International Business

Important topics to study

(Political environment and Globalization)

1. What was the major reason why world political environment changed so dramatically for last couple of decades?

• The collapse of the Soviet Union and the failure of communism because of a lack of motivation (Bipolar System)

2. The definition of Globalization and its four different interpretations.

• Globalization is the growing socio/cultural/economic interdependence of countries abetted by the recent technological advancement

• 4 different interpretations of Globalization:

o 1. Sociological - growing sense of unicity or global village (deterritorialization)

o 2. Cultural - "the spread of west on the rest" and cultural convergence

o 3. Political - process of losing sovereignty of nations & empowerment of people and NGO'S

o 4. Economic - expansion of free market capitalism & acceleration of cross border transactions facilitated by the recent technology development

3. Factors contributed to Globalization.

• 1. Time space compressed by new technology (Fax internet, emails, Trains)

• 2. Institutional arrangement: WTO, IMF, OECD

o World Trade Organization, International Monetary Fund, Organization for Economic Cooperation & Development

• 3. Deregulation/liberation by the government (easier cross border transportation eliminates restrictions)

4. Positive and negative aspects of globalization.

Positive →

• 1. Economic Prosperity - allows for efficient use of resources

• 2. More interdependence - Countries can rely on each other, improve productivity & efficiency

• 3. Cultural convergence - rapid spread of western culture

• 4. "Pollution halo" - MNC'S can actually IMPROVE local environment with higher standards

• 5. Cost efficiency due to cheap labor improve local econ. - firms reduce cost by building production facilities in country, they can use cheaper resources

Negative →

• Income disparity - the richer get richer and the poorer get poorer

• 2. More...