The Global Business Environment

The Global Business Environment

Globalisation – refers to the growing interdependence of countries worldwide through:
• ↑ trade
• ↑ capital flows
• ∞ rapid diffusion of technology

Features of Globalisation (Code: SOILED)

S – Savings or cost reduction through developments in communications and transport
O – Overseas transactions are available among individuals and groups
I – Increase importance of global economy policy relative to domestic policy
L – Local manufacturing will reduce because of available products and competitions with exports
E – Emerging markets will rise and newly industrialized nations.
D – Dependent financial and globally link markets will rise to cater the financial transactions between and among countries



Global Manufacture – A company can manufacture components for a product in a number of different countries. These companies are usually called ‘Contract Manufacturer’ or ‘Outsourced Manufacturer’.

FOXCONN is one of the examples of a Global Manufacture. It is a multinational business group and world's largest maker of electronic components including printed circuit boards. Foxconn is known as a contract manufacturer of Apple, HP, Nokia, Dell, Nintendo, Microsoft and more. It has five main factories in China, Brazil, India, Europe and Mexico.

Global Sourcing – Sub-components may be purchased from countries overseas.
Global sourcing often aims to exploit global efficiencies in the delivery of a product or service. These efficiencies include low cost skilled labor, low cost raw material and other economic factors like tax breaks and low trade tariffs.

Common examples of globally sourced products or services include:
• labor-intensive manufactured products produced using low-cost Chinese labor
• call centers staffed with low-cost English speaking workers in the Philippines and India
• IT work performed by low-cost programmers in India and Eastern Europe


Factors that encourage the globalization of world trade: (Code: FAIL)

F – Financial factors such as Third World debt. Example of which is Philippines having huge amount of debts with IMF. To increase the income of the country, it needs to engage investors to invest and to import/export of natural resources.
A – Alliances of countries and continent. One of the famous alliances is the European Union (EU) which encourage trade and tourism
I – International commodities are globally traded. Commodities are not physically exchanged, only the rights to ownership.
L – Legal Factors such as patents and trademarks, which encourage the development of technology and design