Chapter 1 Globalization
Key Players: Small businesses and entrepreneurs
are exporting earlier and quickly growing international. Many small companies reach global customers solely through the Internet.
Global Sustainability: Three Markets, Three Strategies - Emerging markets
are racing to catch up to rich nations and are overloading infrastructures. Here, resource constraints can force companies to develop highly efficient production methods that are therefore sustainable.
Global Sustainability: Three Markets, Three Strategies - Developed markets
are solidly middle class and people can consume almost any product desired. In this market, a firm may use the latest technologies to develop sustainable products in a sustainable manner.
Globalization of markets
refers to convergence in buyer preferences in markets around the world.
Globalization
trend toward greater economic, cultural, political and technological interdependence among national institutions and economies.
Globalization Drivers: Technological Innovation
which makes it easier, faster, and less costly to move data, goods, and equipment around the world. E-mail and videoconferencing speed up information flows and improve coordination and control tasks across borders. The Internet and a company's intranets and extranets provide several key benefits: The Internet helps sharpen forecasting, lower inventories and costs, and improve communication with distant managers. Intranets give employees access to company information from distant locations while on business travel. Extranets give customers and suppliers access to a company's database to place orders or restock inventories electronically and automatically. Advancements in transportation technologies (such as global positioning satellite, or GPS) make global shipping more efficient and dependable.
Benefits of Global Production ---
Access to lower-cost workers to help cut overall production costs. Access to technical expertise otherwise unobtainable. Access to production inputs unavailable or more costly at home.
The Keys to Global Success
Communicate effectively Know the customer Emphasize global awareness Market effectively Monitor global markets
Global Sustainability: Three Markets, Three Strategies
Developed markets 1 billion people Emerging markets 2 billion people Traditional markets 4 billion people
The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.
Global Business Environment
What benefits might companies obtain from the globalization of markets and the globalization of production?
Global markets can reduce marketing costs, create new market opportunities abroad, and level income streams. Global production can allow access to lower-cost workers, technical expertise, and production inputs.
Impact on Culture debate
Globalization critics say that it: Homogenizes our world, destroys cultural diversity, and lets multinational companies wipe out small local businesses. Supporters say globalization lets nations: Specialize and trade for goods they do not produce, import other peoples' cultural goods, and still protect their deeper moral and cultural norms.
What is the difference between international business and globalization?
Globalization has a more broad and universal concept of the global marketplace, while international business is application of a business model to various markets.
Global Business Environment
Globalization is transforming our societies and commercial activities and increasing competition everywhere. Each national business environment consists of unique cultural, political, legal, and economic characteristics that force companies to adapt products and practices as needed. Events in the international business environment have a strong influence on how business is conducted, so firms must closely monitor events. The context of international firm management means that the duties of international managers can differ greatly from those of primarily domestic managers.
National Sovereignty Debate
Globalization opponents argue that: Supranational institutions with international goals and appointed officials undermine national sovereignty and democracy. They also say that elected officials undercut democracy and local and regional authority with 'inter-national' agreements on behalf of their citizens. Supporters of globalization note that: It has helped spread democracy worldwide—for example, there are a larger number of democratic nations than ever before. They add that some losses of sovereignty have had positive social impacts—such as in human rights, workers' rights, and discrimination.
Global Inequality Debate
Globalization opponents say that it widens income inequality between all people of the world. Supporters point to studies showing that global inequality has fallen in recent decades, although the extent of the decline is uncertain
Inequality between Nations Debate
Globalization opponents say that it widens the gap in average incomes between rich and poor nations. Supporters cite evidence that open nations benefit from trade while closed ones do not.
What does the evidence suggest for each branch of the debate on globalization and income inequality?
On the debate over inequality within nations, studies suggest that developing nations can boost incomes of their poorest members of society by integrating them into the global economy. On the debate over inequality between nations, nations more open to trade and investment seem to grow faster than wealthy nations, while sheltered economies grow worse off. On the debate over global inequality, it is generally agreed that global poverty has fallen in recent decades, though there is disagreement on the extent of the drop.
Jobs and Wages
On the debate over jobs and wages, globalization opponents argue that it: Eliminates jobs in developed nations as good-paying manufacturing jobs go abroad to developing countries. Lowers wages in developed nations because jobs that replace lost manufacturing jobs often pay less. Exploits low-wage workers in developing nations who work servicing Western consumers. Supporters of globalization disagree, saying that it: Increases wealth and efficiency in all nations as firms grow more efficient and pass savings on to consumers. Generates labor market flexibility in developed nations that allows an economy to rapidly deploy labor where it is needed. Advances developing economies by injecting capital that creates higher-paying jobs that, in turn, raises living standards.
Labor, Environment, & Markets Debates
On the debate over labor standards: Globalization opponents claim that it lowers labor standards and reduces labor's bargaining power. Supporters say investments in developing nations' export processing zones show that the reverse is true—that it raises labor standards. On the debate over environmental protection: Globalization opponents say it weakens environmental protections as countries compete for investment by reducing environmental protection laws. Supporters show evidence that pollution-intensive firms invest in countries with stricter, not weaker, environmental standards. Also, closed economies, not the most global ones, are history's worst polluters. On the debate over future markets: Globalization opponents claim that international firms pay local production workers the lowest possible wage and export finished goods back to the home country. Supporters note that firms want to build local markets in developing nations and not simply exploit foreign workers and create local animosity.
The benefits of global markets include ---
Reduced marketing costs due to standardized marketing activities. New market opportunities abroad if the home market is small or saturated. More level income streams for a business selling global seasonal products.
Globalization Drivers: Falling Barriers
The General Agreement on Tariffs and Trade (or GATT) promoted free trade by reducing tariffs and nontariff barriers. A revision of that Agreement lowered tariffs and subsidies for agricultural products, protected intellectual property rights, and created the World Trade Organization. World Trade Organization goals include helping the free flow of trade, negotiating the further opening of markets, and settling trade disputes among member nations. Regional trade agreements involve smaller groups of nations outside the framework of the World Trade Organization that are integrating their economies.
__________ is the value of all goods and services produced by a country's domestic and international activities over a one-year period.
The correct answer is b. Gross National Product
From Anarchy to Debate
The globalization debate a decade ago was characterized by rage and violent protests. Today, the tone of the debate is more civil and reasoned to the benefit of all parties involved.
Measuring Globalization
The globalization index ranks nations on their levels of economic, social, and political globalization. Richest nations are the most global, with most in Europe. The least global nations are found in Africa, East Asia, South Asia, Latin America, and the Middle East.
Globalization Then and Now
first age of globalization extended from the mid-1800s to the 1920s. Back then, like today, migration levels reached record highs, workers feared cheaper labor abroad, and trade and capital flowed freely. But a backlash to globalization in the early 1930s led to high tariffs and other barriers. The geographic divide between East and West became an ideological divide between communism and capitalism.
Key Players: Multinational corporations
generate significant jobs, investment, and tax revenue for the nations they enter. Some multinational companies have more employees than the smallest nations have citizens.
Global Sustainability: Three Markets, Three Strategies - Traditional markets
have mostly rural populations for whom poverty and corruption prevail. In these markets, sustainability means teaching safe farming practices, environmental stewardship, and disease awareness.
Globalization of production
is the dispersal of production activities worldwide to minimize costs or maximize quality.
Key Players: Born global firms
tend to have innovative cultures and knowledge-based organizational capabilities.
