Global Business
ESSENTIAL OVERVIEW
“This unit explores the complexities of international trade, the drivers and impacts of globalisation, and the strategic decisions businesses face when expanding into international markets. It examines the roles of multinational corporations (MNCs), the influence of trade blocs, and the importance of adapting marketing and operational strategies to diverse cultural and economic environments.“
CRUCIAL KEYWORDS
Globalisation
The process by which businesses and organisations develop international influence or start operating on an international scale, leading to increased global interdependence.
Glocalisation
A strategy where a global business adapts its products, services, and marketing to meet the specific cultural and legal requirements of local markets.
Protectionism
Government policies that restrict international trade through methods such as tariffs, quotas, and subsidies to protect domestic industries from foreign competition.
Multinational Corporation (MNC)
A large business organisation that owns or controls production or service facilities in at least one country other than its home country.
Trade Bloc
A group of countries that have signed a regional agreement to reduce or eliminate protectionist barriers to trade between member states.
Core Processes & Theories
1) Bartlett and Ghoshal Matrix
A strategic framework that categorises international strategies based on two pressures: local responsiveness and global integration. Strategies include International, Multi-domestic, Global, and Transnational.
2) Comparative Advantage
An economic theory suggesting that countries should specialise in producing goods where they have a lower opportunity cost, leading to increased global efficiency through trade.
3) Offshoring vs Outsourcing
Offshoring involves moving business processes to another country to reduce costs, while outsourcing is hiring an external organisation to perform specific business tasks.
CASE STUDY EVIDENCE
- McDonald’s employs a glocalisation strategy by offering products like the ‘McSpicy Paneer’ in India and ‘Teriyaki Burgers’ in Japan to cater to local dietary habits.
- The European Union (EU) is a single market trade bloc that allows for the free movement of goods, services, capital, and labour between its 27 member states.
- Starbucks faced significant criticism and tax boycotts in the UK for using complex accounting to report low profits despite high sales, highlighting the ethical challenges MNCs face.
EXAM ESSENTIALS
- When evaluating the impact of MNCs on a host country, always consider both the positive externalities (job creation, infrastructure) and negative externalities (resource depletion, profit repatriation).
- Use the PESTLE framework to analyse the external environment of a new international market, specifically focusing on cultural and legal differences.
- Distinguish clearly between ‘Ethnocentric’, ‘Polycentric’, and ‘Geocentric’ marketing approaches to demonstrate higher level understanding of global strategy.