(New) what is globalization? 4 drivers of globalization | International Business

Summary

This video script from 'Business School 101' explores globalization's impact on business, society, and the economy. It discusses how interconnectedness has grown due to advancements in technology and trade policies, leading to a global marketplace and production. The script highlights the benefits and challenges of globalization, including the convergence of consumer tastes and the sourcing of goods and services worldwide. It also touches on the four major drivers of globalization: technological, market, cost, and political factors.

Takeaways

• 🌐 Globalization is the increased interconnectedness and interdependence of people and countries, affecting various aspects of life including trade, communication, and the spread of ideas.
• 🛒 The globalization of markets merges national markets into a global marketplace, with companies like Apple and Coca-Cola aiming to create a global consumer market.
• 🏭 Globalization of production involves sourcing goods and services from around the world to leverage national differences in production costs and quality.
• 📱 Technology, such as the internet and smartphones, has been a key driver of modern globalization, enabling fast global communication and commerce.
• 🌍 Historically, globalization has gone through waves, with significant growth in the 19th century and a second wave post-World War II, despite periods of downturn and scrutiny.
• 🔍 Despite a trend towards global consumer norms, significant differences in consumer tastes, business systems, and legal regulations still exist among national markets.
• 🌟 Companies like Apple facilitate globalization by designing products in one country but sourcing components from manufacturers worldwide.
• 💡 Globalization allows companies to lower costs and improve product quality by taking advantage of different national cost structures and production efficiencies.
• ⚖️ Political decisions, such as trade barriers and capital controls, significantly influence the extent and nature of globalization.
• 🌟 The COVID-19 pandemic and US-China trade war have highlighted the risks of over-reliance on global production, prompting some countries to consider reshoring essential industries.

Q & A

What does the term 'globalization' refer to according to the World Health Organization?

Globalization refers to the increased interconnectedness and interdependence of peoples and countries.

How has globalization impacted our daily lives?

Globalization has impacted our daily lives by influencing the products we buy, the food we eat, and the ways we communicate with one another.

What are the two interrelated perspectives through which globalization can be understood?

Globalization can be understood from the opening of international borders to increase fast flows of goods, services, finance, people, and ideas, and the changes in institutions and policies at national and international levels that facilitate or promote such flows.

What was the first wave of globalization propelled by?

The first wave of globalization was propelled by steamships, railroads, the telegraph, and other breakthroughs, as well as increasing economic cooperation among countries.

What are the two major facets of globalization discussed in the script?

The two major facets of globalization are the globalization of markets and the globalization of production.

How does the globalization of markets affect consumer products?

The globalization of markets refers to the merging of national markets into one global marketplace, making it easier to sell internationally and leading to a convergence of consumer tastes and preferences.

What is an example of a product that is designed in one country but manufactured in another?

The iPhone is designed in California but its components are manufactured by suppliers around the world.

What are some of the key suppliers for the iPhone mentioned in the script?

Key suppliers for the iPhone include Qualcomm for chips, Samsung for the battery, Sony for the camera, and Bosch Sensor Technology for the accelerometer.

Why do companies source goods and services from locations around the globe?

Companies source goods and services globally to take advantage of national differences in the cost and quality of factors of production, such as labor, energy, land, and capital.

What are the four major factors driving globalization?

The four major factors driving globalization are technological drivers, market drivers, cost drivers, and political drivers.

How has technology shaped the foundation of modern globalization?

Technology, particularly in transportation and communication, has accelerated the pace of globalization, with the internet enabling global communication and containerization lowering shipping costs.

What are some challenges that companies face in the globalization of production?

Challenges in the globalization of production include formal and informal barriers to trade, barriers to foreign direct investment, transportation costs, and issues associated with economic and political risk.