Earlier article describe what’s International Business, its purposes and challenges, below article looks at globalization:
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Globalization:
- The International Monetary Fund(IMF) defined globalization as a growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services, free international capital laws and more rapid and widespread diffusion of technology.
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Purposes/Motive of Globalization:
- Sales expansion
- Acquisition of resources like labour, capital, components, land, technology and information
- Diversification of sales and supply of sources so as to minimize swings in sales and overdependence on suppliers
- To minimize competitive risks for defensive purpose.
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Globalization can be in the following forms:
- Industrial globalization-rise and expansion of multinational companies(MNCs)
- Financial globalization-emergence of worldwide financial markets and better access to external financing for corporate, national and sub-national borrowers
- Political globalization-the spread of political interests to the regions and countries outside the neighbourhood
- Informational globalization-the increase in information flow between geographically remote locations
- Cultural globalization-the growth of cross-cultural contacts
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Salient Point:
- With globalization, countries are integrated and heavily dependent on each other for all sorts of transactions.
- Globalization results in economic, cultural, technological and legal changes in the global market.
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