Globalization

Objectives 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

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

International Business

Globalization of production 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

Benefits of 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

Globalization Drivers I Regional trade agreements GATT WTO Remove barriers to trade and investment

Globalization Drivers II Technological Innovation Email and videoconferencing Internet, intranets, and extranets Transportation advancements Better coordination and control Improved communications and management More efficient, dependable shipping

Jobs and Wages Opponents Supporters Eliminates jobs in developed nations Lowers wages in Exploits workers in developing nations Increases wealth and efficiency everywhere Generates labor market flexibility in developed countries Advances economies of developing nations

Labor, Environment, & Markets Opponents Supporters 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

Income Inequality debate 1 Inequality within nations Poor people in developing nations benefit most from an open economy 2 3 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

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

Impact on Culture Opponents Supporters 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

International Business 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 Multinational Corporation Small Businesses and Entrepreneurs Born Global Firm

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