Much of the 1990s and 2000s can be characterized as the era of globalization, or increased openness and interconnectedness of the world economy. Barriers to international trade, investment and migration were generally falling during that period. While there were some anti-globalization protests and protectionist sentiments present during that period, it was only after the Great Recession of 2008-9 that we saw an era when we are possibly transitioning to de-globalization in the 2010s and 2020s. In simple terms, de-globalization means a retreat from globalization: more restrictions on international trade (e.g. US tariffs under President Donald Trump), international investment (more scrutiny of Chinese investors' acquisitions abroad), and migration (the UK after Brexit). The pace of the retreat is disputable though, and its extent is often somewhat exaggerated. Pankaj Ghemawat is a good source for understanding and measuring globalization, while Michael Witt provides both measurement and theoretical reasons underlying the trend of de-globalization. De-globalization is also linked to the rise of China and the rise of populism, as further explained here.
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These two terms sound similar and refer to sourcing a business process, task or function (such as call centres or software development) from outside of the organisation (hence OUTsourcing) or from a different country, often in an "offshore" location (hence offSHORING). American firms have pioneered this trend with offshoring to India. More recent trends in this area are "nearshoring" (offshoring to near shores, for example from France or Germany to Poland), "reshoring" (bringing work back from distant shores to the home country, eg some American firms returning their processes from China to the US), and "no-shoring", outsourcing jobs, processes etc to automation software, not necessarily bound to any location. Read more in our free eBook http://bookboon.com/en/international-business-and-global-strategy-ebook
International joint ventures are ventures where ownership of a foreign direct investment is shared by two or more partners. When this is a completely new company, it is sometimes called a greenfield equity joint venture as the jointly owned company was created from scratch. If the foreign investor purchases a stake in an existing company, this is a partial acquisition equity joint venture. This sounds similar to a (full) acquisition, which usually involves acquiring 100% (or at least a majority in a foreign firm). Thus both JVs and acquisitions can be "pure"-JVs created from scrach or 100% acquisitions-or "dirty"-the partial acquisition equity joint ventures with some but not full foreign ownership. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
OLI is one of the most famous frameworks for understanding international business, focusing on three factors: ownership advantages (O), location advantages (L) and internalization advantages (I). The LLL framework, standing for linkage, leverage and learning, is different mainly in terms of being developed to understand international business activities of multionational firms from emerging economies, not developed countries. Emerging MNEs often don't focus on exploiting their current ownership advantages (such as brands, technologies or managerial know-how) in foreign markets, but instead expand abroad to link to foreign resources, learn and leverage capabilities internationally. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
Emerging markets are countries with markets that are emerging and are not yet working well. Examples include large “BRIC” economies (Brazil, Russia, India and China) where governments often play a large role in the economy and capital and information markets are imperfect. Other emerging markets where incomes per capita are lower than in advanced economies and growth prospects are relatively high include Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa ("CIVETS"). Some of these are classified as “frontier markets”, being extra poor (under $1500 per capita per year) or suffering a major period of economic collapse in the last 20 years, often being very corrupt or having erratic enforcement of rules and regulations. These economies “on the edge” (e.g. Libya, Myanmar, Cote D’Ivoire, Lao, Mozambique, Cambodia, Senegal, Rwanda, Bangladesh) surprisingly show promising, often double digit growth rates though and are dubbed by some experts as the next big thing in global growth. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
While these two terms sound similar, global strategy focuses on global standardisation and largely treats the world as one unit. Transnational strategy does consider the cost benefits of global standardisation, but strives to be responsive to differences among regions and attempts to derive learning benefits from an international presence. It perhaps tries to have its cake and eat it too. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
Don’t confuse resources and capabilities. Although many authors use these two terms interchangeably, resources are often more static in nature while capabilities are more dynamic and evolving. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
Don’t confuse location specific advantages and country specific advantages. Location specific advantages can be linked to sub-national regions, cities and clusters not just countries. A cluster is a geographic concentration of related companies, organisations, and institutions in a particular field that can be present in a region, state, or nation. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
Pankaj Ghemawat, a major global strategy scholar, outlines what he calls “regional strategies” for global leadership. He says that embracing regional strategies requires flexibility and creativity. A company must decide what constitutes a region, choose the most appropriate strategies, and mesh those strategies with the organization's existing structures. In a world that is neither truly global nor truly local, finding ways of coordinating within and across regions can deliver a powerful competitive advantage. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
A global strategy is both “global” and “strategy”. It deals with strategy of firms (multinational and local) in international competition around the globe. The basics of strategy might be the same (i.e. strategy purpose, process, content) but the international context is making it a more complex endeavour that requires understanding of the foundations of international business, global business environment and international management. Read more in our free eBook: http://bookboon.com/en/international-business-and-global-strategy-ebook
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Layman's termsKey terms and concepts in international business clarified in plain English. Learn more with Featherlight Quizzes (120 questions and answers about international business and strategy) Archives
December 2019
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