

The Criticisms of Globalization Threats to national sovereignty Growth and environmental stress Growing income inequality Pros and Cons of Globalization_(360p).flv

Advantages Access to multiple markets Collaborative decision making Cultural awareness Swift spread of information Tolerance upgradation

Disadvantages of Globalization Inequality of income Americanization Socially unequal distribution of world resources Commodification of labor Less accountability for rich countries in name of development Spread of deadly diseases Inhumane use of PoW and child labor Human trafficking

Thus strong control and monitoring required WTO WB IMF UN

WTO: World Trade Organization WTO replaced GATT as the organization overseeing the multilateral trading system. Location:Geneva, Switzerland Established:1 January 1995 as a new avatar of GATT Created by:Uruguay Round negotiations ( ) Membership: 157 countries on 24 August 2012 Secretariat staff: 640 Head: Pascal Lamy (Director-General) Functions: Administering WTO trade agreements Forum for trade negotiations Handling trade disputes Monitoring national trade policies Technical assistance and training for developing countries Cooperation with other international organizations

The World Bank is an international financial institution that provides loans to developing countries for capital programs The World Bank's official goal is the ‘reduction of poverty’. According to the World Bank's Articles of Agreement (as amended effective 16 February 1989), all of its decisions must be guided by a commitment to promote foreign investment, international trade, and facilitate capital investment World Bank

IMF The organization's stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability, by making financial resources available to member countries to meet balance of payments needs

UN The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace. The UN was founded in 1945 after World War II to replace the League of Nations, to stop wars between countries, and to provide a platform for dialogue. It contains multiple subsidiary organizations to carry out its missions.

Definition of International Business All commercial transactions—including sales, investments, and transportation—that take place between two or more countries

Reasons That Firms Engage in International Business Expanding sales Acquiring resources Minimizing risk

Modes of Operation in International Business Merchandise exports and imports Service exports and imports Tourism and Transportation Service Performance: banking, insurance, engineering, management, interest and dividend Asset Use Investments: FDI(controlling interest) and FII(non controlling interest)

Types of International Organizations Collaborative arrangements Strategic Alliance Multinational Enterprise (MNE)

Collaborative Arrangements Used to define: Companies that work as joint ventures, licensing agreements, management contracts, minority ownership and long term contractual arrangements New alliance

Strategic Alliance Same as collaborative agreement but often reserved to refer either to an agreement important to one partner Or an agreement that does not involve joint ownership Joint work but identity apart

Multinational Enterprise (MNE) It takes a world wide view.. And is willing to consider market and production locations anywhere in the world.