Quiz 1: Globalizing Business


Case introduction: As a part of predicting the future, the following two scenarios were developed about the economy in 2050: Continued globalization: According to this scenario, the globalization will result in strong growth of emerging economies and more integration of economies. The studies of Organization for Economic Cooperation and development support this scenario. De-globalization: According to this scenario, the economies face recession, increase in unemployment, natural disasters, etc. These economic conditions result in weak economies over the world. Out of the two scenarios as discussed in the case, "Continued Globalization" is more reasonable for the global economy in 2050 due to the following reasons: • In this scenario, the emerging economies will remain strong and grow. • Continued Globalization will provide the path for growth of the economies. • This scenario will help lead to higher level of economic integration and higher level of incomes in the emerging economies. • Under this scenario, the competition between the firms will be more intense leading to large amount of profits for the economies. • Institutions like regional, international and supranational will also perform their functions reasonably in this scenario. The predictions were made based on other forecasting studies. Both the scenarios predict that the competition will be more among the countries. However, in de-globalization, the competition results in additional costs for market penetration, which is a negative impact. Impact of continued globalization: The impact of the continued globalization on a consumer, professional and a common citizen of the country are as follows: • Consumer : Continued globalization will promote global economic growth and provide the access to worldwide markets and products. Also, under this scenario, consumers will be benefited in the form of higher quality goods and services at cheaper rates. • Professional : With reduction of trade barrier and Decentralization, there are more opportunities for domestic firms to enter international market. It results in more jobs as there will be free mobility of resources. Greater specialization and wide spread of technologies which results in demand for professionals like IT, Finance, Engineering, Biotechnology etc. • Citizen : Continued Globalization increases integration of economies and resources around the world. Transportation, communication, flow of goods, services and knowledge among various economies will increase. The infrastructure will be developed in low level economies and the GDP will increase. The standard of living will increase in the nations due to the growth in their economy. The continued globalization scenario will have a positive impact on the world economies by increasing the living standards of people, decreasing costs, growth in economies and infrastructure.

Global business involves the exchange of product, services, ideas, knowledge, and culture between the nations, across the world. Global business is helpful to provide the following advantages: • The study of global business helps in understanding the domestic business and their scope in global market. • It helps in understanding the gains from the exports and imports. • Information regarding the better options of investment can be made. • The study of global business helps in making decision regarding portfolio management. Increasing globalization practices across the world have enabled the top executives to dominate the world economy. However, the students might also gain the knowledge of global business and relish the following advantages: • Enhance their career opportunities by understanding the concept of global business. • Work as an expatriate in the foreign country. • Develop competencies and skills to acquire a financially rewarding job. Hence, it is concluded that the students might utilize the study of global business practices.

Chemical companies are evaluated on the basis of their capital spending and research and development spending. The information regarding these expenditures in a company can be assessed through internet, websites, journals, research papers, newspapers and magazines. Top five capital spending companies in the US are given below: 1. BASF 2. Dow chemical 3. Sinopec 4. Ineos group 5. Exxon Mobil Top five research spending companies in the US are given below: 1. BASF 2. Du Pont 3. Bayer 4. Dow 5. Exxon Mobil From the above list, it might be concluded that the top companies invest in both processes i.e. capital investment and research and development. The capital spending enables a firm to increase their cash flow , whereas research and development is required for new product development, product modification, re-engineering and dumping. Therefore, the chemical companies should invest more in these activities to gain competitiveness in the market.