Lecture International business - Chapter 1: Globalization

The objectives of this chapter: Understand what is meant by the term globalization, recognize the main drivers of globalization. describe the changing nature of the global economy, explain the main arguments in the debate over the impact of globalization, understand how the process of globalization is creating opportunities and challenges for business managers.

1

• Identify the types of companies that participate in

international business

• Describe the process of globalization and how it affects

markets and production

• Describe the two forces causing globalization to increase

• Summarize the evidence for each main argument in the

globalization debate

• Describe the global business environment and identify its

four main elements

Chapter Objectives

• User-Centered Design

• Outsource Production

• Markets Globally

We experience international

transactions daily

Imports/exports reach us even in remote areas

Technology and e-business

promote trade Global talent contributes to efficiency/competitiveness

Adopts a global perspective and engages in international business from or near

its inception

Multinational

Corporation   and Entrepreneurs Small Businesses Born Global Firm

Globalization of  production

Dispersal of production  activities worldwide to  minimize costs or  maximize quality 

Levels income

stream

Reduces marketing costs

Creates new market

opportunities

Production inputs Lower­cost labor Technical expertise

What benefits might

companies obtain

from the globalization

of markets and the

globalization of

production?

Global markets can reduce

marketing costs, create new

market opportunities abroad,

and level income streams

Global production can allow

access to lower-cost

workers, technical expertise,

and production inputs.

Falling Barriers

Regional trade agreements

GATT WTO

Remove barriers to trade

 and investment

Years

$ Value

Transportation advancements

Better

coordination

and control

Improved communications and management

More efficient, dependable shipping

Measuring Globalization

Backlash among the disaffected

Backlash among the disaffected

Legitimacy Reason

Civility Debate

is the value of all

goods and services produced

by a country’s domestic and

international activities over a

one-year period.

a Gross Domestic Product

b Gross National Product

c GNP Per Capita

is the value of all

goods and services produced

by a country’s domestic and

international activities over a

one-year period.

a Gross Domestic Product

b Gross National Product

c GNP Per Capita

of developing nations

Supporters Opponents

Salaries of IT Workers

The Keys to Global Success

 Communicate effectively

 Know the customer

 Emphasize global awareness

 Market effectively

 Monitor global markets

Gap widens between rich and poor nations?

or Poor trading nations grow faster than rich ones?

Inequality between Nations

Gap between rich and poor greater everywhere?

or Inequality has fallen but extent unknown?

Inequality within nations: Studies

suggest that developing nations boost

incomes of their poor by integrating

them into the global economy.

Inequality between nations: Nations

open to trade and investment seem to

grow faster than wealthy nations, while

sheltered economies grow worse off.

Global inequality: Global poverty has

fallen in recent decades but experts

disagree on the extent of the drop.

•  Specialize and trade

to obtain other goods

• Import cultural goods

from other nations

• Protect deeper moral

and cultural norms

Supporters

Globalization has benefited societies by helping to spread democracy worldwide

Global Business Environment

The textbook you are using in this

course describes a model of

international business as

occurring within a dynamic and

integrated system called the

The textbook you are using in this

course describes a model of

international business as

occurring within a dynamic and

integrated system called the

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