Globalization

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Chapter Preview
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
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Globalization 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
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International Business

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International Business 5e

Chapter 1 - 4

Globalization
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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

International Business 5e

Chapter 1 - 5

Benefits of Globalization
Globalization of markets Globalization of production

Reduces marketing costs Reduces marketing costs New market opportunities New market opportunities Levels income stream Levels income stream

Access lower-cost labor Access lower-cost labor Access technical expertise Access technical expertise Access production inputs Access production inputs

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International Business 5e

Chapter 1 - 6

Challenges 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

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International Business 5e

Chapter 1 - 7

Globalization Drivers I
Remove barriers to trade and investment

GATT WTO
Regional trade agreements

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International Business 5e

Chapter 1 - 8

Trade Exceeds Output

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International Business 5e

Chapter 1 - 9

Globalization Drivers II
Technological Innovation
Internet, intranets, and extranets Email and videoconferencing Transportation advancements

Better coordination and control

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Improved communications and management

International Business 5e

More efficient, dependable shipping

Chapter 1 - 10

Measuring Globalization

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International Business 5e

Chapter 1 - 11

Globalization Then and Now

Highly mobile labor market

Fear of jobs moving abroad

Free-flowing capital and trade

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Backlash among the disaffected

International Business 5e Chapter 1 - 12

From Anarchy to Debate

Rage Violence Carnage Exclusion

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Reason Legitimacy Civility Debate

Chapter 1 - 13

Jobs and Wages

Opponents

Supporters

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
Chapter 1 - 14

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

International Business 5e

Labor, Environment, & Markets

Opponents
Globalization lowers
labor standards

Supporters
+ Investment raises
labor standards

Weakens protection of
the environment

+ Open economies most

environment friendly

Exploits workers in
poor nations
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+ Companies concerned
for future markets
International Business 5e Chapter 1 - 15

Advice of Global Managers

Communicate effectively Know the customer Emphasize global awareness Market effectively Monitor business environments Analyze problems correctly
International Business 5e Chapter 1 - 16

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IncomeIncome Inequalitydebate Inequality

1 2

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

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International Business 5e

Chapter 1 - 17

National Sovereignty Opponents

Supranational institutions reduce autonomy of national, regional, and local governments
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Supporters
Globalization has benefited societies by helping to spread democracy worldwide

International Business 5e

Chapter 1 - 18

Impact on Culture
Opponents
Destroys cultural diversity Homogenizes our world Bankrupts local small businesses
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Supporters
Specialize and trade to obtain other goods Import cultural goods from other nations Protects deeper moral and cultural norms
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International Business 5e

Culture Matters: Culture Matters: The Global Consumer The Global Consumer
Material Desire Artistic Influence Western Values A Force for Good Deeper Values
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International Business Players

Multinational Corporation
Business that has direct investments abroad in multiple countries

Small Businesses and Entrepreneurs

Small companies and individuals becoming increasingly active in international trade and investment

Born Global Firm

Adopts a global perspective and engages in international business from or near its inception

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International Business 5e

Chapter 1 - 21

How They Stack Up

Comparing revenue of the world's 10 most global firms to the gross domestic product of nations

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International Business 5e

Chapter 1 - 22

Facts of Small Biz Exporting

Most exporters have Comprehensive help fewer than 50 employees is available

Export financing is available

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Most products do not need an export license

International Business 5e Chapter 1 - 23

Global Business Environment

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International Business 5e

Chapter 1 - 24

Chapter Review
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
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e Chapter 1 - 25

Globalization

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

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