Quiz 1: The Challenging Context of International Business

Business

Globalization facilitated the businesses to expand their operations in international environment. It increased free trade among different countries and to provide more varieties of high quality products to the customers at low prices. It also helped in increasing the standard of living by increasing employment. There are different perspectives on globalization. There is a debate on globalization and some groups are opposing as the multinationals supress the domestic businesses and also the loss of manufacturing jobs and increase in service sector. Following are some of the statements made in support of globalization: • The rate of economic growth is more rapid in the globalized countries. • Education, living standards and employment have increased drastically due to globalization. According to the World Bank, the poverty was decreased in developing countries. • Free trade helped in integration of technology and other resources among the countries. • The countries without globalization have faced poverty and other problems in their nations. An article described that the countries became victims of their decision to refuse globalization. Even though some of the jobs are lost and there is a shift in industrial sectors, the new jobs will be better and create a competitive environment. Following are some of the statements made in opposition of globalization: • The positive outcomes of the globalization are not uniformed in all the countries. Some countries even faced increase in poverty. It increased the inequality between the developed and under developed countries. • The jobs of developed countries were migrated to developing countries where the labour costs are less. • Due to increase in operations and production facilities, the natural resources are prone to damage and pollution. The arguments made by supporters and opponents are two diverse and different perspectives of globalization. Based on the arguments, it is not possible to agree with one perspective. Both perspectives are true as globalization has its benefits and drawbacks. So, it cannot be totally accepted or rejected. In order to strengthen the global economy, the businesses should increase more emphasis on benefits and overcome the drawbacks by the following ways: • The tariffs and trade barriers should be reduced to increase exports from developing and under developed countries. • The employers should ensure that their workforce includes the employees of home country and host country in equal proportion. The standards should be developed such that they are applicable to all the employees of different nations. • The resources should be used in such a way that it does not deplete the ecological balance and natural resources. • The countries involved in globalization should require their companies to involve in CSR to contribute the society and environment. • The countries should protect the domestic businesses along with foreign investments and encourage joint ventures, strategic alliances etc. These actions, if implemented can result in more benefits and decrease the drawback and the problems faced by the under developed countries.

7-E Stores is a chain of convince store that operates across the globe. At present, it operates in 18 different countries with more than 56,500 stores. Headquarter of 7-E stores is in Irving, Texas. However, its parent company is Seven-Eleven Japan Co. , which in turn is further held by Seven $ I holdings Co. Headquarter of the company "Seven $ I holdings Co." is in Tokyo, Japan. Hence, it can be concluded that 7-E store is owned by a company whose headquarter is outside of the US. Owner of the 7-E stores is Seven $ I holdings Co. and the owner is based in Tokyo, Japan.

Multi-domestic Corporation can be described as Multinational Corporation which works on localized management structure. These corporations decentralize and don't make decisions from one location. Global company can be described as a company which does business with lots of countries all around the world. A global company works in almost every major country. A global company needs to introduce itself and its products in other countries. International companies are the companies who do business of services, goods, capital and technology at global level or across national borders. Points of difference between multi-domestic, global and international companies are as follows: • A multi-domestic company has multi-country affiliates in which everyone has their own business strategy. Global companies tend to integrate and standardize operations worldwide. An international company can work like multi-domestic or global company. • Multi-domestic companies make strategies that are based on the market of the different countries; global companies use same strategies for all functional areas of different companies of the world whereas international companies make strategies according to the country in which they do business.