globalization 1 copyright © 2014 pearson education, inc

GlobalizationGlobalization1

Copyright © 2014 Pearson Education, Inc.


• Identify the types of companies that participate in international business

• Describe the process of globalization and how it affects markets and production

• Describe the two forces causing globalization to increase

• Summarize the evidence for each main argument in the globalization debate

• Describe the global business environment and identify its four main elements

Chapter ObjectivesChapter Objectives

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AppleApple

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• User-Centered Design• Outsource Production• Markets Globally• Global Brand Strategy

• User-Centered Design• Outsource Production• Markets Globally• Global Brand Strategy


International BusinessInternational Business

We experience internationaltransactions daily

Imports/exports reach useven in remote areas

Technology and e-businesspromote trade

Global talent contributes toefficiency/competitiveness

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Key PlayersKey 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

MultinationalCorporation

Small Businesses

and Entrepreneurs

Born Global Firm

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Global Firms vs. NationsGlobal Firms vs. Nations

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

Source: Based on data obtained from “Fortune Global 500: The World’s Largest Corporations,” Fortune, July 23, 2012, pp. F1–F7; World Bank data set available at data.worldbank.org.

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GlobalizationGlobalization

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

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Benefits of Global MarketsBenefits of Global Markets

Levels incomestream

Reducesmarketing costs

Creates new marketopportunities

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Developed markets 1 billion people

Emerging markets 2 billion people

Traditional markets 4 billion people

Global Sustainability:Global Sustainability:

Three Markets, Three Three Markets, Three StrategiesStrategies

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Benefits of Global ProductionBenefits of Global Production

Production inputs

Lower-cost labor

Technical expertise

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Labor and ResourcesLabor and Resources

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Companies can access workers and resources in favorable business climates

almost anywhere in the world

Companies can access workers and resources in favorable business climates

almost anywhere in the world


Discussion QuestionDiscussion Question

What benefits might companies obtain from the globalization of markets and the globalization of production?

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Answer to Discussion Answer to Discussion QuestionQuestion

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.

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Globalization Drivers (1)Globalization Drivers (1)Falling BarriersFalling Barriers

Regional tradeagreements

GATT

WTO

Remove barriers to trade and investment

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Trade Exceeds OutputTrade Exceeds Output

Years

$ Value

GDP Global Exports

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Globalization Drivers (2)Globalization Drivers (2)Technological InnovationTechnological Innovation

Email and videoconferencing

Internet, intranets,and extranets

Transportationadvancements

Better coordination and control

Improved communications and management

More efficient, dependable

shipping

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Measuring GlobalizationMeasuring Globalization

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Globalization Then Globalization Then andand Now Now

Highly mobileHighly mobilelabor marketlabor market

Highly mobileHighly mobilelabor marketlabor market

Fear of jobs Fear of jobs moving abroadmoving abroad

Fear of jobs Fear of jobs moving abroadmoving abroad

Backlash amongBacklash amongthe disaffectedthe disaffected

Backlash amongBacklash amongthe disaffectedthe disaffected

Free-flowing Free-flowing capital and tradecapital and trade

Free-flowing Free-flowing capital and tradecapital and trade

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From Anarchy to DebateFrom Anarchy to Debate

ViolenceViolenceViolenceViolence

Rage Rage Rage Rage

CarnageCarnageCarnageCarnage

ExclusionExclusionExclusionExclusion

LegitimacyLegitimacyLegitimacyLegitimacy

ReasonReasonReasonReason

CivilityCivilityCivilityCivility

DebateDebateDebateDebate

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__________ is the value of all goods and services produced by a country’s domestic and international activities over a one-year period.

a. Gross Domestic Product

b. Gross National Product

c. GNP Per Capita

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__________ is the value of all goods and services produced by a country’s domestic and international activities over a one-year period.

a. Gross Domestic Product

b. Gross National Product

c. GNP Per Capita

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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

SupportersOpponents

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Salaries of IT WorkersSalaries of IT Workers

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Source: Based on data obtained from the International Average Salary Income Database (www.worldsalaries.org).Source: Based on data obtained from the International Average Salary Income Database (www.worldsalaries.org).


Labor, Environment, & Labor, Environment, & MarketsMarkets

– 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

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Manager’s Briefcase:Manager’s Briefcase:

The Keys to Global SuccessThe Keys to Global Success

Communicate effectively

Know the customer

Emphasize global awareness

Market effectively

Monitor global markets

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Income Inequality Income Inequality debate debate

Rich get richer in wealthy nations?or

Poor get richer in developing nations?

Inequality within NationsInequality within Nations

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Gap widens between rich and poor nations?or

Poor trading nations grow faster than rich ones?

Inequality between NationsInequality between Nations

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Income Inequality Income Inequality debate debate

Gap between rich and poor greater everywhere?or

Inequality has fallen but extent unknown?

Global InequalityGlobal Inequality

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What does the evidence suggest for each branch of the debate on globalization and income inequality?

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Answer to Discussion QuestionAnswer to Discussion Question

Inequality within nations: Studies suggest that developing nations boost incomes of their poor by integrating them into the global economy.

Inequality between nations: Nations open to trade and investment seem to grow faster than wealthy nations, while sheltered economies grow worse off.

Global inequality: Global poverty has fallen in recent decades but experts disagree on the extent of the drop.

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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

• Protect deeper moral and cultural norms

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Culture Matters:Culture Matters:

The Culture DebateThe Culture DebateCulture Matters:Culture Matters:

The Culture DebateThe Culture Debate

Material DesireMaterial Desire

A Force for GoodA Force for Good

Artistic InfluenceArtistic Influence

Deeper ValuesDeeper Values

Western ValuesWestern Values

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National SovereigntyNational Sovereignty

Supporters

Globalization has benefited societies by

helping to spread democracy worldwide

Opponents

Supranational institutions reduce

autonomy of national, regional, and local

governments

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Global Business EnvironmentGlobal Business Environment

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The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.

a. Cultural Business Model

b. Globalization Environment

c. Global Business Environment

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The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.

a. Cultural Business Model

b. Globalization Environment

c. Global Business Environment

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globalization 1 copyright © 2014 pearson education, inc

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