chapter 1
global trade and investment continue to grow at a healthy rate, outpacing domestic growth in most countries. According to the World Trade Organization, in 2017 merchandise exports reached what?
17.5 trillion US dollars and Commercial Services exports reached 6.8 trillion US dollars foreign direct investment or FDI has slowed somewhat in recent years. However, it is important to note that most of the decrease in FDI investment is occurring among developed economies
in Germany and Italy, the working age population will shrink by over what?
20% by 2050.
Other regional and bilateral trade agreements, including the 2003 US Singapore free trade agreement and the what?
2004 US Dominican Republic Central American free trade agreement (CAFTA-DR) were negotiated in the same spirit as NAFTA/USMCA
The perceived negative effects from globalization on the U.S. manufacturing industry was a major issue in the what?
2016 US presidential election. According to some analysts, the anti globalization sentiment may have ultimately swayed the vote in several key states to then candidate Donald Trump.
what is Ministry of international trade and industry (MITI)?
A Japanese government agency that identifies and ranks national commercial pursuits and guides the distribution of national resources to meet these goals
what is Maquiladora?
A factory, the majority of which are located in Mexican border towns, the import materials and equipment on a duty and tariff free basis for assembly or manufacturing and re-export
what is an MNC?
A firm having operations in more than one country, international sales, and a nationality mix of managers and owners
what is the North America free trade agreement (NAFTA)?
A free trade agreement among the United States, Canada, and Mexico that removed most barriers to trade and investment. It was renegotiated and replaced by the United States in 2018 now being called the Mexico to Canada agreement or the USMCA
what is the European union (EU)?
A political and economic community consisting of 28 member states
what is Comprehensive and progressive agreement for Trans-pacific partnership (CPTPP)?
A trade agreement among 11 Pacific Rim countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam
In recent years, such well known American MNC's are what?
Apple, Oracle, Coca-Cola, Ford Motor Company, Exxon Mobil, Caterpillar, Walmart, Microsoft, in Google and they have all earned more annual revenue in the international arena than they have in the United States
partly due to the stalled progress with the WTO and FTAA, The United States has pursued bilateral trade agreements with a range of countries, including who?
Australia, Bahrain, Chile, Columbia, Israel, Jordan, Malaysia, Morocco, Oman, Panama, Peru, and South Korea
what is developing economies (some of which may soon become emerging)?
Around the world there are many economies that can be considered developing (or have what might formerly have been termed less developed or in some cases least developed) that are worthy of attention and understanding. some of these economies are on the verge of emerging as impressive contributors to global growth and development South America - over the years, countries in South America have had difficult economic problems. They have accumulated heavy foreign debt obligations and experienced severe inflation. Although most have tried to implement economic reforms reducing their debt, periodic economic instability and the emergence of populist leaders have had an impact on the attractiveness of countries in this region - Over the past 30 years, Brazil has attracted considerable foreign investment, with foreign companies drawn to opportunities created by Brazil's privatization of power, telecommunications, and other infrastructure sectors. - Power companies such as AES have and General Electric have constructed more than 20 billion US dollars worth of electricity plants throughout the country. At the same time, many other well known companies have set up operations in Brazil, including Yum Brands, Apple, gap, McDonald's, and Walmart. - Until recently, Brazil has benefited from one of the most stable governments throughout Latin America, which is helped secure the country's place today as the undisputed economic leader of South America. - More recently, Brazil has faced alternating periods of economic progress and setbacks. - After a period of robust growth and declining poverty rates from 2008 to 2014, Brazil slipped into recession in 2015 and 2016. Frustration over economic stagnation and a widespread public corruption scandal resulted in the impeachment of President Dilma Rousseff in may 2016, adding political instability to the growing financial crisis. Although the economy has been growing since 2017, the recovery has been slow. - Given Brazil's large and relatively well educated population, ample natural resources, existing industrial base, and strategic geographic position, longer term prospects are still potentially positive. What's an economic output comparable to that of France, The Brazilian economy outweighs that of any other South American country and has become a worldwide presence - Chile's market based economic growth has fluctuated between 2 and 6% since the early 2000s, one of the best and most stable performances in Latin America - Chile attracts a lot of foreign direct investment, mainly dealing with gas, water, electricity, and mining. It continues to participate in globalization by engaging in further trade agreements, including those with Mercosur, China, India, the EU, South Korea, and Mexico - Argentina has one of the strongest economies overall, with abundant natural resources, a highly literate population, and export oriented agricultural sector, and a diversified industrial base; however, it has suffered the recurring economic problems of inflation, external debt, capital flight, and budget deficits. - Most recently, in 2018, Argentina experienced yet another financial crisis when its currency, the peso, crashed. Over the course of just a few months, the peso depreciated by 50% in value when compared to the US dollar. As a result, Argentina's foreign debt became more expensive to repay, inflation soared over 40%, and the central bank raised interest rates to 60%. - Investors feared that Argentina was on the brink of default. To meet its obligations, Argentina was forced to seek the IMF for a 50 billion US dollar loan. the loan, which was the largest in IMF history, was granted in September 2018. Full economic recovery could take many years - despite the ups and downs, a major development in South America is the growth of Inter country trade, spurred on by the progress towards free market policies. For over 20 years, 90% of trade among Mercosur members (Brazil, Argentina, Paraguay, Uruguay, and until recently Venezuela) has been duty free. - At the time, South American countries are increasingly looking to do business with the United States. In fact, a survey of business people from Argentina, Brazil, Chile, Colombia, and Venezuela found at the US market, on average, was more important for them than any other. Some of these countries, however, also are looking outside the Americas for growth opportunities. For over two decades, Mercosur has been in discussion with the EU to create free trade between the two blocs, and Chile and Peru have joined the Asia Pacific Economic Cooperation group in the CPTPP. - these developments help illustrate the economic dynamism of South America and, especially in light of Asia's recent economic problems, explain why so many multinationals are interested in doing business with this part of the world Middle East and Central Asia - Israel, the Arab countries, Iran, Turkey, and the Central Asian countries of the former Soviet Union are a special group of emerging countries. Because of their oil, however, some of these countries are considered to be economically rich. - Recently, this region has been in the World News because of the political instability and civil war in Syria, the rise of the Islamic state in Iraq and Syria, and the decade long wars in Iraq and Afghanistan following the September 11th, 2011, terrorist attacks in the United States. - Despite the political challenges, these countries continue to try to balance geopolitical/religious forces with economic viability and activity in the international business arena. - Students of international management should have a working knowledge of these countries customs, culture, and management practices, since most industrial nations rely, at least to some degree, on imported oil and since many people around the world word for international, Han specifically Arab, employers - the Arab and Central Asian countries rely almost exclusively on oil production. The price of oil greatly fluctuates, in the organization of petroleum exporting countries (OPEC) has trouble holding together its cartel. In times of low oil prices, such as from 2015 through 2019, financial pressure increases throughout the region. Often, oh PEC will attempt to counter the deflation of prices through mandated production cuts, such as those that occurred from 2018 through mid 2019. Saudi Arabia, the largest oil producer in the Arab world, was forced to reduce the fuel, water, and power subsidies that provides to a citizens after experiencing budget deficits totaling more than 300 billion US dollars between 2014 and 2018 due to lower oil revenues. Despite these fluctuations, the countries in the region have accumulated significant wealth over the last 50 years, propelling billions of dollars of investments and US property and businesses. Many people around the world, including those in the West, work for Arab employers. For example, the Kingdom holding company, a conglomerate with ties to the Saudi Royal family has made significant investments in companies like the ridesharing company Lyft and four season hotels and resorts. - The Arab Spring and Syrian civil war, have had a profound impact on the political and economic environment of many countries in this region Africa - Even though they have considerable natural resources, many African nations remain very poor and underdeveloped, and international trade is only beginning to serve as a major source of income. One major problem of doing business in the African continent is the overwhelming diversity of approximately 1 billion people, divided into 3000 tribes, that speak 1000 languages and dialects. Also, political instability is pervasive, and this instability generates substantial risks for foreign investors. - In recent years, Africa, especially sub saharan Africa, has had a number of severe problems. In addition to tragic tribal wars, there has been the spread of terrible diseases such as aids, malaria, and Ebola. These problems have resulted in serious economic setbacks. According to the World Bank, the 2014 through 2016 Ebola outbreak cost the economies of Guinea, Liberia, and Sierra Leone an estimated 2.8 billion US dollars worth of potential economic growth - dispute surrounding intellectual property right (IPR), resulted in a delay of Ebola medicine to the affected countries, worsening the outbreak and adding further devastation to the region. - While globalization has opened up new markets for developed countries, developing nations in Africa lack the institutions, Infrastructure, and economic capacity to take full advantage of globalization. Other big problems include poverty, malnutrition, illiteracy, corruption, social breakdown, finishing resources, overcrowded cities, drought, and homeless refugees. Despite these issues, the future potential of many African countries is promising. Not only are there considerable natural resources, but the diversity itself also can be used to advantage. For example, many African people are familiar with the European cultures and languages of the former colonial powers such as English, French, Dutch, and Portuguese, And this kana serve them well in international business as they strive for continued growth. Education has improved in many African countries, provided the opportunity for a high tech job market. Answering times are ahead, but a growing number of MNC's are attempting to make headway in this vast continent. Also, the spirit of these emerging countries has not been broken. There are continuing efforts to stimulate economic growth period examples of what can be done include Togo, Guinea, and Nigeria, which have sold off many of their state owned operations to private investors. A special case this South Africa, where Apartheid, the former white government's policies of racial segregation and oppression, was dismantled over 20 years ago. Long jailed former black president Nelson Mandela, who focused on uniting South Africa in the years following the apartheid, was recognized as a world leader. These significant developments have led to an increasing number of the world's MNC's returning to South Africa; however, there continue to be both social and economic problems that, despite Mandela's and his successors best efforts, signal uncertain times for the years ahead. One major initiative is the country's broad based black economic empowerment program, designed to reintegrate the disenfranchised majority into business and economic life - Africa's economic growth and dynamism have rapidly accelerated in the past two decades. Real GDP has risen at more than twice the pace it did in the 1980s and 1990s. The telecommunications, banking, and retailing sectors have all flourished, while Nigeria and Angola saw their economies accelerate due in part to higher global fuel prices - it is important to emphasize, however, that sub saharan Africa's recent growth, which has been dependent on foreign direct investment and the high level of global demand for commodities, is particularly sensitive to changes in the global economy. For example, and 2016, low oil prices and China's economic slowdown installed sub saharan Africa's growth to a 20 year low. Several years later, the region is still recovering from this downturn - although global pullback, such as China slowdown, have met less foreign direct investment in the near term, McKinsey, the global consultancy, has found that the rate of return on foreign investment in Africa is actually higher than for any other region, offering positive prospects for this historically struggling region. - Of note is the fact that a number of emerging regions and countries are growing faster than developed countries: notably, China, India, and other Asian economies. In the top ten countries globally on their competitiveness as reported by the World Economic Forum, for 2018, Hong Kong and Singapore were ranked second and third respectively
other groupings of fast growing developing countries include the CEVITS (Columbia, Egypt, Vietnam, Indonesia, Turkey, and South Africa) and EAGLES (Emerging and growth leading economies) which includes the original what?
BRIC and MIST countries as well as Egypt and Taiwan using the data from the World Bank, pricewaterhouseCoopers has made estimates about the future growth of emerging versus developed economies Increasing amounts of foreign direct investment or FDI and a rapidly growing population suggest that African countries could constitute the next wave of dynamic emerging markets. However, most of the region has not, to date, fully benefited from globalization.
unlike the G7 economies, which are primarily located in North America in Europe, the E7 economies are located throughout Latin America and Asia In 2017, PwC predicted that the GDP of the E7, when measured in terms of market exchange rates (MER), would surpass that of the what?
G7 by around 2030. Furthermore, the GDP of the E7 would expand at an annual rate of 3.5% through 2050, while the G7 would only expand by 1.6% annually. Per PWC's predictions, by 2050, the GDP of the E7 is predicted to be 50% higher than that of the G7
what is Keiretsu?
In Japan, an organizational arrangement in which a large, often vertically integrated group of companies cooperate and work closely with each other to provide goods and services to end users. Members may be bound together by cross ownership, long term business dealings, interlocking directorates, and social ties
what is Foreign direct investment (FDI)?
Investment in property, plant, or equipment in another country
While some emerging countries have not benefited from globalization and integration, the emergence of what?
MNC's from developing countries reflects the increasing inclusion of all regions of the world in the benefits of globalization. Yet, as the pace of global integration quickens, so have the cries against globalization and the emergence of new concerns over mounting global pressures. These pressures can be seen in protests at the meetings of the World Trade Organization or WTO, International Monetary Fund or IMF, and other global bodies and in the growing calls by developing countries to make the global trading system more responsive to their economic and social needs.
The Asian market, with nearly 2 billion customers and 25 different brands, is particularly important for what?
PNG's future growth plans
what is established economies?
North America: - As noted earlier, North America constitutes one of the four largest trading blocs in the world. - The combined purchasing power of the United States, Canada, and Mexico is more than 24 trillion US dollars - even though there will be more and more integration both globally and regionally as time goes on, effective international management still requires a knowledge of individual countries - the free market based economy of this region allows considerable freedom in the decision-making processes of private firms. This allows for greater flexibility and low barriers for other countries to establish business - despite increased protectionist policies in recent years, including the implementation of tariffs under the trump administration, The US remains one of the most welcoming environments to foreign investors. - The US MNC's also maintain Holdings throughout the world - US firms will dominate global positions in technology intensive industries, including computing (hardware and services), Telecommunications, media, and biotechnology. - At the same time, foreign MNC's are finding the United States to be a lucrative market for expansion - many foreign automobile producers, such as BMW, Honda, Subaru, Nissan, Mazda, and Toyota, have established a major manufacturing presence in the United States. In fact, by 2018, foreign automakers have produced more cars in the US than domestic car companies - Canada is the United States is largest trading partner, a position it has held for many years. The United States also has considerable foreign direct investment in Canada. This helps explain why most of the largest foreign owned companies in Canada are totally or heavily US owned. Illegal and business environments in Canada are similar to those in the United States, in the similarity helps promote trade between the two countries. Geography, language, and culture also help, as does NAFTA/USMCA, which has assisted Canadian firms in becoming more competitive worldwide. They have had to go head to head with their US and Mexican competitors his trade barriers have been removed, resulting in greater efficiency and market prowess on the part of the Canadian firms, which must compete successfully or go out of business. In recent years, Canadian firms have begun investing heavily in the United States gaining international investment from both the United States and elsewhere. Canadian firms also do business in many other countries, including Mexico, United Kingdom, Germany, in Japan, where they find ready markets for Canada's vast natural resources, including lumber, natural gas, crude petroleum, and agricultural products - By the early 1990s, Mexico had recovered from its economic problems of the previous decade and had become the strongest economy in Latin America. In 1994, Mexico became part of NAFTA, and appear to be on the verge of becoming the major economic power in Latin America. Yet, an assassination that year and a related economic crisis underscored that Mexico was still a developing country with considerable economic volatility. - Mexico now has free trade agreements with 46 countries, more than any other nation, including agreements with Panama, the unifying free trade agreement with Central America, The EU, The European free trade area, and the CPTPP. more than 90% of Mexico's trade occurs under free trade agreements. - The presidential administrations of Vicente Fox, Felipe Calderon, and Enrique Pena Nieto hey, where seen as especially probusiness by many investors. - Vicente Fox focused his economic efforts on lowering inflation and job creation, and Felipe Calderon battled Mexico's narcotics gangs while aiming to attract foreign investments. Enrique Pena Nieto, despite uncertainty from some, continue to advance many pro business initiatives, such as expanding the Mexican auto industry, opening the oil industry to the private sector, and forcing greater competition in telecommunications. No it is unclear whether president Andre Manuel Lopez Obrador, elected in 2018 in a past critic of big business and energy privatization, we'll continue the investment friendly policies of his predecessors - because of NAFTA/USMCA, Mexican businesses are finding themselves able to take advantage Of the US market by producing goods for that market that the US previously purchased from Asia. Mexican firms are now able to produce products at highly competitive prices, thanks to lower cost labor and proximity to the American market. - location has helped hold down transportation costs it allows for fast delivery. just development has been facilitated by the maquiladora system, under which materials and equipment can be imported on a duty and tariff free basis for assembly or manufacturing and re export mostly in Mexican border towns - Mexican firms, taking advantage of a new arrangement the government has negotiated with the EU, can also now export goods into the European community without having to pay a tariff. The country's trade with both the EU and Asia is on the rise, which is important to Mexico, as it wants to reduce its over reliance on the US market The European Union (EU) - What do you ultimate objective of the EU is to eliminate all trade barriers among member countries like between the states in the United States. - this Economic Community eventually will have common custom duties as well as unified industrial and commercial policies regarding countries outside the union. - another goal that has finally largely become a reality is a single currency and a regional central bank. - following the planned Brexit of the United Kingdom in 2019, 27 countries will constitute the EU, with 19 having adopted the euro. Another seven countries, having joined the EU in 2004, 2007, or 2013, are legally bound to adopt the euro upon meeting the monetary convergence criteria - search developments allow companies based in the EU nations to manufacture high quality, low cost goods and ship them anywhere within the EU without paying duties or being subjected to quotas. This helps explain why many North America and Pacific Rim firms have established operations in Europe; however, all these outside firms are finding their success tempered by the necessity to address local cultural differences - the challenge for the future of the EU is to absorb its keister neighbors, the former communist bloc countries. This could result in a giant, single European market. In fact, a unified Europe could become the largest economic market in terms of purchasing power in the world - between 2004 and 2013, Poland , the Czech Republic, Hungary, Bulgaria, Romania, and Croatia all join the EU, improving economic growth, inflation, and employment rates throughout - Such a development is not lost on Asian and US firms, which are working to gain a stronger foothold in Eastern European countries as well as the existing EU. In recent years, foreign governments have been very active in helping stimulate and develop the market economies of central and Eastern Europe to enhance their economic growth as well as World Peace - For the last decade, the EU has faced major challenges. Several European governments, including Greece, Portugal, Spain, and Ireland, have found themselves with dangerously large deficits, which resulted from both structural conditions such as stagnant population growth, overly generous pension systems, early retirements) in shorter term economic pressures such as the 2009 global recession. These conditions have placed pressure on the euro, the currency adopted by most EU countries, and have forced substantial rescue packages led by Germany and France. - The situation in Greece was particularly challenging. Accepting multiple bailout packages from the IMF, the European Commission, and the European Central Bank, totaling over $360 billion, Greece was required to implement severe austerity measures, including higher taxes, the freezing of government pensions and wages, and cuts to public speaking. - The European community believed that forcing these restrictions on Greece was necessary to assure financial stability and repayment of bailout funds, though many in Greece argued that the austerity measures only prolonged financial recovery. - The situation reached a crisis level in 2015 when, via a referendum, the Greek people voted overwhelmingly to reject the terms of a third bailout. - Banks closed across the country and withdrawals were limited to 60 euros per day. - Despite the referendum vote, the Greek government ultimately accepted the terms of the third and final bailout deal in exchange for financial assistance, preventing bankruptcy and a potential Greek exit from the EU. In august 2018, after eight years, Greece finally emerged from its dependence on bailout funds. - Maintaining a unified EU in the coming decades may be challenging. In the face of growing skepticism about the advantages of integration with continental Europe, the United Kingdom, part of the EU but not the euro zone, held a referendum in June 2016 regarding whether to remain in or leave the European Union. In a close but decisive vote, the citizens of the United Kingdom became the first to vote to dissolve their membership in the bloc. In the morning following the referendum vote, remain supporter, Prime Minister David Cameron announced his plans to step aside, leaving the task of coordinating the EU exit, or Brexit, up to the next prime minister, Theresa May. The three year withdrawal process was challenging for both the EU and the United Kingdom. The long-negotiated separation deal between the EU leaders and Theresa May's administration was soundly rejected by the United Kingdom's House Commons on January 15, 2019, just a few months before the planned March 29 separation date. On January 16, 2019, Prime Minister May barely survived a no confidence vote. Many feared that Brexit could occur with no deal in place, resulting in chaos for multinational businesses, trade, and employees. Reaching a majority consensus in the House of Commons on any exit strategy seemed nearly impossible. After a series of additional rejected votes in the House of Commons, the European Council extended the U.K.'s withdrawal date to January 31, 2020 Japan - During the 1970s and 1980s, Japan's economic success was without precedent. The country had a huge positive trade balance, the yen was strong, and the Japanese became recognized as the world leaders in manufacturing and consumer goods. - Analysts ascribe Japan's early success to a number of factors. Some areas that have received a lot of attention by the Japanese cultural values supporting a strong work ethic and a group or team effort, consensus decision making, the motivational effects of guaranteed lifetime employment, and the overall commitment that Japanese workers have to their organizations. - However, at least some of these assumptions about the Japanese workforce have turned out to be more myth than reality, with some of the former strengths have become weaknesses in the new economy. For example, consensus decision making turns out to be too time consuming and the new, speed based economy. Also, there has been a steady decline in Japan's overseas investments since the 1990s due to a slowing Japanese economy, poor management decisions, and competition from emerging economies, such as China. - Some of the early success of the Japanese economy can be attributed to the ministry of international Trade and Industry (MITI). this is a governmental agency that identifies and ranks national commercial pursuits and guides the distribution of national resources to meet these goals. In recent years, MITI has given primary attention to the so called ABCD industries: automation, biotechnology, computers, and data processing. - Another major reason for Japanese success may be the use of keiretsus. which is a Japanese term that stands for large, vertically integrated corporations whose holding supply much of the assistance needed and providing goods and services to end users. Being able to draw from the resources of the other parts of the keiretsu, a Japanese MNC often can get things done more quickly and profitably than its international competitors - despite setbacks, Japan remains a formidable international competitor it is well poised in all three major economic regions: The Pacific rim, North America, and Europe
Procter and gamble or PNG, in American consumer products MNC headquartered in Cincinnati OH, has invested heavily in its what?
Singapore operations over the last 10 years. P&G is Singapore Innovation Center or sgic functions as the primary research and development Center for the company's hair, skin, and home care products. Initially costing 185,000,000 US dollars, the sgic employs more than 500 engineers and scientists , focuses on more than 18 different fields of study, and has successfully introduced several major products into the global marketplace. inspired by the success of the sgic, PNG invested a further 100,000,000 US dollars in 2017 to establish the PNG Singapore a center, a digital innovation hub that focuses on improving supply chain and end to end logistics of the company
what is the World trade organization (WTO)?
The global organization of countries that overseas rules and regulations for international trade and investment
what is Offshoring?
The process by which companies undertake some activities at offshore locations instead of in their countries of origin
what is Globalization?
The process of social, political, economic, cultural, and technological integration among countries around the world
what is Outsourcing?
The subcontracting, or contract ING out, of activities to endogenous organizations that had previously been performed by the firm
what are Chaebols?
Very large, family held Korean conglomerates that have considerable political and economic power
this far outpaced the developed economies of the United States, Germany, and United Kingdom, which only grew by an annualized 4%, 4.4%, and three point 3%, respectively whether or not Goldman Sachs original long-term predictions hold true is yet to be seen, but Brazil, Russia, China, and India will continue to assume what?
a broader role in the global economy as the BRICS economies mature and growth slows, some analysts, including Goldman Sachs, are beginning to turn their attention to a new group of emerging markets. In March 2006, PricewaterhouseCoopers (PWC), coined the term E7 to describe seven major emerging economies (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) that are expected to expand significantly in the coming decades.
However, emerging nations, as a whole, have experienced unprecedented GDP growth in the decades since the global recession. It is important to note, however, that as developing economies mature, their growth rates will likely what?
begin to slow. China provides a good example of this. Following years of double digit economic expansion from the early 1990s through the mid 2010s, China's GDP growth has stabilized to less than 7% annually in the past few years. While emerging markets still hold the most potential for growth in the coming years, the rapid rate of expansion that was experienced over the last decade may prove difficult to match
Although global exports of oil and metal products have boosted incomes and wealth on the African continent over the last 20 years, the regions remain highly dependent on what?
commodity prices. As a result, external factors, such as the slowing of growth in China, can have a significant impact on economic growth in Africa. Transitioning the economy to more non oil industries will be vital to strengthening Africa for the long term
As a result, it is now possible for customers to compare prices between most countries and for business firms to lower their what?
costs by conducting business in one uniform currency. With access to the entire pan European market, large MNC's can now achieve the operational scale an scope necessary to reduce costs and increase efficiencies.
the increase in the size of the elderly population affects more than just the proportion of workers to non workers. The amount of spending on healthcare related services will continue to what?
increase rapidly, all the demand for goods such as cars and computers will decline. Well younger populations spend income on housing and other capital Y financed purchases, elderly population spend money on healthcare services
what is emerging economies?
in contrast to the fully developed countries of North America, Europe, and Asia are the developing and emerging countries. While there is no precise definition, developing economies typically face relatively low GDP per capita and a workforce that is either unskilled or semi skilled. In many cases, there also is considerable government intervention in Economic Affairs. Emerging markets can be viewed as developing economies that exhibit sustained economic reform and growth Central and Eastern Europe - in 1991, the Soviet Union ceased to exist. Each of the individual republics that made up the USSR in turn declared its independence and, in the decades since , has been attempting to shift from my centrally planned to a market based economy. - The Russian Republic has the largest population, territory, and influence, but others, such as Ukraine, also are industrialized and important in the global economy. At most important to the study of international management are the Russian economic reforms, the dismantling of Russian price controls (allowing supply and demand to determine prices) and privatization (converting the old communist style public enterprises to private ownership) - Russia's economy continues to emerge as poverty declines in the middle class expands. Direct investment in Russia, along with its membership and the International Monetary Fund or IMF, helped raise GDP and decrease inflation, offsetting the hyperinflation created from the initial attempt at transitioning to a market based economy in the early 1990s - abundant oil and high global energy prices greatly boosted Russia's economy and early 2000s. Recognizing the increasing importance of Russia on the global economic stage, the group of seven (G7, including the United States, Germany, France, England, Canada, Japan, and Italy) formally expanded to include Russia between 1997 and 2014. - However, Russia's annexation of Crimea ultimately resulted in their suspension from the group, as well as the implementation of multilateral sanctions. These actions, when combined with lower oil and gas prices in recent years, high results in a dramatic slowdown in Russia's economy and a fall in the value of the ruble. Thus, the Russian economy likely will have a number of years of economic instability and many recurrent political problems - one pervasive set of challenges in Russia is persistent crime, corruption, and lack of public security. First, many foreign investors feel that the risk is still too high. Russia is such a large market, however, it has so much potential for the future that many MNC'S feel they must get involved, especially with a promising rise in GDP. There also has been a movement toward teaching western style business courses, as well as MBA programs, at all the central European countries, creating a greater preparation for trends and globalization - in Hungary, state owned hotels event privatized, and western firms, attracted by the low cost of highly skilled, professional labor, have been entering into joint ventures with local companies. MNCs Also have been making direct investments, as in the case of general electric's purchase of Tungsram, hey giant Hungarian electric company. Another example is Britain's Telefos Holdings, which paid 19 million US dollars for 51% of Ganz, a Hungarian locomotive and rolling stock manufacturer. Still others include Suzuki's investment 110,000,000 US dollars in a partnership arrangement to produce cars with local manufacturer Autokonzern, Ford Motors construction of a new 80 million US dollar car component plant, and Italy's Ilwa's 25 million US dollar purchase of the Salgotarjau Iron Works. - Point had a head start on the other former communist bloc countries. General political elections were held in June 1989, and the first non communist government was established well before the fall of the Berlin Wall. In 1990, the communist Polish united Workers Party dissolved and Lech Walesa Was elected president. Earlier than its neighbors, Poland instituted radical economic reforms characterized as shock therapy. - although the relatively swift transition to a market economy was initially very different for the Polish people, with very high inflation, unemployment peaking near 20%, in the decline of public services, Poland's economy has done relatively well. In fact, Poland's economy was the only economy in the EU to continue to grow during the global recession of 2008-2009. - In 2018, Poland GDP grew by around 4%. However, some political instability, low wages, a deteriorating infrastructure, and only modest education levels compared to its European nations have led to some economic hurdles for Poland - although Russia, the Czech Republic, Hungary, and Poland received the most media coverage and are among the largest of the former communist countries, others also are struggling to write their economic ships. A small but particularly interesting example is Albania. Ruled ruthlessly by the Stalinist style dictator Enver Hoxha for over four decades following World War 2, Albania was the last, but most devastated, Eastern European country to abandon communism and Institute radical economic reforms. At the beginning of the 1990s, Albania started from zero. Industrial output initially fell over 60% and inflation reached 40% monthly. Today, Albania still struggles but has experienced several years of growth, stable inflation, and increased FDI inflows. Additionally, the negotiation process for Albania's accession into the EU began in 2019 - The key for Albania and the other Eastern European countries is to maintain the social order, established the rule of law, rebuild the collapsed infrastructure, and get factories another value added, job producing firms up and running. Foreign investment must be forthcoming for those countries to join the global economy. A key challenge for Albania and the other "have not" Eastern European countries will be to make themselves less risky and more attractive for international business China - after years of steady, strong growth, China's GDP has been slowing considerably - in 2018, GDP expanded at only 6.6%, its lowest in 28 years period China faces other formidable challenges, including a massive savings glut in the corporate sector, the globalization of manufacturing networks, fast developmental needs, and the requirement for 15 to 20 million new jobs annually to avoid joblessness and social unrest - China also remains a major risk for investors. The one country, two systems (communism and capitalism) balance is a delicate one to maintain, informed businesses are often caught in the middle. - Many MNC's find it very difficult to do business in and with China. Concerns about intellectual property and continued policies that favored domestic companies over foreign ones make China a complicated and high risk venture. Even so, MNC's know that China, with its 1.4 billion people, will be a major world market and that they must have a presence there - trade relations between China and developed countries and regions, such as the United States in the EU, remain stressed. Tensions erupted in 2018, when the trump administration in the United States implemented tariffs on Chinese imports of solar panels, steel, aluminum, and washing machines. China retaliated almost immediately by enacting tariffs on a variety of US goods. Another contentious issue between China and many of its trading partners around the globe has been the value of its currency, the renminbi also known as the yuan - for years, many argue that the value of the yuan was kept artificially low, giving China an unfair advantage in selling its exports. In addition, China's policy toward foreign investors continues to be fluid and sometimes unpredictable. Both Walmart and Yum Brands found themselves accused of improper business practices and each had to close stores and issue public apologies. Walmart was forced to pay nearly 10 million US dollars in fines over the three year period from 2012 through 2014 due to poor quality food, confusing pricing, and mislabeled meat products. In response, Walmart invested nearly $50 US million dollars through the end of 2015 to improve food safety and testing within China. similarly, Yum Brands suffered a 29% drop in same store sales in China in April 2013 after concerns about the safety of some chicken and the spread of avian flu caused customers stay away from the outlets Other emerging markets of Asia - in addition to Japan and China, there are a number of other important economies in the region, including South Korea, Hong Kong, Singapore, And Taiwan. Together, the countries of the ASEAN bloc are also fueling growth and development in the region - in South Korea, the major conglomerates called chaebols, include search internationally known firms as Samsung, Hyundai, and the LG group. - Many key managers in these huge firms have attended University in the West, where in addition to the academic programs they learned western culture, customs, and language. Now they are able to use this information to help formulate competitive international strategies for their firms. This will be very helpful for South Korea, which is shifted to privatizing a wide range of industries and withdrawing some of the restrictions on overall foreign ownership. Unlike most developed economies, South Korea was able to avoid falling into economic recession in 2009. In the years since, South Korea has maintained steady progress, with a solid economy with moderate growth, moderate inflation, low unemployment, an export Surplus, and fairly equal distribution of income. - Bordering southeast China and now part of the People's Republic of China or the PRC, Hong Kong has been the headquarters for some of the most successful multinational operations in Asia. Although Hong Kong can rely heavily on southeast China for manufacturing, there is still uncertainty about the future and the role that the Chinese government intends to play in local governance - Singapore is a major success story. Its solid foundation leaves only the question of how to continue expanding in the face of increasing international competition. To date, however, Singapore has emerged as an urban planner's ideal model and the leader and financial center of Southeast Asia - Taiwan has progressed from a labor intensive economy to one that is dominated by more technologically sophisticated industries, including banking, electricity generation, petroleum refining, and computers. It's economy, boosted by increasing foreign trade, continues to grow steadily - besides south Korea, Singapore, and Taiwan, Other countries of Southeast Asia are also becoming dynamic platforms for growth and development. Thailand, Malaysia, Indonesia, and Vietnam have developed economically with relatively large population bases and inexpensive labor, despite the lack of considerable natural resources. These countries have been known to have social stability, despite some political turmoil. This is especially true in Thailand. In late 2013, Thailand's Prime Minister Yingluck Shinawatra Government proposed sweeping pardons for various past offenses committed by former and current politicians. Although the legislator overwhelmingly rejected those proposed pardons, protests and political unrest, led by the people's Democratic reform committee, still unraveled on the streets of Bangkok. Prime Minister Yingluck Shinawatra Attempted to contain the protests by dissolving the House of Representatives, declaring a state of emergency, and calling for a new election in February 2014. Continue protests disrupted the February election, leading the constitutional court to nullify the election results. Hello in May 2014, a military coup d'état, Led by general Prayut Chan-o-cha, Removed Prime Minister Yingluck Shinawatra from power. Since then, Thailand has been ruled by the newly formed National Council for peace and order under military dictatorship. Despite the political turmoil that has plagued Thailand and other countries in the region, these export driven Southeast Asian countries remain attractive to outside investors India - With a population of about 1.3 billion and growing, India has traditionally had more than its share of political and economic problems. The trend of locating software and other higher value added services in India has helped bolster a large middle and upper class market for goods and services. India's GDP growth rate is among the highest in the world. India may soon be viewed as a fully developed country if it can withstand this intense growth period. - For a number of reasons, India is attractive to multinationals, especially US and British firms. Many Indian people speak English , are very well educated, and are known for advanced information technology expertise. Also, the Indian government is providing funds for economic development. For example, in 2018, India committed to invest over 1 billion US dollars to expand its fiber optic network and to add 500,000 new Wi-Fi hotspots and rural areas. - Many frustrations remain in doing business in India, but there is little question that the country will receive increased attention In the years ahead
multiple factors are contributing to an aging global population. Due to improvements in technology and healthcare sectors, people are now living what?
longer in both developed and developing countries. The percentage of people over the age of 65, which grew from 5% in 1960 two 9% in 2018, is expected to nearly double to 16% by 2050. global life expectancy, which increased from 48 years in 1950 to 72 years in 2016, will continue to increase steadily over the next several decades
Revolution of global economies has resulted in three main systems:
market economies= - A market economy exists when private enterprise reserves the right to own property and monitor the production and distribution of goods and services while the state simply supports competition and efficient practices. - Management is particularly effective here, since private ownership provides local evaluation and understanding, opposed to a nationally standardized archetype. - This model contains the least restriction, as the allocation of resources is roughly determined by the law of demand. - Individuals within the community disclose wants, needs, and desires, to which businesses may appropriately respond. - A general balance between supply and demand sustains prices, while an imbalance creates a price fluctuation. In other words, if demand for a good or service exceeds supply, the price will inevitably rise, while an excess supply over consumer demand will result in a price decrease - since the interaction of the community and firms guides the system, organizations must be as versatile as the individual consumer. Competition is fervently encouraged to promote innovation, economic growth, high quality, and efficiency. The focus on how to best serve the customer is necessary for optimal growth, as it ensures a greater penetration of niche markets. - The government may prohibit such things as monopolies or restrictive business practices in order to maintain the integrity of the economy. Monopolies are a danger to this system because they tend to stifle economic growth and consumer choice with the power to determine supply. Factors such as efficiency of production and quality and pricing of goods can be chosen arbitrarily by monopolies, leaving consumers without a choice and at the mercy of big business command economies= - a command economy is comparable to a monopoly in the sense that the organization , in this case the government, has explicit control over the price and supply of a good or service. - The particular goods and services offered are not necessarily in response to consumers stated needs but are determined by the theoretical advancement of society. - Businesses in this model are owned by the state to ensure that investments and other business practices are done in the best interest of the nation despite the often contradictory outcomes. - Management within this model ignores demographic information. Government subsidies provide firms with enough security, so they cannot go out of business, which simply encourages a lack of efficiency or incentive to monitor costs. - Devoid of private ownership, a command economy creates an environment where little motivation exists to improve customer service or Introduce innovative ideas - History confirms the inefficiency and economic stagnation of this system with the dramatic decline of communism in the 1980s. Tell me this country's belief that the goals of these so-called people take precedence over individualism. - Well the communist model once dominated countries such as Ethiopia, Bulgaria, Hungary, Poland, and the former USSR, it survives only in North Korea, Cuba, Laos, Vietnam, and China today, in various degrees or forms. - A desire to compete effectively in the global economy has resulted in the attempt to move away from the communist model, especially in China. mixed economies = - A mixed economy is a combination of a market and a command economy. - While some sectors of this system reflect private ownership in the freedom and flexibility of the law of demand, other sectors are subject to government planning. The balance allows competition to thrive, body government can extend assistance to individuals or companies. - Regulations concerning minimum wage standards, Social Security, Environmental Protection, and the advancement of civil rights may raise the standard of living and ensure that those who are elderly, are sick, or have limited skills are taken care of. - Caught ownership of organizations seen as critical to the nation may be transferred to the state to subsidize costs and allow the firms to flourish
what is International business?
profit-related activities conducted across national boundaries
Even though longstanding cultural differences remain, and the EU has recently experienced some substantial challenges, including what?
the planned exit of the United Kingdom, coined Brexit, the EU remains more integrated as a single market than NAFTA/USMCA, CAFTA-DR, or the allied Asian countries With many additional countries interested in joining the EU, including Albania, Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, and Turkey (Although the relationship between the EU and Turkey have been on a downward trajectory), the resulting pan European market is one that no major MNC can afford to ignore
The European Union or EU, has made significant progress over the past two decades in becoming a what?
unified market despite some challenges. In the early 2000s, the EU consisted of 15 nations: Austria, Belgium, Denmark, Finland, France, Germany , the United Kingdom, Greece, the Netherlands, Ireland, Italy, Luxembourg, Portugal, Spain, and Sweden in May 2004, ten additional countries primarily located in central and Eastern Europe joined the EU: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia in January 2007, Romania and Bulgaria acceded to the EU, and in July 2013, Croatia became the newest and 28th member of the EU not only have most trade barriers between remember nation's been removed, but a subset of 19 European countries have adopted a unified currency called the euro
on the positive side, global trade and investment continue to grow, bringing what?
wealth, jobs, and technology to many regions around the world.
There have been instances of substantial losses for companies using India as an offshore base, ask a curd when several automakers including Ford, Hyundai, Renault-Nissan, and Daimler, Experienced the distraction of inventory and a week long production stoppage due to what?
flooding in southern India. It is possible that India will follow in China's footsteps and continue rapid growth in incomes and wealth; however, it is also possible that the challenges India faces are greater than the country's capacity to respond to them.
Moreover, the transatlantic trade and Investment Partnership (T-TIP), a proposed what?
trade agreement between the European Union in the United States, could further bolster trade and multilateral economic growth in Europe and North America
In 2005, automobile sales in China totaled only 5.8 million units, representing less than 9% of global sales, while automobile sales in the United States exceeded what?
17.4 million units. Just 13 years later, and 2018, over 28 million automobile units were sold in China, accounting for over a quarter of global sales and far surpassing the 17 million units sold in the United States. However, a number of emerging market auto companies are becoming global players through their exporting, foreign investment, and international acquisitions, including the purchase of Volvo by Chinese automaker Geely and Tata's acquisition of Jaguar Land Rover
central and Eastern Europe, Russia, and the other republics of the former Soviet Union are still trying to make stable transitions to market economies although the what?
Czech Republic, Slovenia, Poland, and Hungary have accelerated this process through their accession to the EU, others still have a long way to go
As nations become more affluent, they began looking for countries with economic growth potential where they can invest. Over the last two decades, for example, Japanese MNC's have invested not only in their Asian neighbors but also in the what?
United States and the EU. European MNC's, Meanwhile, have made large financial commitments in Japan and, more recently, in China and India because they see Asia as having continued growth potential American multinationals have followed a similar approach in regard to both Europe and Asia
at the most recent meeting, however in Geneva in July 2008, disagreements among the US, China, and India over access to agricultural imports from developing countries resulted in what?
an impasse after 9 days of discussions. Although there have been attempts to restart the negotiations, they have remained stalled, especially in light of rising protectionism.
In addition, while outside MNC's continually target this geographic area, There also is a great deal of what?
cross border investment among Latin American countries regional trade agreements are helping in this cross border process, including the NAFTA/USMCA and CAFTA-DR agreements, presenting new opportunities for bolstering trade, investment, services, and working conditions in the region.
as more people are living longer, they are spending more time in retirement. people are also having fewer children. In the last 70 years, the global fertility rate was what?
cut in half from five children per woman in 1950 to 2.4 children per woman in 2018 though these demographic changes are projected to occur globally, the most dramatic impact will be seen in the developed nations. Western Europe, which has seen stagnant economic and population growth for the last decade, will face some of the sharpest constrictions of the workforce population
Who benefits from globalization?
- Proponents believe that everyone benefits from globalization, as evidenced in lower prices, greater availability of goods, better jobs, and access to technology. - Theoretically, individuals in established markets will strive for better education and training to be prepared for future positions first citizens in emerging markets and underdeveloped countries will reap the benefits of large amounts of capital flowing into those countries, which will stimulate growth and development. - Critics disagree, noting that the high number of jobs moving abroad as a result of the offshoring of business services jobs to lower wage countries does not inherently create greater opportunity at home and that the main winners of globalization are the company executives. - Proponents claim that job losses are a natural consequence of economic and technological change and that offshoring actually improves the competitiveness of American companies and increases the size of the overall economic pie.
from a vantage point of development, performance, and growth, the world's economies can be evaluated as
- established economies - emerging economies - developing economies
Partly as a result of the slow progress and multilateral trade negotiations, The US and many other countries have pursued bilateral and regional trade agreements. In 1994, the United States, Canada, and Mexico enacted the North American free trade agreement or NAFTA, which removed most barriers to trade among these countries and created the world's largest free trade zone. A number of economic developments a curd because of this agreement, which was designed to promote Commerce in the region. Some of the more important developments include:
- the elimination of tariffs as well as import and export quotas - the opening of government procurement markets to companies in the other two nations - an increase in the opportunity to make investments in each other's country - an increase in the ease of travel between countries - the removal of restrictions on agricultural products, auto parts, and energy goods.
initial reports from Goldman Sachs, issued in the early 2000s, BRIC economies share of world growth could double from what?
20% in 2003 to more than 40% by 2025. Additionally, Goldman Sachs predicted that the BRIC'S total weight in the world economy would rise from approximately 10% in 2004 to more than 20% bye 2025
The Association of Southeast Asian nations (ASEAN) made up of Indonesia, Malaysia, the Philippines, Singapore, Brunei, Thailand, Cambodia, Laos, Myanmar, and Vietnam, Is advancing trade and economic integration and now poses challenges to what?
China as a region of relatively low cost production and export In addition, under the comprehensive and progressive agreement for transpacific partnership (CPTPP), Asian facing countries have negotiated an ambitious, next generation, Asia Pacific trade agreements. The CPTPP Group represents roughly 13% of the global economy, consisting of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam
Although Japan has experienced economic problems since the early 1990s, it continues to be one of the primary economic forces in the what?
Pacific rim Japanese MNC's want to take advantage of the huge, underdeveloped Asian markets at the same time, China, already the largest economic force in the region, continues to experience steady growth. China is on pace to surpass The United States as the largest economy in the world, in terms of nominal GDP, as early as 2030 as a region, Asia continues to expand more rapidly than the rest of the world The Philippines, Cambodia, Laos, and Myanmar are expected to average GDP growth rates in excess of 6% over the next several years, in Vietnam, with high amounts of foreign investment, low inflation, and a developed manufacturing sector, has emerged as a global exporter
In addition, MNC's from developing economies, such as India, Brazil, and China, are providing what?
formidable competition to their North American, European, and Japanese counterparts Names like Cemex, Embraer, Haier, Aritel, Tata, and Infosys Are becoming well known global brands
these groups are especially concerned about rising in equities between incomes, and non governmental organizations or NGOs have become what?
active in expressing concerns about the potential shortcomings of economic globalization. In addition, an increasing number of candidates in various election campaigns around the world have criticized globalization, including the migration of people, as a contributing factor leading to lost jobs at home and general economic insecurity.
agreements like NAFTA/USMCA and CAFTA-DR not only reduce barriers to trade but also require what?
additional domestic legal and business reforms in developing nations to protect property rights most of these agreements now include supplemental commitments on labor and the environment to encourage countries to upgrade their working conditions and environmental protections, although some critics believe the agreement do not go far enough in ensuring worker rights and environmental standards
the leaders of the BRIC nations, understanding their increasing role in the global economy, have met for an annual summit since 2009, and in 2010 the leaders of the founding members agreed to what?
admit South Africa to the group, making it BRICS in recent years, however, global economic conditions have led to some setbacks for the economies of Brazil, Russia, and China, leading some to reconsider the rate at which the BRIC economies will continue to grow. low prices for oil and other commodities contributed to the deep 2015 and 2016 recessions in Russia and Brazil, and China's growth has slowed substantially. In 2015, after a few years of losses and weak forecasts for Brazil, Russia, and China, Goldman Sachs dissolved its BRIC mutual fund in folded the remaining assets into its larger emerging markets fund
the N-11 where N stands for next, is another grouping of economies that may constitute the next wave of emerging markets growth. These countries of Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam, all represent a what?
diverse global set, With relative strengths and weaknesses in terms of their future potential the MIST countries of Mexico, Indonesia, South Korea, and Turkey, a subset of the N-11, are sometimes grouped as a particularly attractive subset of the N-11 Goldman Sachs views the MIST countries as the most promising and advanced of the N-11, all of which have young, growing populations and other positive conditions for economic growth
although the full impact of these demographic changes will not be known for several years, strategies such as what?
easing the immigration process for workers from developing to developed nations, incentivizing citizens in developed nations to have more children and encouraging workers to delay retirement could help offset the problems associated with an aging global population
what is Multinational corporations (enterprises)?
engage in activities with its own affiliates in several countries International sales A mix of nationalities among managers and owners
Proponents of globalization contend that even within the developing world, it is protectionist policies, not trade and investment liberalization, that result in what?
environmental and social damage. They believe globalization will force higher polluting countries such as China and Russia into an integrated global community that takes responsible measures to protect the environment. However, given the significant changes required in many developing nations to support globalization, such as better infrastructure, greater educational opportunities, and other improvements, most supporters concede that there may be some short-term disruptions.
developed Asian nations, with some of the longest life expectancies, will not be able to re populate quickly enough to replace the retiring, aging population. In Japan, the number of non workers will be nearly what?
equal to that of workers by 2050. Both Japan and South Korea will face a loss of over 25% of the working class population even some developing countries will face large challenges. Due to years of a one child policy, and rapidly rising incomes, which are almost always accompanied by lower birth rates, China faces an unbalanced population pyramid. It is estimated that China will see a 20% decline in its working class population by 2050, as middle aged workers begin to retire and are replaced by fewer workers. With a lower GDP per capita than Germany, Japan, and other developed nations, Chinese workers will face additional pressure to support the non working population
India is 1 country at the center of the globalization debate. As noted previously, India has been the beneficiary of significant what?
foreign investment, especially in services such as software and information technology or IT. India's public debt has declined to about 65% of GDP over the last 10 years, increasing macroeconomic stability and lowering its vulnerability to external risks. Additionally, India continues to outpace China as the fastest growing large economy, with GDP expanding by over 7% in 2018. But despite this growth, infrastructure challenges still remain. Limited clean water, power, paved roadways, and modern bridges have made it increasingly difficult for companies to expand.
unlike it's fellow BRIC partners, however, India continues to post strong figures, and the country has actually surpassed China in annual GDP growth rate in recent years Despite these setbacks, the economic expansion of these four countries has had a tremendous impact on what?
global trade and Commerce over the last 20 years. By 2018, the four BRIC economies accounted for 23% of global nominal GDP, compared to just 8% in 2001. Over the same period, nominal GDP for Brazil, Russia, India, and China grew by an annualized 7.5%, nine point 7%, 10.5%, and 14.5%, respectively
USMCA maintains the key provisions of the original trade agreement while enacting minor changes aimed at protecting what?
intellectual property rights, altering car manufacturing regulations to encourage more North American manufacturing, and opening the Canadian market to tariff free dairy imports from the United States.
Managers from today's MNC's must learn to work effectively with those from many different countries. Moreover, more and more small and medium sized businesses will find that they are being affected by what?
internationalization. many of these companies will be doing business abroad, and those that do not find themselves doing businesses with MNC's operating locally. and increasingly, the MNC's are coming from the developing world as previously domestic oriented companies from countries like China and India expand abroad through acquisitions or other means
Google A.I., a division of Google that specializes in developing artificial intelligence technology, announced the opening of a what?
major Research Center in Accra, Ghana in 2018. The new center, which focuses on developing artificial intelligence or AI tools for the health care, education, and agriculture sectors, aims to employ highly educated engineers and researchers from local universities.
International management is distinct from other forms of what?
management in that knowledge and insights about global issues and specific cultures are a requisite for success. Today more firms than ever are earning some of their revenue from international operations, even nascent organizations. Many of these companies are multinational corporations or MNC's
However, all remain a target for MNC's looking for expansion opportunities. for example, after the fall of the Berlin Wall in 1989, Coca-Cola quickly began to sever its relationship for most of these state run bottling companies in the former communist bloc countries. the soft drink giant began investing heavily to import its own what?
manufacturing, distribution, and marketing techniques. More than 30 years later, Coca Cola has pumped billions into central and Eastern Europe and this investment has paid off. Its business in central and Eastern Europe has expanded at twice the rate of its other foreign operations
Critics point out that growing trade deficits and slow wage growth are damaging economies and that globalization may be what?
moving too fast for some emerging markets, which could result in economic collapse. Moreover, critics argue that when production moves to countries to take advantage of lower labor costs or less regulated environments, it creates a race to the bottom in which companies and countries place downward pressure on wages and working conditions.
the collective world population is aging and in 2016, for the first time since the end of the Second World war, the global working age population declined. by 2050, the Wall Street Journal projects the working age population will have contracted by what?
nearly 5% worldwide and these demographic changes will have significant effects on the global economy
Over the long term, globalization supporters believe in industrialization will create wealth that will enable what?
new industries to employ more modern, environmentally friendly technology.
economic activity in Latin America continues to be a volatile despite the continuing what?
political and economic setbacks these countries periodically experience, economic and export growth continues in Brazil, Chile, and Mexico.
globalization is distinct from internationalization in that internationalization is the what?
process of a business crossing national and cultural borders, while globalization is the vision of creating one world unit, is single market entity. Evidence of globalization can be seen in increased levels of trade, capital flows, and migration. Globalization has been facilitated by technological advances in transnational communications, transport, and travel
Globalization, coupled with the rise of emerging market MNC's, has brought what?
prosperity to many previously underdeveloped parts of the world this is especially true in China, where luxury items like automobiles have become increasingly attainable.
However, in the 25 years since the Uruguay round, the momentum of global trade agreements has slowed. Trade talks at WTO ministerial conference in Seattle in 1999 were postponed after what?
protesters disrupted meetings and trade representatives from developed and developing countries were unable to agree on an agenda. In November 2001, the members of the WTO successfully launched a new round of negotiations at Doha, Qatar, to be known as the development round, reflecting the recognition by members that trade agreements needed to explicitly consider the needs of and impact on developing countries. However, after a lack of consensus among WTO members regarding agricultural subsidies and the issues of competition and government procurement, progress again slowed.
MNC's continue to turn to India when expanding their consulting, IT, and other service based offerings. These trends reflect the what?
reality that firms are finding they must develop international management expertise, especially expertise relevant to the increasingly important developing and emerging markets of the world.
According to anti globalization activists, if corporations are free to locate anywhere in the world, the world's poorest countries will what?
relax or eliminate environmental standards and social services in order to attract first world investment in the jobs and wealth that come with it.
the CAFTA-DR export zone, which was implemented on a rolling basis between 2006 and 2009, is the United States what?
second largest free trade zone in Latin America after Mexico. In 2017, two way trade totaled more than 54 million US dollars
Economic integration and the rapid growth of emerging markets are creating a what?
shifting international economic landscape. Specifically, the developing and emerging countries of the world are now predicted to occupy increasingly dominant roles in the global economic system. For nearly 20 years, the emerging markets of Brazil, Russia, India, and China, which collectively were known as the BRIC nations in 2001 by Jim O'Neil of Goldman Sachs, have received a great deal of attention by economists and investors alike
in the last few years, Africa's emerging markets have benefited from what?
significant investments made by technology focused MNCS
In the more than 25 years since NAFTA was first implemented, trade between its member countries has quadrupled. Despite the successes, NAFTA, like other free trade agreements, was not immune from what?
some criticism. In recent years, disruptions caused to specific industries, including the shifting of manufacturing jobs from the United States to Mexico, they continue tariffs on dairy exports to Canada, and the inability of Mexican farmers to compete with subsidized US farmers, resulted in discussions to revise the deal. In 2018, the original NAFTA countries agreed to a renegotiated trade agreement, call the United States Mexico Canada agreement or USMCA, which is expected to replace NAFTA following its ratification by each country.
Over the past six decades, succeeding rounds of global trade negotiations have resulted in dramatically reduced what?
tariff and non tariff barriers among countries these efforts reached their Crest in 1994 with the conclusion of the Uruguay round of multilateral trade negotiations under the general agreement on tariffs and trade (GATT) and the creation of the World Trade Organization or WTO to oversee the conduct of trade around the world. The WTO is a global organization of countries that overseas rules and regulations for international trade and investment, including the agriculture, intellectual property, services, competition, and subsidies.
In late 2017, Facebook, which has close to 200,000,000 users in Africa, announced plans to open a what?
technology based incubator space for startups in Lagos, Nigeria, called Ng Hub. as of September 2019, phase one of the project had been launched in the initial 12 entrepreneurs had been selected for occupancy and support in the hub. The primary goal of the project is to provide education and tools to underfunded entrepreneurs, which will enable the startups to grow and attract investment from around the globe. In addition to the incubator space, Facebook committed to providing technology based training over 50,000 Nigerians.
Please contending perspectives are unlikely to be resolved anytime soon. Instead, a vigorous debate among countries, MNC's, and civil society will likely continue and affect what?
the context in which firms do business internationally. Business firms operating around the world must be sensitive to different perspectives on the costs and benefits of globalization and adapt and adjust their strategies and approaches to these differences one important dimension of globalization is the increasing economic integration among countries brought about by the negotiation and implementation of trade and investment agreements.
Thomas Friedman, in his book the world is flat, identify 10 flatteners that have hastened the globalization trend, including what?
the fall of the Berlin Wall, offshoring, and outsourcing, which have combined to dramatically intensify the effects of increasing global linkages. hence, in recent years, globalization has accelerated, creating both opportunities and challenges to global business and international management
what is International management?
the process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political, legal, and cultural contexts The process of applying management concepts and techniques in a multinational environment and adapting management practices to different economic, political, and cultural environments
what is Management?
the process of completing activities with AND through people The process of completing activities efficiently and effectively with and through other people
International business is not a new phenomenon, however, what?
the volume of international trade has increased dramatically over the last two decades. Today, every nation and an increasing number of companies buy and sell goods in the international marketplace. A number of developments around the world have helped fuel this activity.
Interestingly, the CPTPP is actually the 2nd attempt at a major Pacific Rim trade deal; a nearly identical agreement called the trans Pacific partnership (TPP) was originally signed by these eleven countries plus the United States in 2016. however, the TPP was never fully ratified due to what?
the withdrawal of the United States from the deal following Donald trump's election On March 8th, 2018, representatives of the remaining 11 Pacific Rim countries, minus the United States, signed the reworked CPTPP. following official ratification by six countries, the CPTPP went into effect on December 30th, 2018. full ratification by the remaining countries legislative bodies is expected to take up to two years to complete
Within South America, free trade is further promoted through what?
two major regional trading blocs. Mercosur, a customs union, links the economies of Argentina, Brazil, Paraguay, Uruguay, and Venezuela (although Venezuela has been suspended since 2016 due to human rights concerns) Additionally, the Andean community, a sub regional free trade compact, was designed to promote economic and social integration and cooperation among Bolivia, Columbia, Ecuador, and Peru
It is important to remember that even though globalization does contribute to changes in industry and manufacturing, as well as the loss of some jobs, these problems are what?
typically the result of a range of factors, of which globalization is just one
recognizing opportunities in global expansion includes what?
understanding the differences in these systems, as they affect issues such as consumer choice immaterial behavior