Global Business Environment BMG 559 M1

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Global Business Environment - BMG 559 M1

• Grainne Tuohy

University of Ulster
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Introduction

• Introduction to the international business
  environment

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Topics of Discussion

• Module document
• Changes in the global economy

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Document

• Lecture/seminar programme
• Assessment

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Major changes in the global economy

• Remarkable growth in trade investment
• Growth of computer telecommunications
  industries International monetary system
• Growth in economic development of triad
• Growth of MNCs
• Developing countries - severe problems
• Collapse of the USSR reforms in CEE

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Trends in trade investment

• Since the formation of GATT, world trade has
  grown 17 fold, production has quadrupled and per
  capita income has doubled
• Outflows of FDI have grown faster than trade in
  recent years
• Growing internationalisation of economic life

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Main Patterns

• Rapid and increased movement of K across
  frontiers
• Increased movement of goods
• Increased movement of people
• Some international convergence of demand
• Internationalisation of supply
• Organisation of production on global scale

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What has contributed to these developments ?

• Changes in the political environment
• Changes in the technological environment
• Changes in organisation of production

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Political Environment

• Post WW2 - greater co-operation between western
  nations
• GATT and IMF - product of and further cause of
  co-operative stance
• Free trade seen as essential to ensuring growth
  in this environment
• Playing host to MNCs seen as positive

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1970s

• Less co-operative mood at the political level
• Concerns - dominance of foreign K
• convertibility was suspended oil crisis
  gtmore entrenched positions regarding
  international trade and the growth of
  protectionism - new trade barriers
• FDI - seen as an alternative to exports
• Host Governments welcomed FDI

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Regionalisation

• Creation of huge integrated markets
• Harmonisation of product standards
• increased inward investment
• gt greater internationalisation

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Developing countries

• Concerns about economic imperialism
• -how appropriate products and processes were
  to local culture
• - impact of FDI on development
• - repatriation of huge profits
• - environmental health impacts of production

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Last 20 years - increased competition for FDI

• Unemployment
• Governments in DC and LDCs afraid of missing
  opportunities
• MNCs increased awareness of need to pay attention
  to local culture
• Information flows gt reputation of companies can
  be damaged
• Deregulation and privatisation gt stimulus to FDI

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Technological Environment

• Post WW2 - considerable technological
  improvements
• Transportation
• sea, air
• Communication Systems
• electricity era
• information technology era

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Organisational Changes

• Organisation of production on a geographical
  scale
• Just in time production
• Quality control at point of production
• Supply chains integrated into the design and
  manufacture of the product