GLOBAL BUSINESS ENVIRONMENT OVERVIEW
AND INTERNATIONAL MARKET STRUCTURES
STUDY NOTES WITH KEY CONCEPTS AND
FRAMEWORKS
◉ What business opportunities are presented by globalization?
Answer: Trade, transactions, capital, and investment movements.
The migration and movement of people and the dissemination of
knowledge.
◉ What are the economic effects of globalization? Answer:
International movement of goods, capital, services and technology
and information.
◉ What are the political effects of globalization? Answer: Reduces
importance of nation states
◉ What are the cultural effects of globalization? Answer: Ideas,
meanings, values. Decreased uniqueness by once-isolated
communities.
◉ What are the arguments for globalization from a country's
perspective? Answer: Access to broader market, gains access to
cheap labor.
,◉ What are the arguments against globalization from a country's
perspective? Answer: Needs to understand foreign legal and political
policies.
◉ Explain the five stages of entering a global market. Answer: 1.
First stage (market entry),
Companies enter new country's using business models similar to the
ones in home market.
2. Second stage (product specialization),
Companies transfer the full production process of a product to a
single location.
3. Third stage (value chain disaggregation)
Desegregating the the production process and focus on completing
each activity in a better location. (different areas)
4. Fourth stage (value chain reengineering),
Companies seek to further increase their cost savings by
reengineering their production process
5. Fifth stage (creation of new markets)
Allows companies to lower their sticker prices in both new and old
markets.
◉ Explain Four drivers of globalization. Answer: 1. Market - explain
convergence of needs,
,Allows companies to lower their sticker prices in both new and old
markets.
2. Cost - define economies of scale and economies of scope
Refers to product development, manufacturing, and sourcing.
3. Competition - New markets, increased level of trade.
4. Government - Absence or presence of trade policies, technical
standards, policies and regulations.
◉ What is the difference between the world is flat view and the
CAGE analysis? Answer: Events that made the world smaller.
CAGE analysis
1."C" is for culture - Shared beliefs, practices, norms.
2."A" is for administration - Similar country's trade with each other
3."G" is for geography - Location
4."E" is for economic distance - Socioeconomic and demiographic.
◉ What are the benefits of global expansion from MNCs'
perspective? Answer: Unsaturated demand for new product
Lower labor costs
Less expensive natural resources
Higher revenue or lower structure cost
, ◉ What are the costs of global expansion from MNCs' perspective?
Answer: Costs
Ethical business practice (labor, safety, environment)
Organizational structure (incorporating new regions to the value
chain)
Public relations
Leadership
Legal and regulatory structure
◉ List five different political systems and differentiate them.
Answer: Anarchy
Monarchy
Democracy
Oligarchy
Dictatorship
◉ Anarchy Answer: No govt is needed - individuals control the
country
◉ Monarchy Answer: King or Queen rules the country or
Constitutional Monarchy: Aruba & Australia
AND INTERNATIONAL MARKET STRUCTURES
STUDY NOTES WITH KEY CONCEPTS AND
FRAMEWORKS
◉ What business opportunities are presented by globalization?
Answer: Trade, transactions, capital, and investment movements.
The migration and movement of people and the dissemination of
knowledge.
◉ What are the economic effects of globalization? Answer:
International movement of goods, capital, services and technology
and information.
◉ What are the political effects of globalization? Answer: Reduces
importance of nation states
◉ What are the cultural effects of globalization? Answer: Ideas,
meanings, values. Decreased uniqueness by once-isolated
communities.
◉ What are the arguments for globalization from a country's
perspective? Answer: Access to broader market, gains access to
cheap labor.
,◉ What are the arguments against globalization from a country's
perspective? Answer: Needs to understand foreign legal and political
policies.
◉ Explain the five stages of entering a global market. Answer: 1.
First stage (market entry),
Companies enter new country's using business models similar to the
ones in home market.
2. Second stage (product specialization),
Companies transfer the full production process of a product to a
single location.
3. Third stage (value chain disaggregation)
Desegregating the the production process and focus on completing
each activity in a better location. (different areas)
4. Fourth stage (value chain reengineering),
Companies seek to further increase their cost savings by
reengineering their production process
5. Fifth stage (creation of new markets)
Allows companies to lower their sticker prices in both new and old
markets.
◉ Explain Four drivers of globalization. Answer: 1. Market - explain
convergence of needs,
,Allows companies to lower their sticker prices in both new and old
markets.
2. Cost - define economies of scale and economies of scope
Refers to product development, manufacturing, and sourcing.
3. Competition - New markets, increased level of trade.
4. Government - Absence or presence of trade policies, technical
standards, policies and regulations.
◉ What is the difference between the world is flat view and the
CAGE analysis? Answer: Events that made the world smaller.
CAGE analysis
1."C" is for culture - Shared beliefs, practices, norms.
2."A" is for administration - Similar country's trade with each other
3."G" is for geography - Location
4."E" is for economic distance - Socioeconomic and demiographic.
◉ What are the benefits of global expansion from MNCs'
perspective? Answer: Unsaturated demand for new product
Lower labor costs
Less expensive natural resources
Higher revenue or lower structure cost
, ◉ What are the costs of global expansion from MNCs' perspective?
Answer: Costs
Ethical business practice (labor, safety, environment)
Organizational structure (incorporating new regions to the value
chain)
Public relations
Leadership
Legal and regulatory structure
◉ List five different political systems and differentiate them.
Answer: Anarchy
Monarchy
Democracy
Oligarchy
Dictatorship
◉ Anarchy Answer: No govt is needed - individuals control the
country
◉ Monarchy Answer: King or Queen rules the country or
Constitutional Monarchy: Aruba & Australia
