Globalization Chapter 1 ©The McGraw-Hill Companies, Inc., 2000 2

Global Telecommunications 1-1 ©The McGraw-Hill Companies, Inc., 2000 3

Globalization The shift towards a more integrated and interdependent world economy. Two components: The globalization of markets. The globalization of production. 1-2 ©The McGraw-Hill Companies, Inc., 2000

Global Drivers Positive Negative Technology Open Markets Economic Integration Peace Corporate Strategy Global Focus Culture Market Barriers National Barriers War Corporate Strategy Local Focus 1-3 ©The McGraw-Hill Companies, Inc., 2000

Globalization of Markets 1-4 ©The McGraw-Hill Companies, Inc., 2000

Global Production Swan Optical Manufacturing Design 1-5 ©The McGraw-Hill Companies, Inc., 2000 1-5

Growth of World Trade and World Output 1950=100 Figure 1.1 1-6 ©The McGraw-Hill Companies, Inc., 2000

Impact of GATT Tariff Rates Average Tariff Rates on Manufactured Products % of Value Table 1-1 in text Table 1.1 1-7 ©The McGraw-Hill Companies, Inc., 2000

Figure 1.2 1-8 ©The McGraw-Hill Companies, Inc., 2000

The Changing Pattern of World Output and Trade Table 1.2 1-9 ©The McGraw-Hill Companies, Inc., 2000

Percentage Share of Total FDI Stock 1980-1996 Figure 1.3 1-10 ©The McGraw-Hill Companies, Inc., 2000

FDI Inflows 1980-1996 $B Figure 1.4 1-11 ©The McGraw-Hill Companies, Inc., 2000

The National Composition of the Largest Multinationals Of the Top 260 in 1973 Of the Top 500 in 1997 United States 126 (48.4%) 162 (32.4%) Japan 9 (3.5%) 126 (25.2%) Britain 49 (18.8%) 34 (6.8%) France 19 (7.3%) 42 (8.4%) Germany 21 (8.1%) 41 (8.3%) Table 1.3 1-12 ©The McGraw-Hill Companies, Inc., 2000

Globalization - Pro Lower prices for goods and services. Economic growth stimulation. Increase in consumer income. Creates jobs. Countries specialize in production of goods and services that are produced most efficiently. 1-13 ©The McGraw-Hill Companies, Inc., 2000

Globalization - Con Destroys manufacturing jobs in wealthy, advanced countries. Wage rates of unskilled workers in advanced countries declines. Companies move to countries with fewer labor and environment regulations. Loss of sovereignty. 1-14 ©The McGraw-Hill Companies, Inc., 2000

International vs Domestic Business Countries are different. Range of problems are wider and more complex. Government intervention in trade and investment creates problems. International investment is impacted by different currencies. 1-15 ©The McGraw-Hill Companies, Inc., 2000

Sovereignty and the WTO “Under the new system, many decisions that affect billions of people are no longer made by local or national governments but instead, if challenged by any WTO member nation, would be deferred to a group of unelected bureaucrats sitting behind closed doors in Geneva.” -Ralph Nader- 1-16 ©The McGraw-Hill Companies, Inc., 2000

Differences Between International and Domestic Businesses Countries are different. The range of problems are wider and more complex. The intervention of governments that may limit international trade and investment. The need to convert into different currencies. 1-17 ©The McGraw-Hill Companies, Inc., 2000