Drivers of Globalization in International Business

This report discusses the drivers of globalization in international business, including technological, political, market, and cost drivers. It also explores the impact of globalization on the airline industry and strategies for entering new markets.

International business

Contents
Introduction.................................................................................................................................................3
TASK 1..........................................................................................................................................................3
1...............................................................................................................................................................3
2...............................................................................................................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8

Introduction
The business transactions that is government and private which involve two or more
countries is known as international business. Many large and small companies are affected by
global actions and competition. Present report is based on airlines networks. This report covers
various business tool and critically analyze the drivers of globalization. Along with this discuss
the factors that are responsible for formation of these global airline networks. Apart from that
two suitable strategies that individual airline can used for entering into a new market.
TASK 1
1.
There are different driver of globalization and it can be seprated in a five groups are as
follow
Technological drivers: Advance technology change and set the foundations for modern
globalization transport technology is innovated and it revolutionized the industry. In such
developments most important development among all are commercial jet aircraft.
Furthermore, telecommunication also enable effective computing and communication at low
cost. Internet is the most useful technological driver which created global e business. For
producing something it is necessary to have a technology for producing any product( Ball,
Geringer, Minor and McNett, 2012. ). For exporting the products from one country to another
international airline is great transport facility it drives the globalization. Moreover, digital
technologies have opened the way toward global network. It is away which all information and
knowledge can be shared. Internet and e-commerce are used to show the recent used of
techno globalism. Through advance technology customer can book their airline tickets and also
cancel it through online facility.
The communication technology change the way of life of all people all over the world.
The worldwide web enable people to access the information of any thing from any where.
Through internet people are inter connected with each other through emails, video call etc.
with the development of advance technology transport play a important role in globalization.
Airline transport enable the expansion of tourism and trade across the country. The air line
travel has become affordable now for all the consumer(Wild, Wild, and Han, 2014). it remove the
economic boundaries between the countries. Free trade agree not to charge taxes on import
from the other country. The main political driver is influences over elections and politicians.
 Political drivers: deregulated market and liberalize trading rules decrease the tariff and
allowed foreign direct investment through all over the world (Johanson and Mattsson, 2015.).
There are many example of latest developments such as privatization in Europe and
world trade organization etc.
 Market drivers :the opportunities for the growth of domestic market are limited.
Through global expanding is the only way most of the business choose to overcome

from this problem (Khanna and Palepu, 2013). The use of global marketing channels for the
common people.
 Cost drivers: global can take benefits from the cists and sourcing efficiency from country
to country. The opportunity to build global scales economies is the another cost drives
of globalization (Waldman and Jensen, 2013. ). The high product development is another
cost driver of globalization.
 Competitive drivers: the global market lead to the growth of inter firm competion
between organization at international level (Hirst, Thompson and Bromley, 2015). The
support of this driver is high two ways and strong interdependency among different
countries.
The international trade theory
It refer to the exchange of gods and services between countries and various business
entities for across the country. The various type off products are sold by domestic country from
international market is known as export market. Globalization describes trade pattern occur at
differ period of time (Stromquist, Monkman, eds.. and. 2014.). At the first level globalization is
dominated by global expansion. At the next stage rise of multinational companies which lead to
global development through trade. At the last stage that is a current stage is technological
growth driven by globalization. International trade theory is divided into two category that is
classical based theory and firm based theory. Classical theory included comparative advantage,
absolute advantage while on the other hand modern firm based theory includes factors
proportions trade and global strategic rivalry.
International trade theory show the pattern of trade between countries and volume of
trading among goods. This theory also mention lose and gains arrive from trade. In a free trade
it argues that there should be no restriction on trade . it is a laissez free approach of supply and
demand which influences the level of trade (Baylis Smith and Owens, 2013). While protectionism
argue that market should be regulated to make sure that its efficiencies not benefits to trade
countries. This theory has an advantage over other country that is production of good and
services is at low cost because they have cheap labor, skilled labor and fertile land. So they sells
products at cheaper price as compared to other country. However this theory not justify all
aspects of international business. The theory of comparative advantage show that if country
cannot produce product more efficiently then it can produce that goods better and more
efficiently.
Impact of globalization on the air line
The modern air transport industry is expanding within a liberal market. The implication of
globalization is that many manifestoes have been deep for the international air transport
industry. There are many effected on the efficiency of supply and o the advent open skies

airline. Airline I deregulated and always cover in price discrimination. They always try to charge
different fares and much revenue from the customers (Czinkota and Ronkainen, 2013.). They only
offer lower fare when flight is off because of any reason. Problem faced by airline is to stay in
competitive market for this purpose they need to set fixed cost and set takes- off time for each
destination. Various problem occurred when there is new entry to market. Globalization also
lead to increases in overall economic activity. Airlines change the way to fight with challenges
for meeting the new demand required by international labor market. They started low fare
services to change the consumer perceptions and effected on thee travel pattern.
The open skies policies is permit the strategic alliances and it effects the demand and
supply curve of the international air travel. The air transport is highly protected in the
environment with the intention of used for larger political and economies and political
objectives. It is now large and it takes 1%of GDP of EU and US and distributed in many
industries such a exotics and tourism (Folsom, Gordon and Van Alstine, M2012.). The worlds major
airport has been developed to interfaced between the land and air transport and it can also
handle the million of international passengers. International trade also increases the global
income that results in the more tourist travel internationally and many goods shipped .
globalization lead to higher demand for the movement of goods and people from one country
to another. Hence it can be said that globalization entails mobility which help in increase the
migration permanent or temporary. To cover the longer distance international air transport is
cheapest way for travelling.
2.
Geographical expansion considered through franchise systems, there are marketing creativities
that integrated into the expansion strategy (Johanson and Mattsson, 2015). Therefore, at the time of
entering in a new market and expand a business it lead to certain amount of risk for the United
airlines.
There are four marketing strategies for lowering the risk are as follow
 Marketing areas can be develop by opening the high number of stores
 Help new franchisees by developing an opening launch program
 To attain higher sales level yearly local store marketing plan should be developed and
applied immediately following the opening launch program
Develop an opening launch program stage is maybe critical for entering in a new market . but
developing an opening program is helpful in supporting the franchisee to achieve break-even at a
faster rate. After entering into a new market it is important to build awareness of the brand. A
plan required to be developed that is tailored for each new franchisee’s at a particular market
area. Then build awareness of the brand, serves offered and location among the consumers .a
marketing firm should work directly with each (( Ball, Geringer, Minor and McNett, 2012. )). At the
time when franchisee has successfully launch than sales increases for a period of time. For

continue sales growth proper planning and execution should be manage by a marketing firm. In
plan there are some factors which should be addressed such as sales goal, promotional
campaigns, advertising strategies etc.
franchisors choose the traditional practice of selling unit franchisee for growing the
franchise system. Earning profit may become difficult for single isolated fanchisee. For United
airlines franchise growth strategy should be evaluated carefully by keeping in mind the current
economic environment ((Czinkota and Ronkainen, 2013.).). Possibly with the better economic times
return these strategies will utilized continuously. For the long term success these stratagies must
be noticed earlier. Hence Airlines can be successful through franchising because it is a long term
partnership.
Joint Venture Strategy
Joint venture is a cooperative enterprises which enter into toe or more business entities
for expanding the business. Joint venture have improved the Canada airline. The external factors
like oil price, governmental policies etc may affect the success of this airlines. To get risk free
from this external factors Singapore airline required to make partnership and alliances that allow
them to operate more efficiently the entire industry. Through joint venture airlne can offer
services and share profit, risk and revenue. These joint venture become a key factor in the rapid
growth of airline industry. There are many factors that lead to growth of airline JVs worldwide.
In this two or more airlines share their resources and split revenue. In this one problem is face by
the airline is increasing presence of low cost carriers. It mainly offer fares at lowest price. This
force the Canada airline to cut it airfare price for remaining in competitive market. A feature of
joint venture are such as one world, star alliances and sky team ((Hirst, Thompson and Bromley,
2015).). According to this concept means that revenue received by each member off joint venture
is depend on the air carrier which flies the passengers. It only distribute equally among the
carriers. And it apply on only certain routes .The open skies agreement signed between
Government of untied states and European union for its development. It made possible for the
European airlines to fly on any city of U.S. various joint network can be formed across the north
Atlantic such as Lufthansa, air Canada etc. it allows four airlines and promote 250 flights with
500 connections destination. The growth of joint venture is especially great. It allows airlines to
operate in international network. Through joint venture growth isn’t slow down when some
forecast is predicted. It make Canada airline to operates much more efficient international trade.
It makes agree to operate much more efficient international networks. Through joint venture
airline now able to spread out departures at the same time of partner airlines were competing. By
entering into a new market customers are offering a new services and lower airfare. It includes
shorter time because many better connection are available.
Conclusion
From the above report it can be concluded that there are many drivers of globalization
such as technological driver, political driver etc. it all lead to the expansion of airline network.
The international trade theory also help in exporting and importing the products from one
country to another. Further it can be concluded that there are many strategies for entering into

a new market. Airline use the joint venture and franchisee strategies which is most effective for
entering in a new market and for expanding its business.

References
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Wild, J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
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In Knowledge, Networks and Power (pp. 111-132). Palgrave Macmillan UK.
Khanna, T. and Palepu, K., 2013. Winning in emerging markets: A road map for strategy and execution. Harvard
Business Press.
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