Globalization (1)

GlobalizationGlobalization
Copyright © 2010 Pearson Education,
Inc. publishing as Prentice Hall

International Business 5e Chapter 1 - 2
• Describe the process of globalization
• Explain how globalization affects markets
and production
• Identify two drivers of globalization
• Summarize the globalization debate
• List types of firms in international business
• Describe the global business environment
Chapter PreviewChapter Preview

Globalization Involves Us AllGlobalization Involves Us All
We experience international
transactions daily
Imports and exports reach
even remote areas
Technology and e-biz
promote trade
Consumers and companies
pull markets closer

International BusinessInternational Business

Trend toward greater economic, cultural, political
and technological interdependence among
national institutions and economies
Globalization of
markets
Convergence in buyer
preferences in markets
around the world
Globalization of
production
Dispersal of production
activities worldwide to
minimize costs or
maximize quality

Benefits of GlobalizationBenefits of Globalization
of marketsof markets
of productionof production
• Reduces marketing costs
• New market opportunities
• Levels income stream
• Reduces marketing costs
• New market opportunities
• Levels income stream
• Access lower-cost labor
• Access technical expertise
• Access production inputs
• Access lower-cost labor
• Access technical expertise
• Access production inputs

Challenges to BusinessChallenges to Business
Physical
security
Digital
security
Reputational
risk
Examine company
vulnerability and
create a disaster
recovery plan
Guard proprietary
information and
confidential
communications
Require ethical and
lawful behavior from
all employees and
business partners

Globalization Drivers IGlobalization Drivers I
Regional tradeRegional trade
agreementsagreements
GATTGATT
WTOWTO
Remove barriers to trade
and investment

Trade Exceeds OutputTrade Exceeds Output

Globalization Drivers IIGlobalization Drivers II
Technological InnovationTechnological Innovation
Email and
videoconferencing
Internet, intranets,
and extranets
Transportation
advancements
Better
coordination
and control
Improved
communications
and management
More efficient,
dependable
shipping

Measuring GlobalizationMeasuring Globalization

Globalization ThenGlobalization Then andand NowNow
Highly mobileHighly mobile
labor marketlabor market
Highly mobileHighly mobile
labor marketlabor market
Fear of jobsFear of jobs
moving abroadmoving abroad
Fear of jobsFear of jobs
moving abroadmoving abroad
Backlash amongBacklash among
the disaffectedthe disaffected
Backlash amongBacklash among
the disaffectedthe disaffected
Free-flowingFree-flowing
capital and tradecapital and trade
Free-flowingFree-flowing
capital and tradecapital and trade

From Anarchy to DebateFrom Anarchy to Debate
ViolenceViolenceViolenceViolence
RageRageRageRage
CarnageCarnageCarnageCarnage
ExclusionExclusionExclusionExclusion
LegitimacyLegitimacyLegitimacyLegitimacy
ReasonReasonReasonReason
CivilityCivilityCivilityCivility
DebateDebateDebateDebate

Jobs and WagesJobs and Wages
 Eliminates jobs in
developed nations
 Lowers wages in
developed nations
 Exploits workers in
developing nations
 Increases wealth and
efficiency everywhere
 Generates labor market
flexibility in developed
countries
 Advances economies
of developing nations
SupportersSupportersOpponentsOpponents

Labor, Environment, & MarketsLabor, Environment, & Markets
– Globalization lowers
labor standards
– Weakens protection of
the environment
– Exploits workers in
poor nations
+ Investment raises
labor standards
+ Open economies most
environment friendly
+ Companies concerned
for future markets
Opponents Supporters

Advice of Global ManagersAdvice of Global Managers
 Communicate effectively
 Know the customer
 Emphasize global awareness
 Market effectively
 Monitor business environments
 Analyze problems correctly

Income Inequality debateIncome Inequality debate
Inequality within nations
Poor people in developing
nations benefit most from
an open economy
Inequality between nations
Nations open to world trade
and investment grow faster
than rich nations
Global inequality
Inequality has fallen, but
experts disagree on the
extent of the decline
Income InequalityIncome Inequality
32
1

National SovereigntyNational Sovereignty
SupportersSupporters
Globalization hasGlobalization has
benefited societies bybenefited societies by
helping to spreadhelping to spread
democracy worldwidedemocracy worldwide
OpponentsOpponents
SupranationalSupranational
institutions reduceinstitutions reduce
autonomy of national,autonomy of national,
regional, and localregional, and local
governmentsgovernments

Impact on CultureImpact on Culture
Opponents
• Destroys cultural
diversity
• Homogenizes our
world
• Bankrupts local
small businesses
Supporters
• Specialize and trade
to obtain other goods
• Import cultural goods
from other nations
• Protects deeper moral
and cultural norms

Culture Matters:Culture Matters:
The Global ConsumerThe Global Consumer
Culture Matters:Culture Matters:
The Global ConsumerThe Global Consumer
Material DesireMaterial DesireMaterial DesireMaterial Desire
A Force for GoodA Force for GoodA Force for GoodA Force for Good
Artistic InfluenceArtistic InfluenceArtistic InfluenceArtistic Influence
Deeper ValuesDeeper ValuesDeeper ValuesDeeper Values
Western ValuesWestern ValuesWestern ValuesWestern Values

International Business PlayersInternational Business Players
Business that has
direct investments
abroad in multiple
countries
Small companies and
individuals becoming
increasingly active in
international trade
and investment
Adopts a global
perspective and
engages in international
business from or near
its inception
Multinational
Corporation
Small Businesses
and
Entrepreneurs
Born Global
Firm

How They Stack UpHow They Stack Up
Comparing
revenue of
the world's
10 most
global firms
to the gross
domestic
product of
nations

FactsFacts of Small Biz Exportingof Small Biz Exporting
Most exporters haveMost exporters have
fewer than 50 employeesfewer than 50 employees
Most exporters haveMost exporters have
fewer than 50 employeesfewer than 50 employees
Comprehensive helpComprehensive help
is availableis available
Comprehensive helpComprehensive help
Most products do notMost products do not
need an export licenseneed an export license
Most products do notMost products do not
need an export licenseneed an export license
Export financingExport financing
Export financingExport financing

Global Business EnvironmentGlobal Business Environment

• Describe the process of globalization
• Explain how globalization affects markets
and production
• Identify two drivers of globalization
• Summarize the globalization debate
• List types of firms in international business
• Describe the global business environment
Chapter ReviewChapter Review

All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Printed in the United States of America.
Copyright © 2010 Pearson Education, Inc.
publishing as Prentice Hall

Globalization (1)

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