Globalization from a Business Perspective Prof. Anne Lawrence

Globalization from a Business Perspective From a business perspective, globalization may be viewed as the flow of goods, services, and capital across national borders.

Globalization from a Business Perspective Goods are things that are manufactured, grown on a farm, or mined or pumped out of the ground. Services are intangible things that we use but can’t hold in our hand. Capital is money that is invested, in this case in another nation’s economy.

Globalization from a Business Perspective Globalization is a process… a series of interrelated events. It can also be considered a system.

Globalization from a Business Perspective Globalization can be measured as the share of the world’s economic output that is traded externally, among countries, rather than internally, within countries.

Globalization from a Business Perspective Since 1960, the pace of globalization has greatly accelerated, as shown by the next slide.

Globalization from a Business Perspective

Why has globalization accelerated? Improved communications Improved transportation systems The rise of major transnational corporations

Globalization from a Business Perspective Why has globalization accelerated? Social and political reforms The rise of international financial and trade institutions

Globalization from a Business Perspective A transnational corporation is a company that does business in more than one country.

Globalization from a Business Perspective 65,000 transnational corporations operate in the modern global economy. These corporations, in turn, have about 850,000 affiliates – suppliers, subcontractors, retailers, and others with whom they have a business relationship.

Globalization from a Business Perspective The world’s top ten non-financial TNCs, ranked by foreign assets, are: Vodafone General Electric ExxonMobil Vivendi Universal General Motors Royal Dutch/Shell BP Toyota Motor Telefonica Fiat

Globalization from a Business Perspective Firms can enter and compete in the global marketplace in several ways. These can be summarized by the words: Sell Make Buy

Globalization from a Business Perspective Today, many companies have all three elements of global business – market channels, manufacturing operations, and supply chains.

Globalization from a Business Perspective Arguments FOR Globalization Globalization…. Increases economic productivity Reduces prices for consumers

Globalization from a Business Perspective Globalization…. Gives developing countries access to foreign investment funds to support economic development Transfers technology Spreads democracy and freedom, and reduces military conflict

Globalization from a Business Perspective Arguments AGAINST Globalization Globalization…. Causes job insecurity Weakens environmental and labor standards

Globalization from a Business Perspective Globalization…. Prevents individual nations from adopting policies promoting environmental or social objectives Undermines cultural, linguistic, and religious diversity Is just as compatible with despotism as it is with freedom

Globalization from a Business Perspective What are your opinions about globalization? --> A survey of worldviews developed by Prof. Thomas Gladwin of the University of Michigan shows how your feelings about globalization compare with others’.