IBUS7302 Chap.1 Globalisation and International Business
Globalisation and International Business
Connect the macro shift to the firm decision
Globalisation describes increasing cross-border integration in markets, production, capital, information and institutions. International business asks what organisations do within that environment. The analytical move is to link a broad change to a firm-level decision: market selection, value-chain location, ownership, coordination or risk.
A multinational enterprise coordinates value-creating activity across countries, while foreign direct investment involves a lasting interest and meaningful influence over a foreign operation.
Keep opportunity and exposure together
Integration can expand demand, resources, knowledge and scale while increasing interdependence, political exposure and coordination difficulty.
A case answer should identify the channel through which a global trend changes revenue, cost, control, learning or legitimacy. Avoid treating globalisation as a single force that benefits every firm in the same way.
What this chapter covers
- 01
Macro and firm levels
- 02
Multinational enterprises
- 03
Foreign direct investment
- 04
Cross-border opportunity
- 05
Interdependence and exposure
- 06
Decision framing
Worked example · free
Turn a global trend into a firm claim
- 2Identify the macro changes and the firm decision they may affect.
- 2Trace opportunity and exposure mechanisms.
- 2Name evidence and a decision criterion still required.
Key terms
- Globalisation
- Increasing cross-border integration of markets, production, capital, information and organisational activity.
- Multinational Enterprise
- A firm coordinating value-creating activities across more than one country.
- Foreign Direct Investment
- A cross-border investment linked to lasting interest and meaningful influence.
- Interdependence
- Mutual exposure created when activities and outcomes in different locations rely on one another.
Globalisation and International Business FAQ
Is every exporting firm a multinational enterprise?
Not necessarily. Exporting creates a cross-border transaction, while a multinational enterprise usually coordinates or controls value-creating activity across countries. The distinction matters because governance, learning and exposure differ when the firm owns or manages foreign operations rather than simply selling to an overseas customer.
How should I analyse a globalisation trend?
Name the trend, the channel through which it reaches the firm, the affected activity and the decision implication. For example, regional integration may reduce border friction, change supplier choice and support a new value-chain location. It does not automatically prove that entry or investment is attractive.
What makes a globalisation claim too broad?
A claim is too broad when it treats all firms, industries or countries as affected identically. Add the market, activity, time horizon and mechanism. Then test whether the trend changes revenue, cost, control, learning or legitimacy for the specific firm in the case.
Exam move
Build a two-column map with macro change on the left and firm decision on the right. For each course example, draw the transmission path between them: integration changes border conditions, technology changes coordination, and geopolitical tension changes access or continuity.
Practise distinguishing an international transaction from a multinational operating structure and foreign direct investment from lower-control contractual exchange. Then take one current but well-evidenced trend and write two competing implications: an opportunity and an exposure. Name the affected activity, the relevant stakeholder and the time horizon.
Test the claim with one piece of evidence that would strengthen it and one that would weaken it. Finish with a short case paragraph using claim, evidence, mechanism and implication. If the same paragraph could describe any company, add the firm resource, operating location or governance choice that makes it specific.
Review by explaining why globalisation does not remove geography, institutions or local relationships; it changes how firms manage them. Add a comparison exercise using two firms exposed to the same regional development. Give them different resources, value-chain positions or governance arrangements, then explain why the common macro condition produces different choices.
Next, classify ten statements from your notes as context, firm characteristic, operating method or outcome. Rewrite any statement that mixes categories without a causal link. For recall, define globalisation, multinational enterprise and foreign direct investment in one sentence each, and provide a counterexample that shows why the terms are not interchangeable.
Close the session by writing a recommendation with a boundary condition and a reversal test. The boundary states when the reasoning applies; the test identifies evidence that would change the decision. On a later day, rebuild the macro-to-firm map from memory and compare it with your earlier version.
Focus revision on missing arrows rather than decorative detail, because the assessed value lies in explaining how a change reaches an operating choice. Use a final oral drill: choose one host-country development and explain its effect on a domestic exporter, a contract-based entrant and an established multinational. Keep the external fact constant while changing only the firm form.
Listen for places where your reasoning jumps from trend to outcome without identifying access, cost, control, learning or legitimacy. Repair those gaps in writing, then compress the explanation into a four-sentence case answer.
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