MELECT 4

Janelle M. Yu

GLOBALIZATION
 is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical wellbeing in societies around the world.

GLOBALIZATION
 Globalization is not new, though. For thousands of years, peopleand, later, corporationshave been buying from and selling to each other in lands at great distances, such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages. Likewise, for centuries, people and corporations have invested in enterprises in other countries. In fact, many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 1914.

Improved Technology in Transportation and Telecommunications

 What makes the rest of this list possible is the ever-increasing capacity for and efficiency of how people and things move and communicate. In years past, people across the globe did not have the ability to communicate and could not interact without difficulty. Nowadays, a phone, instant message, fax, or video conference call can easily be used to connect people. Additionally, anyone with the funds can book a plane flight and show up half way across the world in a matter of hours. In short, the "friction of distance" is lessened, and the world begins to metaphorically shrink.

Is Globalization a Good Thing?

 There is a heated debate about the true effects of globalization and if it really is such a good thing. Good or bad, though, there isn't much argument as to whether or not it is happening. Let's look at the positives and negatives of globalization, and you can decide for yourself whether or not it is the best thing for our world.

Positive Aspects of Globalization

 As more money is poured in to developing countries, there is a greater chance for the people in those countries to economically succeed and increase their standard of living.  Global competition encourages creativity and innovation and keeps prices for commodities/services in check.  Developing countries are able to reap the benefits of current technology without undergoing many of the growing pains associated with development of these technologies.  Governments are able to better work together towards common goals now that there is an advantage in cooperation, an improved ability to interact and coordinate, and a global awareness of issues.  There is a greater access to foreign culture in the form of movies, music, food, clothing, and more. In short, the world has more choices.

Negative Aspects of Globalization

 Outsourcing, while it provides jobs to a population in one country, takes away those jobs from another country, leaving many without opportunities.  Although different cultures from around the world are able to interact, they begin to meld, and the contours and individuality of each begin to fade.  There may be a greater chance of disease spreading worldwide, as well as invasive species that could prove devastating in non-native ecosystems.  There is little international regulation, an unfortunate fact that could have dire consequences for the safety of people and the environment.  Large Western-driven organizations such as the International Monetary Fund and the World Bank make it easy for a developing country to obtain a loan. However, a Western-focus is often applied to a non-Western situation, resulting in failed progress.

World Trade Organization (WTO)

 is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

International Monetary Fund (IMF)

 is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalizing economic policies on other countries as a condition for loans, restructuring or aid. It also offers loans with varying levels of conditionality, mainly to poorer countries. Its headquarters are in Washington, D.C. United States The IMF's relatively high influence in world affairs and development has drawn heavy criticism from some sources.

United Nations (UN)

 is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace. The UN was founded in 1945 after World War II to replace the League of Nations, to stop wars between countries, and to provide a platform for dialogue. It contains multiple subsidiary organizations to carry out its missions.

United Nations (UN)

 There are currently 192 member states, including every sovereign state in the world but the Vatican City. From its offices around the world, the UN and its specialized agencies decide on substantive and administrative issues in regular meetings held throughout the year. The organization has six principal organs: the General Assembly (the main deliberative assembly); the Security Council (for deciding certain resolutions for peace and security);

United Nations (UN)

 the Economic and Social Council (for assisting in promoting international economic and social cooperation and development); theSecretariat (for providing studies, information, and facilities needed by the UN); the International Court of Justice (the primary judicial organ); and theUnited Nations Trusteesh Council(which is currently inactive). Other prominent UN System agencies include the World Health Organization(WHO), the World Food Programme (WFP) and United Nations Children's Fund (UNICEF). The UN's most visible public figure is the Secretary-General, currently Ban Ki-moon of South Korea, who attained the post in 2007.

United Nations (UN)

 The organization is financed from assessed and voluntary contributions from its member states, and has six official languages: Arabic, Chinese, English, Fren ch, Russian, and Spanish.

Foreign direct investment (FDI)

 is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment which may cross borders, but does not offer such control. Firms which source FDI are known as multinational enterprises (MNEs). In this case control is defined as owning 10% or greater of the ordinary shares of an incorporated firm , having 10% or more of the voting power for an unincorporated firm or development of a greenfield branch plant that is a permanent establishment of the originating firm.

Determinants Of Culture

Social Structure
 is a term used in the social sciences to refer to patterned social arrangements which form the society as a whole, and which determine, to some varying degree, the actions of the individuals socialized into that structure. The meaning of "social structure" differs between various fields of sociology. On the macro scale, it can refer to the system of socioeconomic stratification (e.g., the class structure),social institutions, or, other patterned relations between large social groups. On the meso scale, it can refer to the structure of social network ties between individuals or organizations. On the micro scale, it can refer to the way norms shape the behavior of actors within the social system.

ENGAGING IN INETRNATIONAL MARKETS

Why companies engage in international business:

 Companies engage in international business for a variety of reasons. Identifying these reasons for any firm is important to understand the nature and direction of its motivation to engage I international marketing.

Some of the major reasons why companies engage in international marketing are as follows:
To expand sales of the firm To acquire resources / technology / skills from foreign countries To diversify their sources of sales and supplies To capitalize on incentives from governments, local and foreign To follow existing customers who have moved overseas

Reasons for recent growth of business in international markets:

 International business has increase on a rapid pace, especially after the 2nd world war of 1940s. This expansion in international business has been due to host of reasons. Some of the key reasons for expansion of international business are as follows;

Expansion of technology
 Quicker and cheaper transportation  Communications enable controls from afar .
-Liberalization of cross-border movements of goods, services and factors of production, such as labor, capital and technology etc

 Development of supporting institutional arrangements for international exchange of goods and funds.  Increase in global competition forcing firms to expand in international markets.  Convergence of world markets in terms of tastes, distribution infrastructure, technologies and trade regulations.  Support from national governments for internationalization of local firms and for attracting foreign direct investments.

 Growth of resources available and with large pool of funds ands and other resources firms could easily expand businesses in world markets. Benefits of doing business in international markets:
A country and its people benefit from selling to or even buying from international markets.

Exports
 Propel countrys economic growth as its firms increase sales and profits  Exports of quality products and services support or create better jobs (average export-related job pays more than average national job)

Imports
 Consumers gain from lower costs, better quality and greater variety products on the shelves.  Also create essential competition for local companies which then improve their products and processes.  Keep levels of prices and hence inflation low as with open imports prices of products in domestic markets would depend on the lower prices of the products in international markets .

 A company may engage in international markets in a number of ways. These are categorized in the following;

 Merchandize export and import  Services export and import Travel, tourism and transportation Performance of services Fees in banking, insurance, rentals etc., turnkey operations, management contracts etc. Use of assets for royalties Licensing Use of assets such as trademarks, patents, copyrights, or expertise under contracts Franchising Franchiser sells/leases the use of assets and also assists the franchisee on a continuing basis in operations

 Investments Direct investment - with controlling interest (at least 10% of voting or ownership control) Wholly owned Joint venture Mixed venture (when a government joins as a partner) Portfolio investment - non-controlling interest Equity investment Stock market investment - funds Bonds & loans Money market investment

Companies that engage in international business:

 Mcdonalds  Uniliver  IBM  NOKIA  Apple  Samsung