1.3 Summary: Part A
Part A is essentially an introduction to your study of international business and its chief topic is globalisation. Globalisation of markets implies that the world is one large marketplace. Globalisation of production implies that firms locate their production facilities for maximum efficiency and lowest cost, so that products are no longer seen as Australian products or Japanese or German products, but 'global' products.
The forces that promote globalisation are:
- the lowering of tariff and non-tariff barriers (free trade)
- developments in technology. These include jet aircraft, containerisation, the microprocessor, the Internet and robotics. Developments in communication and travel make it possible for international business to coordinate its activities and to view the world as a single marketplace
Changes in the economic and political domains are conducive to the rise and fall of nation-states. As we begin the 21 st century, the US is the world's dominant nation but it is likely to be challenged by China in the next few decades.
We looked at the costs and benefits of globalisation and noted that although there may be a net benefit, the costs - especially job losses - will be borne by particular localities. Finally, we noted four reasons why managing an international business is more complex than managing a domestic business.
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