In today\'s ever-expanding globalized world, countries are joining ranks and for

Question

In today's ever-expanding globalized world, countries are joining ranks and forming trade alliances to expand their economies. They eliminate trade barriers among their group and provide low-cost labor to nations seeking to outsource their production. The myriad of trade groups globally has also increased new foreign direct investment opportunities for multinational companies. Therefore, the intent of this assignment is to provide students a more thorough understanding of globalization and its nuances.

Assignment Steps

Resources: Suggested but not required: Moran, Theodore. (2011). Foreign Direct Investment and Development. New York, NY: Columbia University Press.

Search the Internet for vendors who sell this book or inquire about it with a local library.

Compose a minimum 525-word response to the following:

Define globalization and identify three of the traditional, international trade theories that support the concept of globalization.

List and explain the two major drivers of globalization and provide two examples of each.

Appraise the pros and cons of global outsourcing by multinational companies. Provide details of how global outsourcing has affected your company, business or industry.

Describe foreign direct investment (FDI) and how it affects world economy.

Format your assignment consistent with APA guidelines.

Explanation / Answer

Globalization is when the businesses operate on an international scale with the aid of technological advancement and it is the integration of various international market assuming it as a common global market. It is a dynamic process in which the global market comes together as a single market.

In the traditional nature, international trade theories that support the concept of globalization are Merchantilism, Absolute advantage theory, Comparative advantage theory and Heckscher-Ohlin theory. Some Modern theories are the Country similarity theory, product life cycle theory, Global strategic Rivalry etc.

Two major drivers of globalization are:

1. Technological advancement: Communicating with people around the globe has become easier with video conferencing calls and with the help of emails. Faster and cheaper modes of communication have enabled international integration. With the aid of WWW, information gathering is easy and a viable option. With the satellite communication and global positioning system, accuracy of information related to weather, natural disasters are available in seconds.

2. Support from Financial Institutions: Liberalization in free trade practices has enabled in globalization. World Bank, World Trade Organization, and International Monetary Fund have supported in capital investments, migration of people, liberalizing the trade policies. It abolishes trade tariffs and GATT agreements are formed. It helps in trade negotiations. It settles disputes as well.

Pros of Global Outsourcing:

1. Competitive Advantage over competitors

2. Low labor cost and operational cost

3. Economies of Scale

4. Knowledge transfer and risk sharing

5. Scope for innovation and creativity

6. Optimal resource utilization

7. Focus on developing core competencies

Cons of Global Outsourcing:

1. Quality Assurance and Effective turnaround time

2. Loss of control of business operations

3. The gap between performance and expectation

4. Exposure of Confidential data

5. Lack of customer focus and needs fulfillment

6. Reduction in public image

Global outsourcing has benefited my business as more employment is available to people, liberty to choose from the best, diverse manpower with innovative approaches makes my IT business strong. The technical expertise is very efficient and risk mitigation is quick. It helps in web development, design, testing, project management, technical support, database management, etc. It saves infrastructure, security, communication technology, resources which are the burden of the outsourcing company. It helps in cost reduction, availability of skills, better utilization of resources etc.

FDI is an investment in a foreign country business by having control over it. OECD defines it as investors with minimum 10% of business shares. Agencies like OECD, UNCTAD, IMF, and Bureau of Economic Analysis keep track of the foreign direct investments.

It helps in global integration, technology transfers, expanded international trade, increases profit, grows businesses, provides the competitive advantage, diversification with shared risks, adopts best practices, and the standard of living increases,

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