,Managing in a Global Business Environment Study Guide
Unit 2 Globalization
Module 1: Political, Economic, and Legal Systems (Lessons 1-6)
1. What is globalization?
Globalization is worldwide interconnections in virtually every sphere of
activity, including the spread of products, technology, info, and job
opportunities. Globalization can result in blurred boundaries between nations,
organizations, and investors. Globalization is when international integration
arises from the interchange of world views, products, ideas, and other
aspects.
2. What opportunities to businesses are brought by globalization?
Globalization allows companies to find lower-cost ways to produce their
products. It also increases global competition, which drives prices down and
creates a larger variety of choices for consumers. Lowered costs help people
in both developing and developed countries.
3. What are the economic, political, and cultural effects of globalization? Elaborate
on each of the aspect.
Economic: globalization of production, finance, markets, technology,
organizational regimes, institutions, corps and labor.
Political: NGOs influence public policy across national boundaries, including
humanitarian aid and developmental aids.
Cultural: transmission of ideas, meanings, and values around the world in
such a way that extends and intensifies social relationships.
4. What are the arguments for and against globalization from country’s perspective?
Advantages of globalization:
o Increased financial stability of many developing nations
o Collaborative global economy may push the development of
technology that could benefit everyone
Disadvantages of globalization:
o Sustainability
o Ability of richer nations to exercise power at the expense of less
powerful nations
5. What are the 5 stages of entering a global market? Explain each stage.
(1) Market Entry: Companies enter new countries using business models
similar to the ones deployed in their home countries
, (2) Production Specialization: companies transfer the full production process
of a particular product to a single, low-cost location and export goods to
various consumer markets.
(3) Value Chain Disaggregation: Supply chain infrastructure, companies
disaggregate the production process and focus on completing each activity on
the most advantageous way.
(4) Value Chain Reengineering: Companies seek to further increase their cost
savings by reengineering their processes to suit local market conditions by
substituting lower cost labor and capital.
(5) Creation of New Markets: Focus on market expansion *Value of revenue
is greater than the value of cost savings in other stages.
6. What are the benefits and costs of global expansion from MNCs’ perspective?
Benefits:
o Unsaturated demand for new products
o Lower labor costs
o Less expensive natural resources
o Other inputs to products
o Economies of Scale
Costs:
o Ethical business practices
o Organizational Structure
o Public Relations
o Leadership
o Legal and Regulatory Structure
o *Infrastructure
o *Technology
7. What are the 4 drivers of globalization? Explain.
(1) Market Opportunities
(2) Cost: economies of scale, scope, drive costs and support globalization
efforts
(3) Competition: Industry characteristics, industry revolution
(4) Government Support: Presence/absences of favorable trade policies,
technical standards, policies and regulations, and government-operated or
subsidized competitors or customers-affect all other elements of global
strategy.
8. What is the difference between the world is flat view and the CAGE analysis?
Elaborate on each of them.
World is a flat view: Friedman; globalization has changed core economic
concepts. The flattening is a product of the convergence of the personal
computer with fiber optic micro capable with the rise of work-flow software.
, CAGE analysis: (Culture/Administration/Geography/Economics) domestic
strategy applied to a bigger market. States if world was flat then international
business and global strategy would be easy. Global strategy begins with
noticing national differences. Focuses more on distance.
9. List different political systems and differentiate them. How does each political
system impact business operation?
Monarchy: a single person rules until death or abdicates the throne, power
can vary by type.
Oligarchy: a small elite group holds power, status not achieved through noble
ancestry.
Dictatorship: A single person (or very small group) holds power, wields
complete and absolute authority over a government and population.
Democracy: citizens organize political parties and elect leaders, leaders
power organized through constitution and term limits.
Local policies, rules, regulations, trade agreements and tariffs, political
stability and risk and involvement of the government in the private sector can
impact the success of a business.
10. List different economic systems and differentiate. How does each economic
system impact business operation and economic production? *SEE CHART IN
NOTES
11. List different legal systems and differentiate.
Common Law: based on traditions and precedence. Judges interpret the law.
The role of the Judge is to hear arguments from both parties and make a
judgement. The judgement stands as a precedent for future cases.
Civil Law: Based on a detailed set of laws that constitute a code and focus on
how the law is applied to the facts. Role of judge is to investigate whether law
has been broken. Juries are rarely used.
Religious Law: based on religious beliefs. Includes Islamic Law, Canon Law
(Vatican City).
Unit 2 Globalization
Module 1: Political, Economic, and Legal Systems (Lessons 1-6)
1. What is globalization?
Globalization is worldwide interconnections in virtually every sphere of
activity, including the spread of products, technology, info, and job
opportunities. Globalization can result in blurred boundaries between nations,
organizations, and investors. Globalization is when international integration
arises from the interchange of world views, products, ideas, and other
aspects.
2. What opportunities to businesses are brought by globalization?
Globalization allows companies to find lower-cost ways to produce their
products. It also increases global competition, which drives prices down and
creates a larger variety of choices for consumers. Lowered costs help people
in both developing and developed countries.
3. What are the economic, political, and cultural effects of globalization? Elaborate
on each of the aspect.
Economic: globalization of production, finance, markets, technology,
organizational regimes, institutions, corps and labor.
Political: NGOs influence public policy across national boundaries, including
humanitarian aid and developmental aids.
Cultural: transmission of ideas, meanings, and values around the world in
such a way that extends and intensifies social relationships.
4. What are the arguments for and against globalization from country’s perspective?
Advantages of globalization:
o Increased financial stability of many developing nations
o Collaborative global economy may push the development of
technology that could benefit everyone
Disadvantages of globalization:
o Sustainability
o Ability of richer nations to exercise power at the expense of less
powerful nations
5. What are the 5 stages of entering a global market? Explain each stage.
(1) Market Entry: Companies enter new countries using business models
similar to the ones deployed in their home countries
, (2) Production Specialization: companies transfer the full production process
of a particular product to a single, low-cost location and export goods to
various consumer markets.
(3) Value Chain Disaggregation: Supply chain infrastructure, companies
disaggregate the production process and focus on completing each activity on
the most advantageous way.
(4) Value Chain Reengineering: Companies seek to further increase their cost
savings by reengineering their processes to suit local market conditions by
substituting lower cost labor and capital.
(5) Creation of New Markets: Focus on market expansion *Value of revenue
is greater than the value of cost savings in other stages.
6. What are the benefits and costs of global expansion from MNCs’ perspective?
Benefits:
o Unsaturated demand for new products
o Lower labor costs
o Less expensive natural resources
o Other inputs to products
o Economies of Scale
Costs:
o Ethical business practices
o Organizational Structure
o Public Relations
o Leadership
o Legal and Regulatory Structure
o *Infrastructure
o *Technology
7. What are the 4 drivers of globalization? Explain.
(1) Market Opportunities
(2) Cost: economies of scale, scope, drive costs and support globalization
efforts
(3) Competition: Industry characteristics, industry revolution
(4) Government Support: Presence/absences of favorable trade policies,
technical standards, policies and regulations, and government-operated or
subsidized competitors or customers-affect all other elements of global
strategy.
8. What is the difference between the world is flat view and the CAGE analysis?
Elaborate on each of them.
World is a flat view: Friedman; globalization has changed core economic
concepts. The flattening is a product of the convergence of the personal
computer with fiber optic micro capable with the rise of work-flow software.
, CAGE analysis: (Culture/Administration/Geography/Economics) domestic
strategy applied to a bigger market. States if world was flat then international
business and global strategy would be easy. Global strategy begins with
noticing national differences. Focuses more on distance.
9. List different political systems and differentiate them. How does each political
system impact business operation?
Monarchy: a single person rules until death or abdicates the throne, power
can vary by type.
Oligarchy: a small elite group holds power, status not achieved through noble
ancestry.
Dictatorship: A single person (or very small group) holds power, wields
complete and absolute authority over a government and population.
Democracy: citizens organize political parties and elect leaders, leaders
power organized through constitution and term limits.
Local policies, rules, regulations, trade agreements and tariffs, political
stability and risk and involvement of the government in the private sector can
impact the success of a business.
10. List different economic systems and differentiate. How does each economic
system impact business operation and economic production? *SEE CHART IN
NOTES
11. List different legal systems and differentiate.
Common Law: based on traditions and precedence. Judges interpret the law.
The role of the Judge is to hear arguments from both parties and make a
judgement. The judgement stands as a precedent for future cases.
Civil Law: Based on a detailed set of laws that constitute a code and focus on
how the law is applied to the facts. Role of judge is to investigate whether law
has been broken. Juries are rarely used.
Religious Law: based on religious beliefs. Includes Islamic Law, Canon Law
(Vatican City).
