Globalization and international business

Unit 1 Journal The development of the World Trade Organization has proved to be a landmark in the move towards globalization. This organization has sought the reduction of trade barriers among its members. This has facilitated both the flow of goods and the flow of capital between nations, two of the major drivers of globalization. This emphasis on freer global trade has contributed to globalization because it has allowed for companies and people in one country to become more dependent on the products and goods from other countries.

The reduction of trade barriers has brought about globally integrated supply chains, and has brought about a much greater level of integration among societies, especially with respect to quality of life, where each society is now dependent on other societies for the current quality of life. Over the past twenty years, trade barriers have been systematically reduced, though in recent years there have been threats to this reduction of trade barriers.

Different countries have been drawn into the international community that might not have been there before, and the result of this has been an improvement in the quality of life in those countries, and improvements in the global economy as a whole (Barrios et al, 2009). Unit 5 A lot of American companies want to do business in China, because of the overwhelming size of the Chinese market. Yet, in addition to some significant cultural differences between the US and China, there are also some major political and legal differences.

For one, China is not a democracy, but rather a Communist country. While there are some elements of capitalism in its economy, by no means does China run a capitalist economy in the Western sense of the term (CIA World Factbook, 2018). Instead, it maintains a strong level of central control, especially over large enterprise.

Not only does the central government control major businesses, but it is not elected, and does not serve the needs of the people, but rather it serves the vision that it has for the PRC in general. Thus, the institutions of law are also not the same as in the US.

There is no particular separation between the executive branch of government and the judicial in China – if the US has issues with this because of presidential appointments, all judges in China are appointed by the central government and all are expected to perform according to the government's expectations. Because the Chinese political system lacks transparency, and the appropriate checks and balances, it is also highly corrupt.

The US is relatively corrupt – not in the manila envelope sort of way but through the buying of influence by lobby groups who finance campaigns. But China is even more corrupt, with direct bribery being quite common. According to Transparency International (2017), China scores a 41 on the corruption perceptions index, compared with 75 for the United States, one of the better scores in the world.

These differences in the political and legal environment will make China a challenging market for any US company that is unfamiliar with operating in such a corrupt and non-transparent market. Unit 7 Journal A greenfield venture is expensive, requiring considerable resources. The rewards are that the company earns all the profit, but the risks of higher, the costs are higher, and all told the company has a much higher odds of failure.

Exporting is relatively cheap because there are no capital investments to be made, but the profits are limited to whatever profit can be gained selling your goods to the local vendor. Further, you lose some control over the brand and how it is positioned/perceived in that market. Franchising is a valid choice for companies that already know how to franchise, and allows for some local market expertise. But again, there are control risks and the company must pay the franchise partner some of the profits.

Re-licensing comes with less control than franchising, but is cheaper. This is a method that puts a lot of the brand in the hands of the local company, but allows for low overhead in the foreign country as well. Unit 9 A business owner must consider the value of maintaining the brand consistency across borders, the differences between local markets, and whether specialization offers greater profit potential. The most important of these is the value of standardization.

This depends highly on the product – specialization has merits when every process is repeatable, so for highly repeatable things like fast food standardization makes sense. But localization makes sense where there are market gains to be made by tailoring the product to local tastes. In terms of branding, Melewar and Saunders (1999) find that standardization is an important element of international success. The factor that poses the biggest risk for the organization is the consistency issue.

Some products should have near universal consistency, but other products really don't benefit from that, because there is a cultural element to the product (fast food is a good example, where many companies have leveraged localization strategies to tailor menus to local tastes). Unit 10 From a consumer perspective, my study of.