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Chapter 1 Globalization
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International Business 4e
Chapter Preview 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 © Prentice Hall, 2008 International Business 4e
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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, 2008 International Business 4e
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International Business
© Prentice Hall, 2008 International Business 4e
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Globalization of production International Business 4e
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, 2008 International Business 4e
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Benefits of Globalization
of markets Globalization of production Reduces marketing costs New market opportunities Levels income stream Access low-cost labor Access technical expertise Access production inputs © Prentice Hall, 2008 International Business 4e
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Advice of Global Managers
Know the customer Emphasize global awareness Develop world-class products Market effectively Improve logistics Analyze problems correctly © Prentice Hall, 2008 International Business 4e
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Globalization Drivers I
Regional trade agreements GATT WTO Remove barriers to trade and investment © Prentice Hall, 2008 International Business 4e
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International Business 4e
Trade Exceeds Output © Prentice Hall, 2008 International Business 4e
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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, 2008 International Business 4e
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International Business 4e
Top 20 Global Nations © Prentice Hall, 2008 International Business 4e
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Globalization Then and Now
Highly mobile labor market Fear of jobs moving abroad Free-flowing capital and trade Backlash among the disaffected © Prentice Hall, 2008 International Business 4e
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Challenges to Business
Physical security Digital 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, 2008 International Business 4e
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International Business 4e
From Anarchy to Debate Rage Reason Violence Legitimacy Carnage Civility Exclusion Debate © Prentice Hall, 2008 International Business 4e
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International Business 4e
Jobs and Wages Opponents Supporters Increases wealth and efficiency Generates labor market flexibility Creates jobs in developed countries Advances economies of developing nations Eliminates jobs in developed nations Forces wages lower in developed nations Exploits workers in developing nations © Prentice Hall, 2008 International Business 4e
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International Business 4e
Labor and Environment 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 © Prentice Hall, 2008 International Business 4e
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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 © Prentice Hall, 2008 International Business 4e
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International Business 4e
National Sovereignty Opponents Supranational institutions reduce autonomy of national, regional, and local governments Supporters Globalization has benefited societies by helping to spread democracy worldwide © Prentice Hall, 2008 International Business 4e
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International Business 4e
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, 2008 International Business 4e
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Culture Matters: Is Resistance Futile?
The Same Everything? …or Cultures Flourishing? Values Gone for Good? …or a Force for Good? Finding Common Ground © Prentice Hall, 2008 International Business 4e
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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, 2008 International Business 4e
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International Business 4e
How They Stack Up Comparing revenue of the world's 10 most global firms to the gross domestic product of nations © Prentice Hall, 2008 International Business 4e
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Global Business Environment
© Prentice Hall, 2008 International Business 4e
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International Business 4e
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 © Prentice Hall, 2008 International Business 4e
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