Q.1 What is globalization? What are its benefits? How does globalization help in internationalbusiness? Give some instances?
describes the process by which regional economies, societies, and cultures have become integratedthrough a global network of political ideas through communication, transportation, and trade. The term is mostclosely associated with the termeconomic globalization: the integration of national economies into the internationaleconomy throughtrade,foreign direct investment,capital flows,migration,the spread of technology,andmilitary presence.However, globalization is usually recognized as being driven by a combination of economic, technological,sociocultural, political, and biological factors.The term can also refer to the transnational circulation of ideas,languages, or popular culturethroughacculturation.An aspect of the world which has gone through the process can be said to be
.Against this view, an alternative approach stresses how globalization has actually decreased inter-cultural contactswhile increasing the possibility of international and intra-national conflict.Globalization has various aspects which affect the world in several different ways
Industrial - emergence of worldwide production markets and broader access to a range of foreign productsfor consumers and companies. Particularly movement of material and goods between and within national boundaries.International tradein manufactured goods increased more than 100 times (from $95 billion to$12 trillion) in the 50 years since 1955.China's trade with Africa rose sevenfold during 2000-07 alone.
Financial - emergence of worldwide financial markets and better access to external financing for borrowers.By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily tosupport the expanded levels of trade and investment
Economic - realization of a global common market, based on the freedom of exchange of goods and capital
Job Market- competition in a global job market. In the past, the economic fate of workers was tied to thefate of national economies. With the advent of the information age and improvements in communication,this is no longer the case. Because workers compete in a global market, wages are less dependent on thesuccess or failure of individual economies. This has had a major effect on wages and income distribution
Political - some use "globalization" to mean the creation of a world government which regulates therelationships among governments and guarantees the rights arising from social and economic globalization.Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of the United States’own economy, the People's Republic of China has experienced some tremendous growth within the pastdecade. If China continues to grow at the rate projected by the trends, then it is very likely that in the nexttwenty years, there will be a major reallocation of power among the world leaders. China will have enoughwealth, industry, and technology to rival the United States for the position of leading world power.Most of us assume that international and global business are the same and that any company that deals withanother country for its business is an international or global company. In fact, there is a considerabledifference between the two terms.
– Companies that deal with foreign companies for their business are considered asinternational companies. They can be exporters or importers who may not have any investments in any other country, apart from their home country.
– Companies, which invest in other countries for business and also operate from other countries,are considered as global companies. They have multiple manufacturing plants across the globe, catering to multiplemarkets.The transformation of a company from domestic to international is by entering just one market or a few selectedforeign markets as an exporter or importer. Competing on a truly global scale comes later, after the company hasestablished operations in several countries across continents and is racing against rivals for global market leadership.
Sem Assignment International Business Management
Abhishek Jain - 511035358
Page 2 of 15
Master of Business Administration-MBA Semester 4
International Business Management
Assignment Set - 2
Q1 .What is WTO? Explain its objectives, functions and structure.
Ans: World Trade Organization (WTO). WTO was established on 1st January 1995. In April 1994, theFinal Act was signed at a meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April1994 was formed to strengthen the world economy that would lead to better investment, trade,income growth and employment throughout the world. The WTO is the successor to the GeneralAgreement on Tariffs and Trade (GATT). India is one of the founder members of WTO. WTO representsthe latest attempts to create an organizational focal point for liberal trade management and toconsolidate a global organizational structure to govern world affairs. WTO has attempted to createvarious organizational attentions for regulation of international trade. WTO created a qualitativechange in international trade. It is the only international body that deals with the rules of tradesbetween nations.The WTO agreements are a set of rules that are followed by the member governments whileformulating policies and practices in the area of international trade. The agreements mainly cover goods, services and intellectual property. The agreements comprise the rights and obligations of thegovernment that are enforceable in multilateral framework. The agreement supports individual
countries’ commitments to lower customs tariffs and other trade barriers, and to open services
markets. The agreements recommend governments to make their trade policies transparent.According to the agreement, the government must notify the WTO about the measures adopted tomake their trade policies transparent
Objectives and functions
The key objective of WTO is to promote and ensure international trade in developing countries. Theother major functions include:
Helping trade flows by encouraging nations to adopt discriminatory trade policies.
Promoting employment, expanding productions and trade and raising standard of living andincome and utilizing
the world’s resources.
Ensuring that developing countries secure a better share of growth in world trade.
Providing forum for trade negotiations.
Resolving trade disputes.The important functions of the WTO as stated in the WTO agreement are the following:
Developing transitional economies
Majority of the WTO members belong to developingcountries. The developing countries such as India, China, Mexico, Brazil and others have animportant role in the organization. The WTO helps in solving the problems of developingeconomies. The developing states are provided with trade and tariff data. This depends on the
country’s individual export interest and their participation in WTO
-bodies. The new membersbenefit hugely from these services.
Providing help for export promotion
The WTO provides specialized help for export promotion toits members. The export promotion is done through the International Trade Center established bythe GATT in 1964. It is operated by the WTO and the United Nations. The center accepts requestsfrom member countries, usually developing countries for support in formulating andimplementing export promotion programmes. The center provides information on export marketand marketing techniques. The center also provides assistance in establishing export promotionand marketing services. Through this WTO proves its commitment in the upliftment of the worldeconomy.
Cooperating in global economic policy-making
The main function of the WTO is to cooperatein global economic policy-making. In the Marrakesh Ministerial Meeting in April 1994, a separatedeclaration was adopted to achieve this objective. The declaration specifies the responsibility ofWTO as, to improve and maintain the cooperation with international organizations such as theWorld Bank, International Monetary Fund (IMF) that are involved in monetary and financialmatters. WTO analyses the impact of liberalization on the growth and development of nationaleconomies which is the important factor in the success of the economy.
Monitoring implementation of the agreement
The WTO administers sixty different agreementsthat have the statue of international legal documents. The member-governments sign andconfirm all WTO agreements on attainment.