Global Busines

In: Business and Management

Submitted By YvonneEe
Words 396
Pages 2
Question:
Define what is meant by Global Business. Identify the stages in the phase model of globalisation and explain the level of risk inherent in each.
Introductory paragraph * Definition of global business: ‘The buying and selling of goods and services by people from different countries’ (Williams & McWilliams 2010, p.151). * Phase model of globalisation- Exporting, cooperative contracts, strategic alliances, wholly owned affiliates. * Purpose: To outline the level of risk inherent in each phase model of globalisation.
Paragraph 2
Exporting
Risk: * Trade barriers. * Problems with local marketing agents. * High costs of transportation (Schultz and Speiser 2003, pp.3). * Lack of certain knowledge and experience. * Uncertainty effects (Belu and Caragin 2008, pp.88).
Paragraph 3
Cooperative contracts (Licensing and franchising)
Risk:
- Licensing * Licensees may become future competitors. * Disclosure of accumulated knowledge and experience. * Lack of control over the qualities of products. * Interact with foreign market passively. * Organizing licensing operations require high costs of controlling, transfer and adaptation (Belu and Caragin 2008, pp.94).
- Franchising * Other franchisees’ bad performance or unforeseen problems can bring a damaged, system-wide image. * High initial franchise fee, royalties and advertising fees (Belu and Caragin 2008, pp.97). * Loss control over technology (Schultz and Speiser 2003, pp.3).
Paragraph 4
Strategic alliances
Risk:
* Inability to engage in global strategic coordination (Schultz and Speiser 2003, pp.3). * Struggling for power. * Inability to realize location and experience economies. * Risk giving control of technology to partner (Álvarez 2003, pp. 3). * Lack of leadership (Williams & McWilliams 2010, pp.163).…...

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