MB0053 [International Business Management] Set1 Q1

Q 1 - What is globalization and what are its benefits?

Ans:

Globalization is a process where businesses are dealt in markets around the world, apart from the local and national markets. According to business terminologies, globalization is defined as ‘the worldwide trend of businesses expanding beyond their domestic boundaries’. It is advantageous for the economy of countries because it promotes prosperity in the countries that embrace globalization. In this section, we will understand globalization, its benefits and challenges.

Benefits of globalization

The merits and demerits of globalization are highly debatable. While globalization creates employment opportunities in the host countries, it also exploits labor at a very low cost compared to the home country. Let us consider the benefits and ill-effects of globalization.

Benefits of globalization are as follows:

1. Promotes foreign trade and liberalization of economies.

• Increases the living standards of people in several developing countries through capital investments in developing countries by developed countries.
• Benefits customers as companies outsource to low wage countries
• Outsourcing helps the companies to be competitive by keeping the cost low, with increased

2. Productivity.

• Promotes better education and jobs.
• Leads to free flow of information and wide acceptance of foreign products, ideas, ethics, and best practices and culture.
• Provides better quality of products, customer services, and standardized delivery models across countries.
• Gives better access to finance for corporate and sovereign borrowers.
• Increases business travel, which in turn leads to a flourishing travel and hospitality industry across the world.
• Increases sales as the availability of cutting edge technologies and production techniques decrease the cost of production.
• Provides several platforms for international dispute resolutions in business, which facilitates international trade.