The Globalization Case

With reference to alternative viewpoints and empirical evidence, answer the following question: "The globalization of international business: what is it and has it happened?"

1 Introduction

International business and globalization are always intertwined in discussions because the two facilitates each other. The study here looks at the process of globalization in international business. The essay begins by identifying the definitions of "globalization" and "international business". For international business, three features stand out: the integrated national markets, attempt to seek the most advantageous location for each business process, internationalization of firms(Morrison,2009). The essay will examine these aspects within the scope of globalization and the forces behind. Statistics will be used to illustrate the presence and trend of globalization in international business.

2 Concepts of Globalization and International Business

In essence, globalization is the process of growing interdependence among nations(Daniels et al, 2011). International business consists of all business activities carried out across national borders. This definition includes not only international trade and foreign manufacturing but also the growing service industry(Ball et al,2010).

3 GLOBALIZATION OF MARKET

The globalization of markets means the merging of separate national markets into one global market (Hill,2011), applies to standardized products, but for some consumer goods,diversity of preferences persists(Morrison,2009). It alters the operation strategies of firms which intend to gain from the global market. Converging tastes and preferences of consumers in different countries are the result of integration of cultures. It is both the promotor and impact of standardizing products brought by the globalization of markets. Firms like McDonald's and IKEA are more than just benefactors of the globalized market,they also facilitates it(Hill,2011). Globalized market applies to industrial products, agricultural produce, oil and other fuels, IT and financial products(Morrison,2009). Theodore Levitt foresee this merging of markets and the homogenization of cultures(Levitt, [1983] 1993) but he underestimated the significance in language and religious differences(Cavusgil et al,2008).

Vodafone's strategies of product standardization and global branding have made it benefits from the globalized market(Cavusgil et al,2008). Firms like Vodafone are able to source globally and deliver products to global market, adapted to different tastes at competitive prices. The globalization of production, therefore, has been decisive to market success. (Morrison,2009)

4 GLOBALIZATION OF PRODUCTION

The globalization of production refers to the sourcing of components and services globally to take advantages of national differences in the cost (Hill,2011). Technology development enables firms to separate the manufacturing process into stages each in different locations and manage them through networks(Morrison,2009). Emerging countries are seen as attractive locations with their low-cost labour and the market potential consisting of large population (Morrison,2009).

5 INTERNATIONALIZATION OF FIRMS

International operations of firms are affected by the operating environment including social and competitive factors(Daniels et al,2011) which will be discussed in the next section.Therefore internationalization strategies such as establishing FDI and outsourcing have been adopted by firms aiming at expanding sales,acquiring resources and minimizing risk(Daniels et al,2011).

5.1 Foreign direct investment (FDI)

Constantinescu(2008) suggests that the globalization appears when the companies, the nations are in persistent competition in the attraction of investments. It can be seen that foreign investment plays an important role in the globalization of international business.

According to The Organization for Economic Co-operation and Development, FDI refers to a situation of owning at least 10 percent in a foreign company's shares and aims to maintain a lasting interest in the host country(Sitken et al,2010). However most FDI flows towards a few major developing countries, such as China, while many poorer developing countries have received little FDI due to the poor infrastructure. (Morrison,2009)

5.2 OUTSOURCING

Outsourcing or offshoring occurs when a firm contracting out of a function specifically to a low-cost country in order to take advantage of low-cost operation. Thus developing countries like India and China are popular offshoring locations for developed countries like US and UK(Buckley et al, 2004,cited in Morrison,2009). Pangea3 is an example of service outsourcing firm in India. It helps U.S. companies enhance their efficiency and reduce cost by having routine legal work done in India in stead of U.S.. (Hill,2011)

Despite the expanding multinational enterprises(MNE), there is a bunch of "born-global companies" emerged with a global focus established by founders with international background which aims at global market from the very beginning(Daniels et al,2011).

6 DRIVERS

The drivers of globalization in international business have remained constant