Chapter 1 Globalization

© Prentice Hall, 2008International Business 4e Chapter Describe globalization Explain how globalization affects markets and production Identify the drivers of globalization Discuss the globalization debate List types of firms in international business Define the global business environment Chapter Preview

© Prentice Hall, 2008International Business 4e Chapter 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

© Prentice Hall, 2008International Business 4e Chapter International Business

© Prentice Hall, 2008International Business 4e Chapter 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

© Prentice Hall, 2008International Business 4e Chapter Benefits of Globalization Globalization of markets Globalization of production Reduces marketing costs New market opportunities Levels income stream Reduces marketing costs New market opportunities Levels income stream Access low-cost labor Access technical expertise Access production inputs Access low-cost labor Access technical expertise Access production inputs

© Prentice Hall, 2008International Business 4e Chapter Advice of Global Managers Know the customer Emphasize global awareness Develop world-class products Market effectively Improve logistics Analyze problems correctly

© Prentice Hall, 2008International Business 4e Chapter Globalization Drivers I Regional trade agreements GATT WTO Remove barriers to trade and investment

© Prentice Hall, 2008International Business 4e Chapter Trade Exceeds Output

© Prentice Hall, 2008International Business 4e Chapter Globalization Drivers II Technological Innovation and videoconferencing Internet, intranets, and extranets Transportation advancements Better coordination and control Improved communications and management More efficient, dependable shipping

© Prentice Hall, 2008International Business 4e Chapter Top 20 Global Nations

© Prentice Hall, 2008International Business 4e Chapter Globalization Then and Now Highly mobile labor market Fear of jobs moving abroad Backlash among the disaffected Free-flowing capital and trade

© Prentice Hall, 2008International Business 4e Chapter 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

© Prentice Hall, 2008International Business 4e Chapter From Anarchy to Debate Violence Rage Carnage Exclusion Legitimacy Reason Civility Debate

© Prentice Hall, 2008International Business 4e Chapter Jobs and Wages   Eliminates jobs in developed nations   Forces wages lower in developed nations   Exploits workers in developing nations   Increases wealth and efficiency   Generates labor market flexibility   Creates jobs in developed countries   Advances economies of developing nations Supporters Opponents

© Prentice Hall, 2008International Business 4e Chapter Labor and Environment – – 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 OpponentsSupporters

© Prentice Hall, 2008International Business 4e Chapter Income 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 Inequality 3 2 1

© Prentice Hall, 2008International Business 4e Chapter National Sovereignty Supporters Globalization has benefited societies by helping to spread democracy worldwide Opponents Supranational institutions reduce autonomy of national, regional, and local governments

© Prentice Hall, 2008International Business 4e Chapter Impact 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

© Prentice Hall, 2008International Business 4e Chapter Culture Matters: Is Resistance Futile? The Same Everything? …or a Force for Good? …or Cultures Flourishing? Finding Common Ground Values Gone for Good?

© Prentice Hall, 2008International Business 4e Chapter International Business Players Business that has direct investments abroad in multiple countries Small companies and individuals becoming increasingly active in international trade and investment Takes a global perspective on its market and engages in international business from inception Multinational Corporation Small Businesses and Entrepreneurs Born-Global Firm

© Prentice Hall, 2008International Business 4e Chapter How They Stack Up Comparing revenue of the world's 10 most global firms to the gross domestic product of nations

© Prentice Hall, 2008International Business 4e Chapter Global Business Environment

© Prentice Hall, 2008International Business 4e Chapter Chapter Review Describe globalization Explain how globalization affects markets and production Identify the drivers of globalization Discuss the globalization debate List types of firms in international business Define the global business environment