What is Globalization - Assignment Example

What is Globalization? How has it affected the world? Today, the world has been observing a totally different scenario because geographical distances are reducing due to tremendous development in telecommunications and transportation technologies. Theses changes and developments have decreased the barriers to cross-border trade and investments. The process of these changes in global economy is generally known as globalization. Impact of globalization can be observed at a global scale in numbers of different fields including economic, social, political, cultural, and technological aspects of life. In the cultural context, globalization has impacts on thoughts, theories, idealism, consumer behavior, and practices of human race. In the perspective of international business, its impacts range from manufacturing, production, promotion, consumption, commercial exchange, and distribution. 1-Why do large companies internationalize? Why do small & medium-sized companies internationalize? Large companies go for internationalization (i) To grow the size of its marketing and operations (ii) To gain new skills through host country workers (ii) To increase its strategic assets and profit. Small and medium-sized companies internationalize (i) To increase their revenue (ii) to utilize the resources in host countries which are not locally available 2-What are key characteristics of the American culture? People in America have all kinds of beliefs; they come in all shades, and speak many 'languages'. They are incredibly separate, individual, and like to be unique from rest of the world. 3-What are the differences between an individualistic culture and a collectivist culture? In individualistic cultures, individuals are more oriented towards personal objectives rather than the benefits of the community or group while in collectivist cultures; people usually have more associations with the interests of the groups like national interest, family interests, and community perspectives. 4-What’s one way to know how corrupt a specific country might be? The malicious, inconvenient, and insecure business environment for international investors is the leading indications of a corrupt country. 5-Know the 4 main types of legal systems? Civil Law, Common Law, Religious Law, and Pluralistic Law are main types of legal systems in the world. 6-What are ways that we measure a country’s economic performance? Economists generally measure the economic performance of a country by considering it GDP rate, inflation rate, unemployment rate, foreign currency reserves, currency exchange rates, national income and growth rate per capita, and balance of payment. 7-What is the VERY important anti-corruption law that can land an American in jail? American Federal Law deals with anti-corruption cases. 8-What are motivations for global corporate responsibility? Ethical consumerism, transparency and trust, employee motivation, increased public expectations of business, laws and regulations, crises and their consequences, and stakeholder priorities are the basic motivational factors behind the global corporate responsibility. Unit 1: International Business Strategy 9-Where do you need to start all international business strategy discussions? The adoption of International Business Strategy is needed to discuss when the pressure is low in terms of both local responsiveness and cost reduction. 10-What are Porter’s 5 competitive forces? Threat of New Entrants, Bargaining Power of Buyers, Threat of Substitutes, Bargaining Power of Suppliers, and Determinants of Rivalry among Existing Competitors are Porter’s 5 competitive forces. 11-Know the Product Life Cycle and be ready to discuss how it affects international operation decisions? From manufacturing to sale in the competitive markets, each and every new product has to pass through a series of stages. It includes introduction, growth, maturity, and decline stages. In corporate world, these sequential stages are known as Product Life Cycle (PLC). Since Product Life Cycle is closely connected with continuous changes in local and global markets, therefore, it has direct affects on business plan, corporate strategies, and marketing mix. 12-What is Blue Ocean Strategy? Know how it applies to growing companies. Blue Ocean Strategy is actually an attempt made by some new or unknown industry or product to capture an uncontested space in the market. Since with passage of time, competitor’s strategies converge, therefore, growing industries try to go out for value innovation by creating new Blue Ocean. They adopt this strategy by searching for alternative industries, by collaborating with strategic groups within same industry, estimating financial and emotional drivers of new innovation, and considering the future demands in the market. 13-Know the 2 most common business strategies and why you can’t use them together? Product Differentiation Strategy and Price Skimming Strategy (also called Cost Leadership Strategy) are two very common business strategies but both cannot be simultaneously implemented with full letter and spirit because there is a huge difference between them in terms of potential to conflict. 14-What are the pressures to globalize/standardize vs. pressures to localize? Demand for low cost reduction and demand for maximizing the local responsiveness are two main pressures on standardize strategy while substantial differences across the nations with respect to tastes and preferences are main pressures on localization strategy. 15-On only a very high level, know the differences between the four International Business Strategies? First one is International Strategy which is cost effective when the pressure is low in terms of local responsiveness and cost reduction while the second one Global Standardization Strategy is best in case of high pressure in terms of cost reduction and low pressure from local responsiveness. Localization Strategy comes into sense when pressure for local responsiveness is high but for cost reduction is low. Transnational Strategy is more appropriate if both local responsiveness and cost reduction are high. 16-Important: Entrepreneurial companies leverage both their internal competitive advantages as well as external competitive advantages from their strategic partners? Entrepreneurial companies leverage both their internal competitive advantages as well as external competitive advantages through different ways i.e. (1) In order to encourage the local workers; companies must set up incentive system to gain new expertise. (2) Setting up of process to identify newly created talent in the subsidiaries. (3) Establishing a system to transfer valuable skills within companies. Unit 2: International Market Entry 17-What decisions related to resource allocation does a company need to make once they decide to go international? In order to create the required marketing plan and allocating appropriate resources to venture into global markets, a company needs to establish a well sorted out budget, suitable human resource, and transportation modes, closely correlated to its strategic objectives. The entry mode of a company to a new target market largely depends on the expected ease and difficulty levels which the company likely to encounter. 18-To scan opportunities, a company needs to develop a company-specific criteria to evaluate potential markets? In order to scan the opportunities, a company formulates some criteria to assess the businesses potential of its targeted markets. Generally, the criteria are based on questions such that (i) Will there be adequate economical reward in the competitive market? Is there any opportunity for possibly increasing industry for the product? What will be the customers’ demand and response to the company’s product or ideas? 19-What are some examples of possible criteria (opportunities and costs) to consider? Companies also formulate their opportunities and costs criteria in terms of allocating resources, customer pain due some problems, controlling management, difficulty level of some problems, and time. 20-What is the difference between a Consolidation Market Entry Strategy and a Diversification Market Entry Strategy? Consolidation Market Entry Strategy is generally associated with financial, technical, and operational resources linked with the trade of original product while Diversification Market Entry Strategy is a business strategy which looks for to increase success through higher product sales acquired from new products and new marketplaces through new expertise, methods, and facilities. 21-What do you call it when you decide to leave an international market? It is generally termed as Exit Strategy. 22-What are the 11 market entry modes? Which ones are lowest risk and which ones are highest? Basically there are three market entry strategies which are further classified into several entry modes which are shown in the table below. Home Market Production Foreign Direct Investment Direct Export Indirect Export Distributors Overseas subsidiaries Trading companies Piggyback Counter trade Licensing Joint ventures Contracts Ownership Franchising Export processing zone Exporting has the lowest while direct investments have the highest risks. 23-As risk increases, what other factors increase at the same time? As the risk increases, the speed of entry mode also increases. Further the trade growth is also maximized. 24-Know what circumstances you would likely use each market entry mode? In terms of Exporting Entry Mode, you will likely to use four main players for this kind of entry mode i.e. exporter, importer, transport provider, and government while in case of Foreign Direct Investment, you will likely to use acquisition of an already existing entity or the establishment of new enterprise. For internationalization, language is a key determinant factor not only to select the target markets but also to successfully execute the marketing plan. Unit 3: Global Marketing 25-Know the Global Marketing Orientations and the main situations where they apply? The Global Marketing Orientations are listed below. Ethnocentrism. Decisions oriented with home country values and interests Polycentrism. Decisions based on values where the company operates Regiocentrism. Regional orientation with respect to specific region Geocentrism Orientation with respect to global opportunities 27-What are the two main ways to segment your market? Demographic segmentation and Psychographic segmentation are two leading ways to segment your market. 28-What does a firm need to consider altering in its products in order to be able to sell them in international markets? Its highly depends on the performance of international distributor, consumer behavior, and transportation management. When company observes negative outcomes from these aspects, it starts to think to change its products. 29-Define marketing promotion? It is the way through which a company communicates that what it does and what it can offer to the customers. It is based on branding, advertising, corporate identity, personal relations, sales management, special offers, and exhibitions. 30-What are push and pull promotions? A Push Marketing Strategy is applied by the companies to create customer demand for a product or entity through the sales management and marketing promotion techniques. The manufacturing companies promote their products to the wholesalers while wholesalers introduce them to retailers and retailers take them to the consumers. A Pull Marketing Strategy is one that is associated with huge investments on promotion to develop the customer need for a product. In this case the consumer demands the product from retailers, retailers ask for wholesalers, and wholesalers ask the manufactures. 31-What are the advantages and disadvantages of standardizing product promotion? Advantages Disadvantages It promotes the efficiency of the product as well as company Highlights the tendency toward one market at global scale Reduces marketing cost Better centralized control of business activities It ignores the general conditions of products in use Local lawful conflicts are ignored It does not consider the changing behavior of consumers 32-What should you look for in choosing an international distributor? Certain features are quite critical when you go to select an international distributor. For example, the distributor must be financially strong and possesses good customer’s support and service. The most important thing is that your distributor must be relevant to your product or company’s competitive advantage over the rivalries. Read More