Copyright

Major Trends & Developments in International Business

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: How The Global Business Environment Affects Business: Explanation & Examples

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:03 Changing Trends & Developments
  • 1:21 Growing Middle Class
  • 2:43 Technology
  • 3:33 Demographics
  • 5:09 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Timeline
Autoplay
Autoplay

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Dr. Douglas Hawks

Douglas has two master's degrees (MPA & MBA) and is currently working on his PhD in Higher Education Administration.

Entire courses - even entire college degrees - exist to teach people the complexities of international business. While this lesson is just an introduction, it will discuss important trends that are shaping the world's economy.

Changing Trends & Developments

As recently as the 1980s, national borders meant as much in economics as they did in geography. At that time, Japan was becoming the expert of manufacturing, and China and India were emerging as sources of low-cost labor. America was, without a doubt, the largest consumer market in the world, and it was the norm for trade zones to include a cluster of nations relatively close together.

Fast forward to 2015 and, that quickly, almost the entire global economy has changed. It is projected by 2020 that China will be the largest consumer economy and the United States will drop to second. International trade treaties are made between countries all over the world, regardless of how close they are, because transportation has become more efficient. In 2005, famous economist Thomas Friedman authored the book The World is Flat, a reference to the path we are on to become one global economy where national borders mean very little.

While even a single book can't cover all of the complexities of the world's changing economy, there are three major trends and developments that can frame much of what we see going on in the international marketplace: a growing middle class, technology, and demographics. Each of these has significant implications for both companies and customers.

Growing Middle Class

Even before globalization became such an important business concept, the middle class has driven economic growth. The middle class is made up of primary consumers with income, depending on the size of the family, between $35,000 and $100,000 per year. When the economy grows, more jobs become available, more of the middle class can afford more goods and services, and the cycle of economic growth begins.

In 2010, approximately 25% of the world's population was considered within the middle class - most of them in the United States and Europe. But, as it has become easier and cheaper to manufacture goods in emerging economies, the opportunity to get jobs and work into the middle class became a possibility for workers in China, India, Africa, and other emerging economies. Most economists expect that by 2020 the global middle glass will include almost half of the world's population, and by 2040 that number will be over 60%.

If the middle class is the primary driver of economic growth, just imagine what will happen when the size of the middle class more than doubles. That means twice as many TVs will be sold, twice as many computers, twice as many vehicles, and twice as much gas, utilities, groceries, and other usage items. The growing middle class is quite likely the single biggest factor that will change the business landscape over the next 30 years.

Technology

Much of what has led to the growth of the middle class can be credited to technology. Companies that were once completely limited to locating all of their facilities and people in the United States can now spread production throughout the world. Technology has improved transportation, so something produced in China can be on the shelves for sale in New York City within a day or two.

Technology has also made collaboration possible. Teleconferencing, emails, and other forms of communication available to connect employers to employees and customers to producers no longer make person-to-person contact necessary to run a good business and get deals done. Also, something that can't be understated is that technology has made worldwide education possible - another important part of growing the middle class and teaching foreign employees how to produce goods and services.

To unlock this lesson you must be a Study.com Member.
Create your account

Register for a free trial

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Free 5-day trial

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it free for 5 days!
Create An Account
Support