Global Business Aspects: Drivers of Globalisation, Domestic vs International Business, Trading Blocs, and Role of WTO

This presentation covers the drivers behind globalisation, the differences between domestic and international business, the effects of trading blocs, and the role of WTO in international business. It discusses the advantages and disadvantages of expanding internationally, including the costs associated with setting up in a new market and terminating operations. The presentation is relevant to courses in international business and globalisation.

The drivers behind globalisation
Globalization could be defined as existence of a economic connection of countries with the worldwide
economy. The mutuality exists in relation to production based factors such as technological exchange,
workforce exchange and capital exchange in conjunction with transaction of products themselves such as
completed and uncompleted products, user and capital products.
Globalization could be said to have three main drivers:
Firstly demographical factors which relate to its population density, if a country has huge density of
population but lacks funds it has an advantageous position in manufacture of goods which are labour
intensive and thus benefit from exporting such products to nations which don't have an advantage of
abundance of labour.
Secondly technological drivers play a key role behind globalisation ground breaking inventions have
significantly reduced the cost associated with transport such as jet propulsion which makes transportation
of goods and people monumentally quicker and the cost of communicating which has resulted in a
variety of new business practices such as sourcing goods and services from other nations setting up of
global supply chain and the successful advent of e-commerce.
Globalisation
The role of WTO in international business;
Its an international body which formulated rules and
resolves legal issues arising out of trade at international
level. If a country is member of WTO then there are
advantages of reduction of obstruction to trade among
other member counties. Moreover it cooperates with
IMF and world bank to make policies of economics
around the world. It also functions as a stage through
which negotiations related to trade can take place
moreover it assists with implementing and administering
and flattening out of agreements of business between the
countries.
Benefits
-Gaining foothold into markets which were previously inaccessible
due to being confined to domestic market which means increased
sales and more revenue , building new base of consumers .
-if a company sets up at a new place by extension means it will have
access to wider pool of talent since the locality in which they operate
will have workers with unique abilities which will provide an
advantage to the business.
-Expansion into international markets would mean the business
growing exponentially than what it was when it remained domestic
which will in turn fuel more growth and expanding into newer
markets.
The differences between domestic and international business
Domestic business refers to confines of economic exchanges in relation
to geographical territory of nation In this type of setup both the receiving
and providing party belong to one territory and same type of currency is
used in transacting further the customer base is homogenised.
Where as International business doesn't confine itself to any particular
territory the end parties are from different countries and the customer
base is not homogenised they transact using different currencies. The
language and culture used or the guidelines for business practice and law
are very different in international business.
The effects of trading blocs in international business.
Trading blocks can have various benefits such as smoothing out restriction to trade without impositions of
duties, the labour being free to seek employment across the bloc and creating goodwill among the member
countries however there are various disadvantages as well which are that if trade takes place outside the
boundaries it can be very cost incurring further the restriction are imposed on the countries to stop them
from being part of more than one trading bloc its considered as an hindrance to international trade.
Disadvantages
There are also a lot of disadvantages associated with expanding internationally which
are given below
the cost associated with setting up in a new market and terminating operations are huge
these relate to costs of infrastructure, getting new employees, setting up of paperwork
related to starting a new businesses are incredibly time consuming and need research
which by extension is very costly. Together with working capital requirements these
come out to be huge burdens and if these aren't done right or due to some other
exigency the business has to be shut down it can again burn up cash it the procedures
related to shutting down can be very tedious and time consuming.