The world’s national economies are becoming increasingly intertwined through the process of globalization. Cultural, political, legal and economic events in one nation increasingly affect the lives of people in other countries. Companies must pay attention to how changes within the nations in which they do business and in the international business environment can affect their activities.
The two forces driving globalization (lower trade and investment barriers and increased technological innovation) are taking companies into previously isolated markets and increasing competitive pressure worldwide. The firs main force behind increasing globalization is falling barriers to trade and investment. The world has made great strides in reducing trade barriers through institution such as GATT (General Agreement on tariffs and Trade) and the WTO (World Trade Organization) an international organization with the power to enforce the rules of international trade. Technological innovation is also a main force behind organization. Companies are more able than ever to monitor their global activities with the use of e-mail, videoconferencing, intranet and extranet. These devices increase the speed with which companies can manage their far-flung activities. Innovation in transportation technologies are also making the shipment of goods between nations more efficient and dependable.
Globalization is marked by denationalization, in which national borders are becoming somewhat less relevant. It is affecting Market and production activities. Companies that sell global product can standardize aspects of their marketing activities to reduce costs. They are also able to explore international market for their products if the home market is small or becomes saturated. Firm take advantages of globalization of production by accessing low cost labor to make their goods more price competitive. They can also benefit by gaining access to technical know-how or natural resources that are either nonexistent or too expensive at home.
(courtesy of http://www.spiread.com) Almost any company can participate in international business. Many small business have become increasingly active in international trade and investment thank to the internet and other technologies that permit them to surmount obstacles such as prohibitively high advertising and distribution costs. Large multinational corporations (MNCs), however, conduct most international business transactions.