Bma181 Tutorial1

BMA181 Tutorial One - Globalisation 1.

• • •

•

“The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms.” Evaluate this statement. How might the Internet and the associated World Wide Web affect international business activity and the globalisation of the world economy? How did outsourcing work to Wipro improve General Electric’s ability to compete in the global economy? Does outsourcing harm or benefit the American economy? If India’s information technology companies continue to prosper, over time what do you think will happen to the income differential between software programmers in the United States and India? What are the implications for the American economy? What does the rise of Wipro teach you about the nature of the global economy in the first decade of the 21st century?

1.

• • •

• • •

“The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms.” Evaluate this statement. This statement has a very narrow view on the global economy. It shows the lack of foresight in that it misses the many opportunities that are available to small businesses in the international environment Individuals and companies believe in this view may find that they do not achieve their full potential (abilities – what they can do) and may ultimately fail to success. As the two main drivers of globalisation ( decline in trade barriers and technological advancement) continue to drive towards a greater global economy, access to new opportunities and threats increases. The rise of the mini-multinationals suggests there are global opportunities for even small firms. Paying attention to international markets can be critical for long-term competitive survival – why and how? Foreign firms may be entering domestic market, which could seriously impact on local competition. Small firms could source best foreign suppliers to improve its cost structure and its competitive advantage.

2

How might the Internet and the associated World Wide Web affect international business activity and the globalisation of the world economy?

•

The ability of firms and individuals to market their products and services and to know about new products and services worldwide is increased by the World Wide Web. Imagine by using WWW as an initial point of contact to initiate new flows of trade and investment – how much more effective than using paper mail or personal contact. Consumers can find new products of interest that are not available in local retail outlets and then order them over the internet – Strawberrynet.com and Ebay Sellers and buyers are geographically connected by the internet This increased connection may require economies, better distribution systems, reduction in the traditional trade-off between price and quality. Through the Internet and WWW even small firms can conduct business internationally

•

•

• • •

3

How did outsourcing work to Wipro improve General Electric’s ability to compete in the global economy? Does outsourcing harm or benefit the American economy?

•

By outsourcing GE was able to reduce the labor cost of its total operation cost. This increased their ability to be competitive in the global market place. In short-term, yes, such outsourcing did hurt American workers whose jobs were outsourced, but in a longer-term. It improved the economy through job growth

•

4

•

• •

If India’s information technology companies continue to prosper, over time what do you think will happen to the income differential between software programmers in the United States and India? What are the implications for the American economy? If India’s IT companies continue to prosper, and demand continue to increase, wage rates will equalize between the US and India. The population differentials, it is likely that the new US programmers will be paid less than formerly. The implications for the American economy are a downward pressure on wages and the price of software will decline. If routine programming is done in India, U S programmers can improve their situation by focusing on more innovative work, higher skilled activity – designing and engineering.

5

• • • •

What does the rise of Wipro teach you about the nature of the global economy in the first decade of the 21st century?

Wipro has a competitive advantage in terms of cost, but it needs to reinvest some of its gain into closer relationships with the client. Global trade and global production can increase firm’s competitive advantage. Make sure the focus is on the customers – locally or globally. Face-to-face still matters. Wipro has discovered that it needs a local presence.