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 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 New market opportunities Levels income stream

Access lower-cost labor Access technical expertise 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
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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Backlash among the disaffected

International Business 5e
Chapter 1 - 12

From Anarchy to Debate

Rage Violence Carnage Exclusion

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall International Business 5e

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
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

+ 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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

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

Global inequality Inequality has fallen, but experts disagree on the extent of the decline

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

International Business 5e

Chapter 1 - 17

National Sovereignty Opponents

Supranational institutions reduce autonomy of national, regional, and local governments
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Supporters

Globalization has benefited societies by helping to spread democracy worldwide

International Business 5e

Chapter 1 - 18

Impact on Culture
Opponents

Supporters
Specialize and trade to obtain other goods Import cultural goods from other nations Protects deeper moral and cultural norms

Destroys cultural diversity

Homogenizes our world Bankrupts local small businesses

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

Born Global Firm

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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Most products do not need an export license

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