Lecture 2 - Globalization and International Business

International Business and Globalization
Dr. Irfan Abdullah

Office: 308- NBS
Date: September 15, 2022
E-post: [email protected]
OVERVIEW
• Globalization
• International Business
• Why we study
International Business?
• Factors effecting
International Business
• Globalization: An
Opportunity or a
Threat?
What is
Globalization?
https://www.youtube.com/watch?v=xPD477FuqtY
Umbrella Term:
• Financial integration,
• Trade liberalization,
• Deregulation and
market reforms,
• Technological, social
and cultural
homogeneity.
• It can be seen as the

emergence of single,
interdependent global
business civilization.
Globalization
Globalization
• Economists- Emergence of global

markets
• Sociologists- Convergence or
mergence of lifestyle and social values
• Political Scientists- Reduce national
sovereignty
Example???
Production facilities are based in Toulouse,
France; Hamburg, Germany; Seville, Spain;
Tianjin, China; and Alabama, USA.
Globalization
• Refers to the wide set of interdependent
relationships among people, firms and
companies from different parts of the world.
• It refers to the reduction and elimination of

barriers to international movements of goods,
services, capital, technology, and people that
influence the integration of world economies.
• Globalization is the ongoing process that

deepens and broadens the relationships and
interdependence among people and countries.
• International Business is a mechanism and

mode to bring about globalization.
International business consists of all commercial
transactions—including sales, investments, and
transportation—that take place between two or
more countries.
International
Business Increasingly foreign countries are a source of both
production and sales for domestic companies.
Private companies undertake such transactions for

profit; governments may undertake them either for
profit or for other reasons.
Why we study
International
Business?
Reasons to Study International Business
• Know about the market- most companies are either

international or compete with international companies in
home or in foreign market/countries.
• Modes of operations may differ from those used

domestically. (logistics, production, exports, partnership)
• Conducting business require different situation and

condition in other countries. (PESTEL)
• A better understanding of the conditions and situations

may help in formulation and implementation of better
decisions.
• Such understanding can help us to decide what factors

we should follows.
Think?
• Firms Internal
Factors (Micro
Factors)
• Firms External
Factors Effecting Factors (Macro
International Business Factors)
Internal Factors
• Company Strategy
• Company Resources
• Company expansion
route (type and nature
of entry and
expansion)
• Type of products and
services
• Nature of products
and services
Factors Effecting • Nature and Number
of markets
Factors Effecting International Business
External Factors (Macro Factors)

• Microenvironment/ external environment
is the total environment outside the firm, in
which firms operates includes-
• Political
• Economic
• Social
• Technological
• Legal
• Environmental
Factors Effecting International
Business
Source: (Daniels et. Al., 2015)

Factors Contributing to Rapid
Growth in International Business
• Increase in and wider application of technology

EXP- IoT, Big Data, AI, Block Chain, Digital media,
internet, transportation, online operations
• Liberalization of cross-border trade and resource
movements
EXP- Zara, Levi's manufacturing in Pakistan, Airbus etc.
• Removal of political and trade barriers
EXP- CEPEC, USMCA, SAARC, EU etc.
• Development of services that support international
business
EXP- R&D centers, Call centers, Universities, Vaccines,
hotels, airports etc.
• Growing consumer demand and pressures
EXP- Fashion, styles, new products, green products
https://www.youtube.com/watch?v=qhCM0F81vEg&list=RDqhC
M0F81vEg&start_radio=1&t=2
Factors Contributing to Rapid
Growth in International Business
• Increase in global competition

EXP- iPhone, Samsung, One Plus, Coca Cola vs. Pepsi
Cola etc.
• Changing political situations
EXP- US bans on Huawei
• Interconnected marketplace (Global Market)
EXP- Starbucks vs Sattar Buksh.
• Expansion of cross-national cooperation
EXP- NAFTA, SAARC, EU, CEPEC.
• Increasing adoption of International Rules
EXP- ISO certifications, AACSB accreditation etc.
• Others……….
Globalization An Opportunity or Threat?
Opportunities
International Business can be a source of
• Market seeking- market and sales expansion,
• Resource seeking- inputs, labor, cost, better

products
• Efficiencies seeking- lower cost, new ways to

doing business, economy of scale
• Strategic Resource seeking- knowledge, expertise,

R&D and Innovation
• Survival- reducing risk, avoid competition at home
• Others……………
Threats
• Threats to national sovereignty (the
freedom to act locally)
• Economic growth and environmental

stress
• Growing income inequality and

personal stress
• Offshoring – the transferring of

production/services abroad – is
controversial in terms of -
who benefits when costs are reduced
-
the process exchanges good jobs for
bad ones.
Group Project: Provide a consultancy to any real or an imaginary
company/ startup (a Pakistani or a Foreign) for the internationalization of their
products, processes, operations and business.
Groups:
– Maximum 2 members with exception of 3
– Only one group can work with a specific company (first come first serve
basis)
– No individual projects are permitted
– Students are responsible for selection and registration of their groups
– Each member of the group must be constructive, contributing and effective
member of the group.
– No room for FREE RIDERS, they should be report right from the
start.
– Formation and registration of groups on LMS should be completed by end of
week 3, time 24:00 hours (Midnight)
– Submission will be in the last week of final exam time 24:00 hours (12:00
AM)

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International Business and Globalization

Dr. Irfan Abdullah

• It can be seen as the

• Economists- Emergence of global

• It refers to the reduction and elimination of

• Globalization is the ongoing process that

• International Business is a mechanism and

Private companies undertake such transactions for

• Know about the market- most companies are either

• Modes of operations may differ from those used

• Conducting business require different situation and

• A better understanding of the conditions and situations

• Such understanding can help us to decide what factors

External Factors (Macro Factors)

Source: (Daniels et. Al., 2015)

• Increase in and wider application of technology

• Increase in global competition

• Market seeking- market and sales expansion,

• Resource seeking- inputs, labor, cost, better

• Efficiencies seeking- lower cost, new ways to

• Strategic Resource seeking- knowledge, expertise,

• Survival- reducing risk, avoid competition at home

• Economic growth and environmental

• Growing income inequality and

• Offshoring – the transferring of

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