Chapter 1: Global Business Management

What is Globalization?

Globalization refers to the interconnectedness and integration of economies, markets,

industries, and companies on a global scale. It involves the increasing flow of goods, services,
capital, information, technology, and people across national borders.

Several key aspects characterize globalization in the business context:

1. Market Expansion: Businesses seek to expand their markets beyond domestic borders
to tap into new customer bases and growth opportunities in foreign countries.

2. Supply Chains: Globalization has led to the development of complex international

supply chains, where different stages of production are spread across multiple
countries to take advantage of cost efficiencies and specialized capabilities.

3. International Trade: Businesses engage in importing and exporting goods and

services across borders to access resources, reduce costs, and gain competitive
advantages.
 4. Multinational Corporations (MNCs): Large corporations operate in multiple
countries, establishing subsidiaries, branches, and production facilities in various
locations to serve global markets.

5. Outsourcing and Offshoring: Companies outsource certain functions or processes to

third-party providers located in other countries to reduce costs or access specialized
skills. Offshoring involves relocating business operations to a foreign country, often
for cost savings.

6. Technology and Communication: Advances in technology, particularly the internet

and telecommunications, have facilitated rapid communication and information
exchange, enabling businesses to operate seamlessly across borders.

7. Competition: Globalization intensifies competition as businesses face competition not

only from domestic rivals but also from foreign firms operating in the same markets.

Factors that push in favor of globalization

There are several factors that push in favor of globalization:

1. Economic Efficiency: Globalization allows countries to specialize in producing goods

and services where they have a comparative advantage. This leads to more efficient
allocation of resources and can increase overall economic productivity.

2. Access to New Markets: Globalization opens up new markets for businesses. This can
lead to increased sales, profits, and growth. It also provides consumers with a wider
variety of goods and services.

3. Technological Advancements: The spread of technology and innovation is accelerated

by globalization. Countries can benefit from the latest technological advancements
without having to develop them domestically.
 4. Cultural Exchange: Globalization facilitates the exchange of culture, ideas, and
knowledge. This can lead to greater understanding and cooperation between nations.

5. Poverty Reduction: By creating jobs and lowering prices, globalization has the
potential to reduce poverty. In many developing countries, globalization has led to
significant economic growth.

6. Political Cooperation: Globalization can lead to increased political cooperation as

countries become more interconnected. This can help address global issues such as
climate change and terrorism.

Factors that push against globalization

There are several factors that push against globalization:

1. Job Loss: Globalization can result in the loss of jobs in certain industries. For example,
when a company moves its manufacturing operations to a country with lower labor
costs, workers in the original country may lose their jobs.

2. Wage Suppression: Globalization can suppress wages in some industries. For

instance, if a company outsources customer service jobs to a country where wages are
lower, workers in the company's home country may experience pressure on their
wages to remain competitive.

3. Poor Working Conditions: In some cases, globalization can lead to poor working
conditions, particularly in developing countries where labor laws may be less
stringent.

4. Tax Exploitation: Multinational corporations can exploit tax loopholes, leading to

significant loss of revenue for governments. One common tactic is shifting profits to
low-tax or tax haven countries where they have little to no actual business operations.
This allows them to minimize their tax liabilities in higher-tax jurisdictions where
they operate. For example, a multinational technology company might establish a
 subsidiary in a low-tax country and attribute a significant portion of its global profits
to that subsidiary through complex financial arrangements or transfer pricing
mechanisms. As a result, the company pays lower taxes overall, depriving the
countries where it generates substantial revenue of tax revenue that could otherwise
be used for public services and infrastructure development.

5. Trade Imbalances: Globalization can lead to trade imbalances, with some countries
exporting much more than they import. This can lead to economic instability.

6. Loss of National Sovereignty: Some argue that globalization can erode national
sovereignty as international corporations and organizations gain more influence.

7. Environmental Impact: Globalization can lead to increased consumption and

production, which can have detrimental effects on the environment.

Expansion of globalization and its effects on developing countries like

Bangladesh

Globalization has had a significant impact on developing countries like Bangladesh. Here are
some key points:

1. Economic Growth: Globalization has contributed to economic growth in

Bangladesh. The country’s economy grew rapidly during the 1990s as it liberalized its
markets and became increasingly integrated into the world economy. This growth
was largely due to increased exports and foreign investment.

2. Human Development: Bangladesh made notable progress in human development

during the 1990s. It ranked third for improvement of human development, behind
only China and Cape Verde.
3. Garment Industry: The garment industry in Bangladesh has blossomed thanks to
globalization. However, the increasing competitiveness of the global garment industry
threatens to undermine Bangladesh’s growth.

4. Remittances: The inflow of remittances from migrant workers has been one of the few
saving graces during economic slowdowns. However, these remittances rely strongly
on the economic fortunes and hospitality of host countries, some of which are now
changing policies and attitudes towards guest workers.

5. Income Inequality: While globalization has contributed to overall economic growth in

Bangladesh, it has also exacerbated income inequality. The benefits of globalization
have not been evenly distributed, with wealth and opportunities concentrated among
certain segments of the population, particularly urban elites and those employed in
export-oriented industries.

5. Environmental Impact: Globalization has put pressure on Bangladesh's natural

resources and environment, particularly in industries such as textiles and
manufacturing. Pollution, deforestation, and water contamination have emerged as
significant challenges, requiring sustainable development strategies and
environmental regulations to mitigate adverse effects.

6. Vulnerability: Despite the positive trends, Bangladesh’s economy was hit hard by the
2001 global recession. The country’s reliance on exports and remittances exposes it
to vulnerabilities.

7. Future Challenges: If Bangladesh is to become less vulnerable to the economic

fortunes of others, it will need to strengthen its domestic economy, creating jobs and
markets at home.
 Chapter 2: Designing a Global Strategy

What is Global Strategy

Global strategy is essentially a business plan for operating on a worldwide scale. It involves:

▪ Planning to enter new markets and expand your reach beyond your home country.
▪ Adapting your products and marketing to different cultures and needs around the
world.
▪ Building a strong global business system with an efficient supply chain and risk
management.
▪ Creating a global organization that can manage a geographically spread-out
workforce.

The Global Strategy of SONY

Sony, a global leader in electronics and entertainment, has built its success on a well-defined
global strategy. Here's a breakdown of its key highlights:

▪ Glocalization: Mixing Global and Local

Sony's strategy is all about "glocalization." This means they make products that are global
in their quality and features but also tweak them to fit local tastes. For example, a
PlayStation might have different games depending on where you buy it.

▪ Innovation & Strong Brand

Sony keeps inventing new stuff to stay ahead. This, combined with their strong brand
name, helps them sell products all over the world.

▪ Picking the Right Places to Sell

 Sony doesn't try to sell everywhere. They choose markets where they know people want
their stuff. Then, they put their money and effort into those places to make sure they sell
well.

▪ Being the Same, but Different

Sony wants people to recognize them no matter where they are. But they also know that
people in different places like different things. So, they adjust their products and ads to
match local tastes while still keeping the Sony style.

▪ Efficient Business Worldwide

Sony has a smart system for making and selling their products globally. They make sure
everything runs smoothly from making the products to getting them to the stores. They
also plan for problems like money issues or political trouble.

▪ Organized for Success Everywhere

Sony doesn't use the same rules everywhere. They change how they work depending on
where they are. For example, they might have one way to make products but let each place
decide how to sell them.

Framework for Global Strategy and Global Ambition

This framework outlines key elements for building a successful global strategy that aligns
with your company's ambitions for international reach and growth.

1. Setting the Stage: Ambition and Direction

• Vision & Mission: Define a clear global vision for your company. Where do you see
your company in the international marketplace in the long term? What is your mission
statement regarding your impact on a global scale?

• Market Analysis: Conduct a thorough market research to identify attractive markets

with high growth potential and a good fit for your products or services. Consider
 economic conditions, demographics, regulations, competitor presence, and cultural
nuances.

• Competitive Advantage: Identify your company's unique strengths and competitive

advantages in the global context. What sets you apart from competitors
internationally?

• Resource Allocation: Strategically allocate resources (financial, human capital,

technology) based on market priorities. This ensures you're focusing on areas with
the greatest potential for success.

2. Techniques for Global Positioning

• Brand Consistency: Maintain a strong, recognizable brand identity across all global
markets. This fosters brand recognition and trust with customers worldwide.

• Product Differentiation: While maintaining core functionalities, adapt products and

marketing messages to resonate with different cultural preferences and market
needs. This could involve adjusting product features, packaging, or language used in
marketing materials.

• Value Proposition: Clearly communicate the unique value your company offers to
customers in each region. What specific benefits do your products or services provide
that address local needs and preferences?

3. Methods for creating a Global Business System

• Supply Chain Management: Establish a strong and efficient global supply chain to
ensure timely and cost-effective production and distribution of your products or
services. This involves optimizing logistics, managing inventory effectively, and
building strong relationships with suppliers across different regions.

• Risk Management: Proactively identify and mitigate potential risks associated with
global operations. These risks could involve political instability, currency fluctuations,
intellectual property theft, or trade disruptions. Having a risk management plan in
 place helps ensure your business continues to operate smoothly even in challenging
environments.

• Sustainability: Integrate sustainable practices throughout your global business

system. Consider environmental and social responsibility in areas like manufacturing,
packaging, and waste management. Sustainability is increasingly important for
consumers and investors, so focusing on it demonstrates responsible business
practices.

4. Ways for building a Global Organization

• Centralized vs. Decentralized Structure: Decide on the optimal organizational

structure for your company's global operations. This could involve a centralized
approach for core functions like research and development, while empowering local
teams for market-specific decisions such as marketing and sales. The ideal structure
depends on factors like product complexity and market diversity.

• Cross-Cultural Collaboration: Actively promote collaboration and knowledge sharing

between teams in different regions. This fosters innovation, leverages diverse
perspectives, and breaks down cultural barriers.

• Leadership Development: Develop leaders with a global mindset who understand

cultural differences and can effectively manage a geographically dispersed workforce.
These leaders should be able to inspire, motivate, and build strong teams across
borders.

5. Continuous Monitoring and Improvement

• Performance Measurement: Establish key performance indicators (KPIs) to track the

progress of your global strategy and measure the success of your initiatives in
different markets.

• Adaptability and Flexibility: Recognize that the global landscape is constantly

evolving. Be prepared to adapt your strategy and tactics based on changing market
conditions, competitor actions, and customer feedback.
 Chapter 3: Global Mergers & Acquisitions

Mergers and Acquisitions

Merger: When two companies agree to combine and create a new entity, it's called a merger.
Both companies are typically of similar size.

• Example: In 1998, Daimler-Benz and Chrysler merged to form DaimlerChrysler,

combining their resources to compete better globally.

Acquisitions: When one company buys another company and takes over its operations, it's
called an acquisition. The acquired company becomes part of the acquiring company.

• Example: In 2012, Facebook acquired Instagram, expanding Facebook's product

offerings and market presence.

Formation:

• Merger: A new company is formed from the merger of two companies. For instance,
the merger of Glaxo Wellcome and SmithKline Beecham in 2000 formed
GlaxoSmithKline.

• Acquisition: The acquired company is absorbed into the acquiring company. For
example, Google's acquisition of YouTube in 2006 did not create a new company;
YouTube became a part of Google.

Control:

• Merger: Control is shared between the shareholders of the merging companies.

o Example: The merger of Exxon and Mobil in 1999 to form ExxonMobil shared
control between the shareholders of both companies.

• Acquisition: The acquiring company gains full control over the acquired company.

o Example: Amazon’s acquisition of Whole Foods in 2017 resulted in Amazon

having control over Whole Foods' operations and strategy.
Size of Companies:

• Merger: Typically involves companies of similar size and market power.

o Example: The merger of equals like Dow Chemical and DuPont in 2017 to form
DowDuPont.

• Acquisition: Often involves a larger company acquiring a smaller one.

o Example: Microsoft acquiring LinkedIn in 2016 for $26.2 billion, where

Microsoft was significantly larger than LinkedIn.

Difference between Mergers and Acquisitions

Aspect Merger Acquisition
Definition The combination of two companies One company purchases another
to form a new entity. company and takes over its
operations.
Formation A new company is usually formed. The acquired company becomes part
of the acquiring company.
Control Control is usually shared between The acquiring company gains control
the companies' shareholders. over the acquired company.
Size of Typically involves companies of Often involves a larger company
Companies similar size and market power. acquiring a smaller one.
Legal Both companies dissolve, and a new The acquired company ceases to
Process legal entity is formed. exist independently; its assets and
operations are absorbed.
Stock Shares of both companies are The acquiring company’s shares may
Exchange usually surrendered, and new be used as payment, or cash is paid
shares are issued for the new entity. for the acquired company's shares.
Examples - Daimler-Benz and Chrysler - Facebook acquired Instagram.
merged to form DaimlerChrysler.
Motivation To achieve mutual benefits and To expand the acquiring company’s
create a larger, more competitive market reach, capabilities, or
entity. product line.
Difference Between Global Mergers and Local Mergers

Aspect Global Mergers Local Mergers

Definition Mergers involving companies Mergers involving companies
from different countries. within the same country.
Cultural More complex due to different Less complex as companies share
Integration national cultures. the same national culture.
Regulatory Must comply with multiple Must comply with the regulations
Environment countries' regulations. of a single country.
Market Reach Expands market reach to multiple Expands market reach within the
countries. same country.
Currency Issues Involves dealing with multiple Typically deals with a single
currencies. currency.
Example The merger of British-Swedish The merger of two American
AstraZeneca and American banks, Wells Fargo and Norwest
MedImmune. Corporation.

Difference Between Global Acquisitions and Local Acquisitions

Aspect Global Acquisitions Local Acquisitions

Definition Acquisitions where the acquiring and Acquisitions where both
acquired companies are in different companies are in the same
countries. country.
Cultural More complex due to different Less complex as companies
Integration national cultures. share the same national
culture.
Regulatory Must navigate regulatory Must navigate regulatory
Environment requirements of multiple countries. requirements of a single
country.
Market Provides access to new international Provides access to new
Expansion markets. domestic markets.
Currency Issues Involves transactions in different Typically involves
currencies. transactions in a single
currency.
Example Google’s acquisition of British Facebook’s acquisition of
company DeepMind. American company
WhatsApp.
Value Creation in Mergers and Acquisitions

Value creation in mergers and acquisitions (M&A) is the process by which the combined
entity becomes more valuable than the sum of the separate companies. Here’s how value can
be created:

Cost Savings: When companies merge, they can produce goods or services at a larger scale,
which often reduces the cost per unit. This happens because fixed costs, like administration
and facilities, are spread over more units of production.

Revenue Enhancement: M&A can create new opportunities to sell products or services to the
combined customer base of both companies. Example: A bank acquiring an insurance
company can start offering insurance products to its banking customers.

Entering New Markets: By merging with or acquiring a company in a different region or

country, a company can quickly enter new markets and expand its customer base.

Acquisition of New Technologies or Expertise: Merging with or acquiring a company with

advanced technology or specialized expertise can provide a competitive edge. Example: A
traditional media company acquiring a digital media startup to boost its online presence and
technological capabilities.

Strengthening Competitive Position: By merging with a competitor, a company can increase

its market share, reduce competition, and potentially increase pricing power.
Sources of Failure in the Integration Process

Mergers and acquisitions (M&A) can fail during the integration process due to several
factors. Here are the main sources of failure:

1. Unrealistic Expectations: Overestimating the cost savings or revenue increases that

the merger will bring can lead to disappointment and financial strain if these
synergies do not materialize as expected. Example: If a company expects to save
significantly by combining sales forces but finds that the transition is more complex
and costly than anticipated, it can result in financial losses.
2. Lack of Clear Communication: Failure to clearly communicate the reasons for the
merger, the integration plan, and the expected outcomes can lead to confusion,
rumors, and uncertainty among employees.
3. Technical Challenges: Integrating different IT systems, software, and processes can be
more difficult and costly than expected.
4. Operational Disruptions: Disruptions to day-to-day operations during the integration
process can lead to customer dissatisfaction and lost business.
5. Underestimating Integration Costs: The costs associated with integrating two
companies can be higher than anticipated, putting financial strain on the new entity.
6. Leadership Conflicts: Disagreements and power struggles among top executives can
hinder the integration process and decision-making.
7. Clashing Corporate Cultures: Different companies often have distinct corporate
cultures. If these cultures clash, it can lead to conflicts, reduced morale, and lower
productivity.
8. Resistance to Change: Employees from both companies might resist changes to their
routines, roles, or organizational structure, leading to a lack of cooperation and
decreased efficiency.
Guiding Principles/Best Practices in Merging and Acquisition
To ensure successful mergers and acquisitions (M&A), companies should follow certain
guiding principles and best practices.:

1. Clear Vision and Strategy: Have a well-defined reason for the M&A and a clear plan
for achieving it.

o Example: Establishing clear goals such as market expansion or technology

acquisition before proceeding with the merger.

2. Strong Leadership and Communication: Ensure leaders from both companies are on
the same page and communicate effectively with all employees.

o Example: Regular meetings and updates to keep everyone informed and

aligned with the integration process.

3. Focus on Culture: Pay attention to cultural integration and work on blending the best
aspects of both companies.

o Example: Organizing team-building activities and workshops to help

employees from both companies get to know each other and build trust.

4. Effective Integration Planning: Develop a detailed integration plan that addresses all
aspects of the merger.

o Example: Creating a comprehensive integration roadmap with timelines and

responsibilities clearly defined.
 Chapter 4: Assessing Countries' Attractiveness

How to assess countries' attractiveness for investment ?

When evaluating a country's attractiveness for investment, it's crucial to consider various
factors that influence the potential for successful business operations. These factors can be
grouped into four main categories: general investment framework, market opportunities,
industry opportunities, and country risk analysis.

1. Assessing General Investment Framework

The general investment framework includes the overall conditions and policies that affect
the ability to invest and conduct business in a country.

Ease of Doing Business:

• Factors like ease of starting a business, obtaining permits, and the efficiency of tax
systems.

• Example: New Zealand consistently ranks high in the World Bank's Ease of Doing
Business index, making it an attractive destination for investors.

Tax Policies:

• Corporate tax rates, incentives for foreign investment, and overall tax burden.

• Example: Ireland’s low corporate tax rate has attracted many multinational
companies to set up operations there.

Political Stability:

• The stability and predictability of the political environment, including

government policies towards foreign investment.

• Example: Switzerland is known for its political neutrality and stability, which
makes it attractive for investors seeking a safe and predictable environment.

Infrastructure:

• Quality and availability of physical infrastructure such as transportation,

telecommunications, and utilities.
 • Example: The United Arab Emirates has invested heavily in infrastructure, making
it a hub for global trade and logistics.

2. Assessing Market Opportunities

Assessing market opportunities involves evaluating the potential demand for products and
services within a country.

Market Size and Growth:

• Population size, GDP growth, and income levels which indicate the potential
customer base and purchasing power.

• Example: China’s large and rapidly growing middle class represents a significant
market opportunity for consumer goods companies.

Consumer Behavior and Preferences:

• Understanding local consumer habits, preferences, and cultural factors that

influence purchasing decisions.

• Example: In Japan, high demand for technology and innovation creates

opportunities for tech companies to introduce cutting-edge products.

Competitive Landscape:

• Analysis of existing competitors, market share, and the level of market saturation.

• Example: Entering a highly competitive market like the US automotive industry

requires substantial investment and differentiation strategies.

3. Assessing Industry Opportunities

Evaluating industry-specific factors is crucial to understand the potential success within a

particular sector.

Industry Growth and Trends:

• Growth rates, technological advancements, and emerging trends in specific

industries.

• Example: The renewable energy industry in Germany is thriving due to strong

government support and incentives.

Regulatory Environment:
 • Industry-specific regulations and compliance requirements.

• Example: The pharmaceutical industry in India benefits from relatively lower

regulatory barriers compared to many Western countries.

Availability of Resources:

• Access to necessary raw materials, skilled labor, and technological resources.

• Example: Silicon Valley in the US offers unparalleled access to tech talent and
innovation, attracting numerous tech startups and established companies.

Supply Chain and Logistics:

• Efficiency and reliability of the supply chain and logistics networks.

• Example: The logistics network in the Netherlands, centered around the Port of
Rotterdam, supports efficient distribution throughout Europe.

4. Country Risk Analysis

Country risk analysis involves evaluating the potential risks associated with investing in a
particular country.

Political Risk:

• Risks related to political instability, changes in government, and political decisions

that can impact business operations.

• Example: Political unrest in Venezuela poses significant risks for investors due to
unpredictable policy changes and instability.

Economic Risk:

• Risks related to economic performance, such as inflation, currency fluctuations, and

economic recessions.

• Example: Argentina’s history of economic instability and high inflation rates presents
challenges for investors.

Legal and Regulatory Risk:

• Risks arising from changes in laws and regulations that could adversely affect
investments.

• Example: Sudden changes in tax policies or foreign investment regulations in India

can impact investment decisions.
Operational Risk:

• Risks related to operational challenges, such as labor strikes, supply chain

disruptions, and natural disasters.

• Example: Frequent labor strikes in South Africa’s mining sector can disrupt
operations and affect profitability.

Security Risk:

• Risks related to crime, terrorism, and personal safety for employees and assets.

• Example: High crime rates in some parts of Brazil pose security risks for businesses
operating in those areas.
Chapter 5: Entry Strategies for International Markets

Entry Strategies for International Markets

When expanding into international markets, companies must choose appropriate entry
strategies such as:

Market Penetration:

• Objective: Quickly gain market share in the new market.

• Example: A company might use aggressive marketing and competitive pricing to

attract customers in a new country.

Resource Acquisition:

• Objective: Secure access to raw materials, technology, or talent.

• Example: A tech company might enter a foreign market to tap into a pool of skilled
software developers.

Diversification:

• Objective: Spread business risk by entering multiple markets.

• Example: A consumer goods company expanding into various geographic regions to

reduce dependence on a single market.

Revenue Growth:

• Objective: Increase overall sales and revenue by entering new markets.

• Example: An electronics manufacturer entering a high-growth emerging market to

boost global sales.

Strategic Positioning:

• Objective: Establish a presence in key markets to enhance competitive positioning.

• Example: A luxury brand opening stores in major international cities to enhance its
global brand image.
Advantages & Disadvantages of Being a First Mover
Advantages:

Market Leadership:

• First movers can establish a strong brand presence and customer loyalty.

• Example: Coca-Cola's early international expansion helped it dominate the global

soft drink market.

Competitive Advantage:

• First movers can set industry standards and benefit from economies of scale.

• Example: Amazon's early entry into online retail gave it a significant lead over
competitors.

Access to Resources:

• Early entry can secure critical resources, locations, or partnerships.

• Example: McDonald's securing prime locations in international markets.

Disadvantages:

High Risk and Cost:

• First movers face high costs and risks associated with unknown markets.

• Example: Pioneering new markets might require substantial investment in market

research and infrastructure.

Market Uncertainty:

• Uncertain market conditions and regulatory environments can pose challenges.

• Example: Regulatory changes in a new market can adversely affect first movers.