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Week1chapters1and21.ppt
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Chapter 1

Globalization

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Introduction

In the world economy today, we see

A shift away from self-contained national economies

A move toward a more integrated global economic system

The effects of this trend can be seen

The cars people drive, in the jobs where we work

The food we eat, the clothes we wear

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What is globalization?

Globalization refers to the trend towards a more integrated global

economic system

Two key facets of globalization are the globalization of

Production and

Markets

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What is globalization?

The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace

The globalization of production refers to the sourcing of goods and services from locations around the globe

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The emergence of global institutions

Several global institutions have emerged to:

Help manage, regulate, and police the global market place

Promote the establishment of multinational treaties to govern the global business system

Notable global institutions include:

World Trade Organization (WTO)

International Monetary Fund (IMF)

World Bank

United Nations (UN)

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Drivers of globalization

There are two macro factors underlying the trend toward greater

Globalization

Declining trade and investment barriers

Technological change

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Declining trade and investment barriers

International trade occurs when a firm exports goods or services to consumers in another country

Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country

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Technological change

  • The lowering of trade barriers made globalization of markets and production a theoretical possibility, technological change made it a tangible reality

  • Since World War II, there have been major advances in communication, information processing, and transportation:

1. The development of the microprocessor has lowered the cost of global communication

2. U.S. Web-based transactions

3. Commercial jet aircraft and super freighters and the introduction of containerization

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The changing nature of the multinational enterprise

  • A multinational enterprise is any business that has productive activities in two (2) or more countries

  • Decline in the dominance of U.S. firms in the global marketplace

  • Many small and medium-size firms are expanding internationally

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The changing world order

  • The collapse of communism in Eastern Europe

  • Economic development in China

  • Free market reforms and democracy in Latin America

A more integrated global economy presents

new opportunities for firms.

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Issues in globalization

  • Globalization, jobs and income

  • Globalization, labor policies and the environment

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Issues in globalization

  • Globalization and national sovereignty

  • Globalization and the world’s poor

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Chapter 2

National differences in

political, economic and legal systems

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Introduction

  • A country’s political economy refers to its political, economic, and legal systems

  • These systems are interdependent, and interact and influence each other

  • Political systems can be assessed

1. Collectivism as opposed to individualism

2. Democratic or totalitarian

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Collectivism and individualism

  • Collectivism refers to a system that stresses the primacy of collective goals over individual

  • Individualism suggests individuals should have freedom over their economic and political pursuits

  • Individualism stresses

1. Individual freedom and self-expression

2. Letting people pursue their own self-interests to achieve the best overall good for society

3. Democratic systems and free markets

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Democracy and totalitarianism

  • Democracy is a political system in which government is by the people

  • Totalitarianism is a form of government in which one person or political party exercises absolute control

  • Democracy and individualism go hand in hand

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Democracy and totalitarianism

  • Collectivism and totalitarianism generally go hand in hand

  • There are four major forms of totalitarianism today:

1. Communist totalitarianism

2. Theocratic totalitarianism

3. Tribal totalitarianism

4. Right wing totalitarianism

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Economic Systems

  • Political ideology and economic systems are connected

  • There are three types of economic systems:

1. The market economy

2. The command economy

3. The mixed economy

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Legal Systems

  • The legal system of a country refers to the rules, or laws

  • A country’s laws regulate business practice, define the manner in which business transactions are to be executed and they set down the rights and obligations of those involved in business transactions

  • There are three main types of legal systems:

1. Common law

2. Civil law

3. Theocratic law

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Property Rights and Corruption

  • Property rights can be violated

1. By private action

2. By public action

  • Corruption

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Property Rights and Corruption

Rankings of Corruption by Country 2011

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The protection of intellectual property

  • Intellectual property rights include:

1. Patents

2. Copyrights

3. Trademarks

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Product Safety and Product Liability

  • Product safety laws set certain safety standards to which a product must adhere

  • Product liability involves holding a firm and its officers responsible when a product causes injury, death, or damage

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Implications for managers

  • The political, economic, and legal systems of a country

  • The political, economic, and legal environment of a country

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Implications for managers

  • The political, economic, and legal systems of a country

  • The political, economic, and legal environment of a country

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Putting it into Practice

  • Would you do business here?