1. Globalization

2. 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

3. eBay expanded all types Eli Lilly hired a virtual
E-Biz Surprise
eBay expanded all types
of product markets
Eli Lilly hired a virtual
R&D “workforce”
Expedia moved travel
booking online
Dell pioneered online
buying of custom PCs

4. International Business

5. The nature of IB?
Foreign Business denote the domestic operation within a foreign company.
Multi Domestic Company is an organization with multi country affiliate, each of which formulate its own business strategy based on perceived market differences.
Global Company is an organization that attempts to standardize and integrated operations worldwide in all functional area.
International Company refers to both global and Multi Domestic Company.

6. Advice of Global Managers
Know the customer
Emphasize global awareness
Develop world-class products
Market effectively
Improve logistics
Analyze problems correctly

7. 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

8. Benefits of Globalization
of markets
Globalization
of production
Reduces marketing costs
New market opportunities
Levels income stream
Access low-cost labor
Acquire technical expertise
Obtain production inputs

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

10. Trade Exceeds Output

11. 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

12. Top 20 Global Nations
Political Technological Personal Economic

13. Globalization Drivers III Market
- As companies globalize, they also become global customer.
-Avoid the competitor stealing their customers
-Market Saturate

14. Globalization Drivers IV Cost
-Economic scale to reduce unit cost
-Reduce development, production, inventory cost.

15. Globalization Then and Now
Highly mobile
labor market
Fear of jobs
moving abroad
Free-flowing
capital and trade
Backlash among
the disaffected

16. Challenges to Business
Physical
security
Digital
Reputational
risk
Assess 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

17. From Carnage to Civility
Rage
Reason
Violence
Legitimacy
Carnage
Civility
Exclusion
Debate

18. 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

19. Labor and Environment Opponents Supporters Investment raises
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

20. Income Inequality debate1
Inequality within nations
Poor people in developing nations benefit most from 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

21. 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

22. 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

23. 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 or near its inception
Multinational
Corporation
Small Businesses
and Entrepreneurs
Born-Global Firm

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

25. Global Business Environment

26. Teaming up
Imagine that you and a group of your fellow classmates own a company that manufactures cheap sunglasses. To lower production costs, you want to move your factory from your developed country to a low-wage country. Choose a prospective country to which you will move. What elements of the national business environment will affect your move? Are there any obstacles to overcome in the international business environment? How will managing your company be different when you undertake international activities? What challenges will you face in managing your new employees?

27. Teaming up
This may be a good time to get students working on their Market Entry Strategy Simulation project, if this has been assigned. This project gets students to begin pondering the types of elements that must be considered when selecting a country for investment. At a minimum, students’ responses should consider: (1) The presence of investment barriers in the country; (2) Resources needed to carry out production, as well as their availability and cost’ (3) Availability of modern telecommunications to facilitate communication with the home office; and (4) How the expansion might be financed.

28. Chapter Summary
This chapter defines the scope of international business within the context of globalization. Globalization lets firms standardize marketing practices, enter new markets, access resources worldwide, and increase production efficiency. Fueling globalization are falling barriers to trade and investment, and rapid innovation in communication and transportation technologies. Globalization also affects a nation, whose level of globalization depends on political engagement, technological connectivity, personal contact, and economic integration. Yet because globalization’s impact is not always uniform, nor always positive, it has sparked debate. Disputes include globalization’s affect on jobs and wages; labor and environmental protection laws; income inequality; national sovereignty; and cultural diversity. Large multinationals, small firms, and entrepreneurs engage in international business. Each of these must navigate the global business environment—the dynamic, integrated global system that weaves together four distinct elements: (1) the forces of globalization, (2) national business environments, (3) the international business environment, and (4) international firm management.