International Business (Chapter 1 - Globalization) - Part 4 - Summary

3. Describe the two forces causing globalization to increase.

• Falling barriers to trade and investment is one major force behind globalization. • Trade barriers have been drastically reduced through institutions such as the General Agreement on Tariffs and Trade and the World Trade Organization. • Groups of several or more nations are reducing trade barriers by creating regional trade agreements. • Technological innovation is a second main force driving globalization. • Companies can manage global business activities through the use of e-mail,videoconferencing, intranets, and extranets. • Technology increases the speed and ease with which companies can manage far-flung operations. • Innovations in transportation technologies are making the shipment of goods between nations more efficient and dependable

2. Describe the process of globalization and how it affects markets and production.

• Globalization is the trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies. • Globalization is marked by denationalization, in which national borders become somewhat less relevant. • The globalization of markets helps a company to (1) reduce costs by standardizing marketing activities, (2) explore international markets if the home market is small or saturated, and (3) level income streams, especially for makers of seasonal products. • The globalization of production helps a company to (1) access low-cost labor and become more price competitive and (2) access technical know-how or natural resources nonexistent or too expensive at home

5. Describe the global business environment and identify its four main elements

• International business occurs within an integrated, global business environment consisting of four elements. - Globalization is transforming business and society and increasing competition for all firms. - The international business environment influences how firms conduct operations, while globalization further entwines the flows of trade, investment, and capital. - Separate national business environments comprise unique cultural, political, legal, and economic characteristics that define business activity within a nation. - International business management differs from management of a purely domestic firm in nearly all respects.

1. Identify the types of companies that participate in international business.

• Large multinational corporations (MNCs) conduct most international business transactions. • MNCs have great economic and political muscle, and their deals are often worth billions of dollars. • Globalization has given rise to the born global firm—a company that adopts a global perspective and engages in international business from or near its inception. • Born global firms tend to have an innovative culture, knowledge-based capabilities, and the status of international competitor in less than three years. • Entrepreneurs and small firms benefit from the Internet and other technologies that help them overcome high advertising and distribution costs.

4. Summarize the evidence for each main argument in the globalization debate.

• Regarding jobs and wages, both sides agree that globalization causes dislocation in labor markets: Those supporting globalization believe overall gains of national economies are worth lost jobs for individuals; but critics of globalization do not. • Labor unions argue that globalization causes a "race to the bottom" in labor and environmental regulation, though they lack supporting evidence. • Regarding inequality within nations, developing nations can boost the incomes of their poorest citizens by integrating themselves into the global economy. • In the debate over inequality between nations, nations that embrace world trade and investment grow faster than rich nations, whereas sheltered economies become worse off. • Groups agree that global inequality has fallen in recent decades but differ on the extent of the drop. • Evidence suggests that the cultures of developing nations are thriving in an age of globalization and that deeper elements of culture are not easily abandoned. • In terms of national sovereignty, globalization has helped spread democracy worldwide and has aided progress on many global issues.