1.Drivers of Market Globalization – (integration of economies across the globe)
-Worldwide reduction of barriers to trade & invest (WTO)
- Market liberation & adoption of free market (china free market)
- Industrialization, economic development, modernization (good for economy)
-Integration of world financial market
-Advance in technology (reduces cost of doing business)
2.Dimensions of Market Globalization –
- Integration and interdependence of national economies
-Rise of regional economic integration blocs (EU, NAFTA, MAECOSUR)
-Growth of global investment & financial flows
-Convergence of buyer lifestyle & preferences
-Globalization of production (cut cost work in china)
-Globalization of services
3.Societal Consequences of Market Globalization –
-Contagion: rapid spread of financial crises from one country to another (2008 economy experienced crisis, due bubble price)
-Loss of national sovereignty (MNE can interfere government to control their own economy. US do this with cars japan)
-Effect on the poor (globalization also tend to disrupt job, MNE pay low wages)
-Effect of natural environment (globalization harm the environment)
-Effect on national culture (national identity may)
4.Firm level Consequences of Market globalization –
-Countless new business opportunities for
-New risks and intense rivalry from foreign competitors
-More demanding buyers who source from
-Greater emphasis on proactive internationalization
-Internationalization of firm’s value chain
1.What is a Multinational Enterprise (MNE)?
M.Corporation are organization that own or control production or service facilities in more than one country. They increase GDP of the country, create jobs to max production, promote good economy and social progress. Bad, take jobs out of US (cheap)
2.What is a Small Medium Size Enterprise?
Micro <10 turn over of 2 million. Small<50 10. Medium<500 50
It’s the 70% of Europe entire work force. The ability to respond to market need ( flexibility)
3.What is a Born Global Firm?
It’s a business that from inception, seek to derive significant competitive advantage from the use of resources and the sale of output in many countries.
4.Be able to define an “upstream” and “downstream” value chain activity?
Upstream; before production (market research, sourcing)
Midstream; transportation, storage
Downstream; after production (marketing, distribution, service)
5.What are the types of foreign market entry?
-Foreign direct investment (100% ownership)
-International collaborative venture (sonny & Ericson)
-Exporting (sell your product to buyers in other country) low risk
-Import or sourcing (good brought across national border)
-Licensing (granted the right to a foreign partner to use your product in exchange of royalties) lank of control
-Franchising (arrangement where franchiser allows franchisee the ability to use the product in exchange of fees and royalty)
6. What are Distribution Channel Intermediaries?
The main purpose is to deliver products from the manufacture to the users in foreign market
-Foreign distribution (buys the manufacture’s product for resale to middlemen or final buyer)
-Agent or broker (wholesalers that facilitate sales)
-Manufacture’s representative (work under contract by the export to represent them)
-Trading company (intermediary that handles import & export)
-Export management company (Common in USA, they act as an export agent for the local firm)