Globalization and international business

Globalization and international business

Question 1: why should domestic managers have an understanding of globalization and international trade? What are the current views regarding future of globalization?

Globalization is the process by which the world’s economy is increasingly becoming a single system dependent on each other. This implies that customers, employees and competitors could come from anywhere in the world. Adler stated that “managing the global enterprise and modern business management have become synonymous” (Adler 5). Managers should therefore have a comprehensive understanding of globalization and international trade to be successful.

The knowledge of globalization will help a manager improve on customer treatment; this is because globalization offers a variety of a particular product to consumers hence they will choose from the best. Additionally, globalization and international trade will help a manager adjust business cultures to suit the global market. All employees should be made aware of culture approaches to be followed.

An understanding of international trade will help a manager deal with the barriers to international trade. The social, economic and legal-political factors are all important aspects in handling international trade.

According to economists, “the world will see the biggest shift in economic strength in more than a century” (Alder 6). Moreover, of the top fifteen economic performers this century will be from today’s rapidly developing economies

Question 2: what is international business? What are the primary reasons why companies engage in international business?

International business involves the exchange of goods, services and resources across the borders of different countries. It has promoted and encouraged the growth, purchase and movement of goods and services from one country to the other. McDonald and Burton further says that “firms can increase their cost competitiveness through trade by enjoying economies of scale when output increases” (36)

Firms also enter into international business to pursue profits and diversify their risks. In this way, there is maximum production and the risk of failure by domestic market can be offset in the international market. Moreover, it allows business organizations to maximize their specialization in the production of goods which they are best suited to produce. Lastly, international business enables firms to acquire that which they cannot produce, such as raw materials. In exchange they sell to trading partners their finished products.

Question 3: In a short essay, identify and explain three competitive factors that influence international business.

International trade being the exchange of goods and services across borders is influenced by several factors.  To begin with, the imposition of quotas to a country’s imports influences quantity of goods imported. Quotas are statements that show maximum quantity of goods that a country imports. It affects the exporting country in that sales volume drops and profit margins also decrease. In some instances it also has impacts on production levels. A country may impose quotas on imports in order to encourage consumption of locally produced goods and promote the local industries.

In addition to quotas, exchange rates also affect international business. It is the price for which a country’s currency can be exchanged for another country’s currency. This affects international business in certain ways; when a country’s currency are cheaper in comparison its exports tend to be cheap while it pays a lot for exports. The result could be a deficit in the balance of payments and negatively affect trade between these two countries. Exchange rates can be affected by inflation, political stability and interest rates. When exchange rates are stable, countries enjoy good international trade since none pays more at the expense of the other. Lastly, tariff barriers also affect international trade. This happens when a country does not take imports from a trading partner and imposes tariffs to hinder imports buying. Tariffs are mostly used when the government wants to discourage consumption of particular type of goods imported.

Question 4: Describe the four major theories discussed in your text that explains why motivation differs from one country to another.

The categories for classifying work motivation theory are; content theories and process theories.  Maslow’s and Herzberg’s two-factor theory are the contents theories. They explain what motivates people to work.  Processtheories on the other hand considers employee behavior in terms of its initiation to how it’s stopped.

To begin with, Maslow’s theory states that in order to satisfy needs, rewards must be done. How important reward is affected by people’s culture. Similarly, the value individuals attach to rewards differ across cultures, hence it determines how effective the reward system will be.

Herzberg identifies two factors of motivation; on one hand are motivators which boosts employee motivation such as achievement, and recognition, while on the other hand are health issues that are not necessarily critical in motivating employees.

According to equity theory, individuals are motivated if individuals are convinced and believe that they are treated fairly in comparison to others within the organization. The success of the theory lies on how workers value particular equity.

Goal setting theory focuses on the goals set within the organization. These goals are set by individuals and they later aim to achieve them. Under this this theory, the effect of such achievements on motivation is studied.

Question 5: what is the difference between monochromic and polychromic cultures? How do such culture differences affect business practices for international firms?

Anthropologist Edward Hall coined the term polychronic for cultures that jungle many tasks at the same time while monochronics organize single tasks into linear sequence” (Hodge 66). Meetings in a monochronic system have a stated agenda while in polychronic systems, there is no agenda and meeting often takes longer. Another difference is that monochronic relations in an organization are subordinated to schedules while schedules are subordinated to relations in a polychronic system.

Polychronic business people are seen as scattered and disorganized while monochronic are cold and rigid. Hodge further says that “monochronic cultures tend to see polychronic organizations as disorganized and scatterbrained while polychronic cultures tend to see monochronic style as heartless, mechanical and money oriented.

Question 6: What is the difference between polycentric, ethnocentric and geocentric approach to international management? What key factors should a firm consider before adopting one of these approaches?

Different firms adhere to different policies in regard to recruiting manpower. The ethnocentric staffing policy means “manning of senior management cadre for overseas operations by home country individuals” (Vyuptakesh 463). The basic purpose of adhering to this policy is that managers are fully aware of company’s policies and they can implement them more effectively.Polycentric staffing policy is the reverse of ethnocentric policy meaning “oversees operations are managed by location country  individuals” (Vyuptakesh 463). Their rationale is that local managers are aware of local problems and they can handle the problem more effectively.

In a geocentric staffing policy, “senior managers are recruited irrespective of their nationality; from the home country, host country or a third country” (Vyuptakesh 464). The merit of this policy is that the company can avail services of best-proven managers from wherever they are recruited.

Works cited

Adler, Nancy J.International Dimensions of Organizational Behavior. Cinncinati, OH, USA:

Thomas Learning, 2002. Print

McDonald, Frank&Fred Burton. International business. New York: Cengage Learning, 2002.


Herrmann, Andrea. Globalization and its effect on International Business. NY: Routledge, 2012.


Weiner, Bernard. Human Motivation. USA: Psychology Press, 2013. Print

Hodge, Sheida. Global Smarts: The Art of Communicating and Deal Making Anywhere in the

World: John Wiley & Sons, 2000. Print

Vyuptakesh, Sharan. International Business: Concept, Environment and Strategy. India: Pearson

Education, 2003. Print


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