Unit 1: Introduction to International Business and Globalization
In this unit, we will explore the basic foundation of international business and the history of globalization. Have you ever wondered how many components within your smartphone came from different countries to make the final product? Most products involve some level of globalization, since their materials or the technology used to assemble them come from many sources. We live in a very connected, global community.
Completing this unit should take you approximately 3 hours.
Upon successful completion of this unit, you will be able to:
- explain the foundational concepts of international business and how cross-border operations have expanded geographically due to technological advances;
- explain why an organization might aspire to expand beyond its domestic market;
- predict future trends in the global business environment; and
- evaluate key arguments for and against globalization
1.1: Technological Advances
Commercial trade across borders is not a new phenomenon. However, advances in technology have made trade much more efficient. This section will look at trends in globalization and learn how those trends influence international businesses.
There have been many technological advances and inventions that have revolutionized the world and brought us closer. For example, many international business calls are now conducted via video conferencing which allows groups to establish a more knowledgeable assessment of their business connections while also being able to read body language when presenting new information or opportunities. This reading on Technological Globalization from Lumen Learning provides you with information on how technology is changing the way we do business. The internet, smart phones and laptops are essentially communication tools that have enhanced our ability to connect and create opportunities on a global scale. Can you imagine how international business was conducted prior to the internet?
Advances in transportation have spurred global economic growth by reducing travel time and increasing the number of passengers. A businessperson can board a plane in the evening in New York and land in London after a 6-hour flight to attend a morning business meeting. A century ago, this journey would take several weeks by ship. Read chapter 2, which discusses the opportunities and risks for the transportation industry today. The transportation industry is vital to international business since it allows business trips, meetings, and commercial activity to occur regularly and efficiently.
In the past, the United States was a manufacturing-based economy. However, due to the rising costs of technology and the effects of globalization, most manufacturing went overseas, even though certain segments within the manufacturing industry have remained in the United States, such as high-end production that requires specialized capabilities. Though shifts in politics and international security may lead to more manufacturing happening within the United States in the future, international partners will always be necessary to provide components for production. Globalization is a critical matter for international businesses. Read this chapter and focus on the trends in global business over the past few decades. Are these trends going to continue, or could we see changes as nations start to become more isolationist in an attempt to protect jobs?
1.2: Global Resource Allocation
Nations and corporations continuously seek resources outside of their domestic markets. Since every country has a finite level of resources, they must find resources abroad to expand their economies and improve their living standards.
Read this introduction to a resource-based approach toward international business that highlights topics like transaction costs theory and analytical models.
Outsourcing, as a trend over the past few decades, has benefitted both consumers and companies. The ability to seek lower-cost labor, materials, and capacity has drastically reshaped the modern-day business environment. Have we hit peak outsourcing?
Outsourcing is prevalent in manufacturing, but it can be found in any industry where companies hire other providers to fill service needs at a lower cost than they could otherwise perform internally. Read this article, which discusses why contract manufacturing occurs and presents its opportunities and risks.
Outsourcing also creates challenges. The cost savings that were the primary driver in recent decades are starting to fade. Companies are now assessing other factors, such as transportation costs, quality control, and proximity to consumers, which may limit the popularity of outsourcing in the future. Watch this video to see more about these issues.
For the global economy to work efficiently, materials must be shipped and delivered expeditiously to allow end products to be quickly assembled for the consumer. Improvements in technology have been a significant driver in increasing the efficiency of logistics. Read this article and watch these videos, which explain the supply chain and how advances in technology have created essential links for global businesses.
As companies expand internationally, they must improve their human resource capabilities to consider culture, local labor laws, and differing approaches to work as they hire employees in other countries. This article introduces several key concepts in global HR management and explains its significance for international businesses.
1.3: Globalization
Globalization describes how the world has become more connected and how products, services, and resources can quickly move nearly anywhere. As technology has improved efficiency, the speed of globalization has also increased.
Read this chapter, which covers globalization and how it affects individuals, companies, and nations. As you read, focus on how we got to this point and what the world might look like 50 years from now if globalization continues at the current rate.
One of the leading drivers of globalization and outsourcing is costs, since businesses seek to lower their costs while maintaining the same quality level. In competitive global markets, companies seek advantages like reducing costs to gain market share by selling more products or increasing profit margins per unit. Read this page, which describes how companies approach these situations. Focus on how an international company could use globalization and outsourcing to gain a competitive advantage in the market.
Companies and investors look for opportunities that often require expanding beyond their borders. Therefore, a thorough analysis must be conducted to determine which opportunities are legitimate and mitigate potential threats to the company.
Read this chapter, which explains how a global company must consider opportunities and threats before making business decisions in international markets. As you read, think about one of your favorite companies. What opportunities and threats do they face in the global market?
Study Guide: Unit 1
We recommend reviewing this Study Guide before taking the Unit 1 Assessment.
Unit 1 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.