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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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 2
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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 3
International Business
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 4
Globalization Trend toward greater economic, cultural, political and technological interdependence among national institutions and economies Globalization of markets
Globalization of production
Convergence in buyer preferences in markets around the world
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
• Access lower-cost labor
• New market opportunities
• Access technical expertise
• Levels income stream
• Access production inputs
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 7
Globalization Drivers I Remove barriers to trade and investment
GATT WTO Regional trade agreements
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 8
Trade Exceeds Output
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 9
Globalization Drivers II Technological Innovation
Email and videoconferencing
Better coordination and control Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Internet, intranets, and extranets
Transportation advancements
Improved communications and management
More efficient, dependable shipping
International Business 5e
Chapter 1 - 10
Measuring Globalization
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 11
Globalization Then and Now
Highly mobile labor market
Fear of jobs moving abroad
Free-flowing capital and trade
Backlash among the disaffected
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 12
From Anarchy to Debate
Rage
Reason
Violence
Legitimacy
Carnage
Civility
Exclusion
Debate
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 13
Jobs and Wages Supporters
Opponents
Eliminates jobs in developed nations
Lowers wages in developed nations
Exploits workers in developing nations
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Increases wealth and efficiency everywhere
Generates labor market flexibility in developed countries
Advances economies of developing nations
International Business 5e
Chapter 1 - 14
Labor, Environment, & Markets Opponents – Globalization lowers labor standards
– Weakens protection of the environment
Supporters + Investment raises labor standards
+ Open economies most environment friendly
– Exploits workers in
+ Companies concerned
poor nations
for future markets
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 16
Income Inequality Income Inequality debate
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
3
Global inequality Inequality has fallen, but experts disagree on the extent of the decline
International Business 5e
Chapter 1 - 17
National Sovereignty Opponents
Supporters
Supranational institutions reduce autonomy of national, regional, and local governments
Globalization has benefited societies by helping to spread democracy worldwide
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 18
Impact on Culture Supporters
Opponents •
Destroys cultural diversity
•
Specialize and trade to obtain other goods
•
Homogenizes our world
•
Import cultural goods from other nations
•
Bankrupts local small businesses
•
Protects deeper moral and cultural norms
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 19
Culture Matters: The Global Consumer Material Desire Artistic Influence Western Values A Force for Good Deeper Values Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 20
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Born Global Firm Adopts a global perspective and engages in international business from or near its inception
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 22
Facts of Small Biz Exporting
Most exporters have fewer than 50 employees
Comprehensive help is available
Export financing is available
Most products do not need an export license
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 23
Global Business Environment
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 2
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 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 3
International Business
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 4
Globalization Trend toward greater economic, cultural, political and technological interdependence among national institutions and economies Globalization of markets
Globalization of production
Convergence in buyer preferences in markets around the world
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
• Access lower-cost labor
• New market opportunities
• Access technical expertise
• Levels income stream
• Access production inputs
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 7
Globalization Drivers I Remove barriers to trade and investment
GATT WTO Regional trade agreements
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 8
Trade Exceeds Output
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 9
Globalization Drivers II Technological Innovation
Email and videoconferencing
Better coordination and control Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Internet, intranets, and extranets
Transportation advancements
Improved communications and management
More efficient, dependable shipping
International Business 5e
Chapter 1 - 10
Measuring Globalization
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 11
Globalization Then and Now
Highly mobile labor market
Fear of jobs moving abroad
Free-flowing capital and trade
Backlash among the disaffected
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 12
From Anarchy to Debate
Rage
Reason
Violence
Legitimacy
Carnage
Civility
Exclusion
Debate
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 13
Jobs and Wages Supporters
Opponents
Eliminates jobs in developed nations
Lowers wages in developed nations
Exploits workers in developing nations
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Increases wealth and efficiency everywhere
Generates labor market flexibility in developed countries
Advances economies of developing nations
International Business 5e
Chapter 1 - 14
Labor, Environment, & Markets Opponents – Globalization lowers labor standards
– Weakens protection of the environment
Supporters + Investment raises labor standards
+ Open economies most environment friendly
– Exploits workers in
+ Companies concerned
poor nations
for future markets
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 16
Income Inequality Income Inequality debate
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
3
Global inequality Inequality has fallen, but experts disagree on the extent of the decline
International Business 5e
Chapter 1 - 17
National Sovereignty Opponents
Supporters
Supranational institutions reduce autonomy of national, regional, and local governments
Globalization has benefited societies by helping to spread democracy worldwide
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 18
Impact on Culture Supporters
Opponents •
Destroys cultural diversity
•
Specialize and trade to obtain other goods
•
Homogenizes our world
•
Import cultural goods from other nations
•
Bankrupts local small businesses
•
Protects deeper moral and cultural norms
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 19
Culture Matters: The Global Consumer Material Desire Artistic Influence Western Values A Force for Good Deeper Values Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 20
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
Born Global Firm Adopts a global perspective and engages in international business from or near its inception
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
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 22
Facts of Small Biz Exporting
Most exporters have fewer than 50 employees
Comprehensive help is available
Export financing is available
Most products do not need an export license
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
International Business 5e
Chapter 1 - 23
Global Business Environment
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
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
