GLOBAL BUSINESS ENVIRONMENT

2. GLOBAL BUSINESS ENVIRONMENT UNIT 18 COLBOURNE COLLEGE SUMMER TERM 2017 BY: BRANFORD JOHNSON

3. Household Management • Unit 18 – Global Business Environment • Thursdays • May 4 and May 11: Online classes, 6:30 – 8pm • Thereafter: alternate from online to classroom lecture (+online) • Instructor expects ACTIVE PARTICIPATION ― time permitting; • If I don’t get to your question, write it down. It will be addressed. • Contact for Branford Johnson: bjohnson@colbournecollege.com • More details to come, as needed • Questions?

4. Aim of Course • Explore expanding position of many organisations in global arena • Develop appreciation of complexities of operating globally • Equip you with the knowledge and tools to enhance your company

5. Aim of this Unit • Define and explore globalisation and related terms • Analyse key factors which drive globalisation • Determine strategic complexities associated with globalisation • Evaluate how operating in global market influences organisation’s: • Structure • Culture • Functions • Evaluate influence of globalisation on decision-making and strategy

6. LO 1: 1. Key Factors That Drive Globalisation • Historical • Economy • Resources and Markets • Production Issues • Political • Industrial Organisation • Technologies • Source: http://www.yourarticlelibrary.com/globalization/7-factors-influencing-globalization-discussed/22639/

7. 1. Historical • The great Silk Road - silk-route from east to west and from west to east • Roman Empire’s famous roadways • Spice Route • Slave Route • Transcontinental RR (USA) Silk Road (red) and Spice Route (blue) Time Period: 120 BCE ― 1450s CE Source: https://en.wikipedia.org/wiki/Silk_Road

8. 2. Economy • The overall economics of a particular industry or trade is an important factor in globalisation. Buy or manufacture goods inexpensively in location A and sale at “market price” in location B. • Incense • Salt • Sugar • Diamonds • iPhones

9. (3) Resources and Markets: • The natural resources like minerals, coal, oil, gas, human resources, water, etc., make an important contribution in globalisation.

10. (4) Production Issues: • Utilisation of built up capacities of production, sluggishness in domestic market and over production makes a manufacturing company look outward and go global. The development of overseas markets and manufacturing plants in autos, four wheelers and two wheelers is a classical example. Also: • Cigarettes • McDonald’s • Starbucks

11. (5) Political: • The political issues of a country make globalisation channelised as per political leaders. • Regional trade agreements determine the scope of globalisation. • Trading in European Union and special agreements in the Soviet block and SAARC are examples. Also: • NAFTA • AFTA (ASEAN Free Trade Area) • WTO • TPP Source: Sodacan, Wikipedia commons

12. (6) Industrial OrganisationS: • The technological development in the areas of production, product mix and firms are helping organisations to expand their operations. The hiring of services and procurement of sub-assemblies and components have a strong influence in the globalisation process. • Shipping industry • Weapons Industry • Robotics Industry • Air Transport Industry • Space Industry • High Speed Train Industry

13. (7) Technologies: • The stage of technology in a particular field gives rise to import or export of products or services from or to the country. • European countries like England and Germany exported their chemical, electrical, mechanical plants in 50s and 60s and exports high tech (then) goods to under developed countries. • Today India is exporting computer software and related services to advanced countries like the UK, USA, etc.

14. Eight barriers in economic activities: • Many countries, particularly developing ones, impose restrictions to globalisation by: • Imposing high taxes and duties for capital goods, spares and materials • Licensing restrictions • Foreign exchange restrictions • Investment restrictions • Incentives and prioritisation to specific domestic industries, and • Banning / restricting products of foreign origin • Procedural hassles, bureaucracy • Closed mind-set • Source: http://www.yourarticlelibrary.com/globalization/7-factors-influencing-globalization-discussed/22639/

15. Fears of the countries in that case may be: • To provide local employment • To raise standard of living and GDP • To help in building up foreign exchange reserves • To channelise the resources of the country • To develop new skills / markets, and • To mobilise capital Source: http://www.yourarticlelibrary.com/globalization/7-factors-influencing-globalization-discussed/22639/

16. Significant impact of the digital revolution • Creating better products and services at lower costs • Impact of social media and other applications • Twitter, Facebook, cloud computing, digitized design, manufacturing and distribution systems

17. Summarise and review major points • Aim of course • Aim of Learning Objective 1 (LO 1 – This Unit) • 7 Key factors that drive globalisation • 8 Barriers in economic activities • Fears of the other countries

18. REFERENCES BARTLETT, C. and BEAMISH, Pl (2011). Transnational Management: Text, Cases, and Readings in Cross-Border Management. 6th Ed. Maidenhead: McGraw-Hill. GUAY, T. R. (2014) The Business Environment of Europe: Firms, Governments, and Institutions. Cambridge: Cambridge University Press. PENG, M. (2014) Global Business. 3rd Ed. Cengage Learning. https://en.wikipedia.org/wiki/Silk_Road https://en.wikipedia.org/wiki/Transcontinental_railroad http://www.yourarticlelibrary.com/globalization/7-factors-influencing-globalization-discussed/22639/ https://www.nytimes.com/2017/04/26/us/politics/jared-kushner-beny-steinmetz.html http://www.managementstudyguide.com/what-is-globalization.htm