The contemporary causes of globalisation
3 important questions on The contemporary causes of globalisation
The two environmental causes of globalisation are;
- Changes in the political environment
- Technological changes
How did they impact globalisation?
- Changes in the political environment
- Trade barriers against foreign trade and investment were removed after WWII.
- Technological changes
- Improvements in communication, transportation, and information made international business easier
- From sailing to flying
- Computers -> Information
- Communication -> E-Mail, smartphones, tablet computers
What are emerging markets? Why should international businesses not ignore these markets?
The definition varies from BRIC-Countries to the Big Ten to most non-high-income countries in Africa, Asia, Eastern Europe and Latin America.
They should not be ignored because they account for a significant amount of the worlds population. China and India are some of the most fast developing countries in the world.
They should not be ignored because they account for a significant amount of the worlds population. China and India are some of the most fast developing countries in the world.
The four motives for firms to go global are;- To leverage core competencies
- To acquire resources and supplies
- To seek new markets
- To better compete with rivals
Please describe each of the four motives.
- To leverage core competencies
- Core competency: Strength or advantage that is central to a firm's operations
- Increase revenues and profits -> Foreign customers interested in the product
- To acquire resources and supplies
- Resources like materials, labor, capital or technology
- Scarcity in local resources -> Forced to go global
- To seek new markets
- Domestic market matures -> Hard to generate revenue and profit
- Opportunities in new markets where there is room for a certain product
- To better compete with rivals
- Forced to follow competitors when they expand
- Ex. Pepsi forced to keep up with coca cola.
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