Portfolio Assignment

ryan25

wild_ibcaninppt_01111.ppt

Home >Business & Finance homework help >Economics homework help >Portfolio Assignment

Globalization

CHAPTER ONE

INTERNATIONAL

BUSINESS

The Challenges of Globalization

Canadian Edition

Wild • Wild • Valladares Montemayor

Describe the process of globalization and how it affects markets and production
Identify the two forces causing globalization to increase
Summarize the evidence for each main argument in the globalization debate
Identify the types of companies that participate in international business
Describe the global business environment and identify its four main elements

Learning Objectives

1 - *

In this chapter, you will come to understand the scope of international business.

You will also:

Learn about globalization, the forces behind its expansion, and how it alters production and marketing activities.
Look inside the debate between the supporters of and opponents to globalization.
Acquaint yourself with the types of companies active in international business.
Explore a model of the global business environment.

1 - *

As new technologies

drive down the cost of global communication and travel, we are increasingly

exposed to the traits and practices of other cultures.

Photo: Gerry Taft, Mount Royal University

A fish market on the shores of Lake Baikal in Lustvyanka, Siberia

Globalization is reshaping our lives

These new realities of international business are

altering our cultures and transforming the way companies do business.

International Business Transactions

1 - *

We experience international

transactions daily

Technology and

e-business

promote trade

Global talent contributes to

efficiency/

competitiveness

Imports/exports reach us even in remote areas

Photo: Gerry Taft, Mount Royal University

A road sign in rural Iceland

Globalization reshapes our cultures and systems of politics, laws, and economics; affects standards of living; and alters global trade and investment patterns.

We encounter the result of international business transactions every day.
Technology and e-business greatly facilitate these international business transactions.
Development and production activities regularly occur on a global basis today, which helps companies grow more efficient and competitive.
The photo is of

International Business Involves Us All

1 - *

Every year, all the nations of the world export goods and services worth more than $18 trillion.

This figure is approximately 41 times the annual global revenue of Walmart which is the biggest company in the world based on revenue.

Photo: Gerry Taft, Mount Royal University

A street market in Kowloon, China

Companies use technology to acquire materials and products from distant lands and to sell goods and services abroad.

Technology Makes It Possible

1 - *

Technology is perhaps the most remarkable facilitator of societal and commercial changes today.

Photo: Gerry Taft, Mount Royal University

Gare de Paris-Est (Paris East Train Station) relying on technology to connect people and goods with the rest of the world)

Technology is perhaps the most remarkable facilitator of societal and commercial changes today.

Consumers use technology to reach out to the world on the Internet—gathering and sending

information and purchasing all kinds of goods and services. Companies use technology to

acquire materials and products from distant lands and to sell goods and services abroad

Global Talent makes it possible

1 - *

Workers at a factory in Indonesia inspect electronic parts bound for global markets.

Today, companies

can go almost anywhere in the world to tap into local expertise and favourable business climates

Workers at a factory in Indonesia inspect electronic parts bound for global markets. Source : AFP Photo/Bob Low/Newscom.

Globalization

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

1 - *

Globalization is marked by “denationalization,” which is NOT the same as “internationalization.”
It embraces concepts and theories from economics, political science, sociology, anthropology, and philosophy.

Global Products

1 - *

Global products —products marketed worldwide, essentially

without any changes.

Photos: Gerry Taft, Mount Royal University

In Paris, they have mini cars and electric motorcycles.

Do you think these products could be marketed globally with no modifications?

What changes might be necessary?

Globalization of Markets

1 - *

Reduces

marketing costs

Creates new market

Opportunities

Levels income

stream

Apple standardized the iPad to reduce production and marketing costs and to support its powerful global

brand.

Source : STR/Newscom.

This trend is occurring in many product categories, including consumer goods, industrial products, and business services.

The benefits of global markets include:

Reduced marketing costs due to standardized marketing activities.
New market opportunities abroad if the home market is small or saturated.
More level income streams for a business selling global seasonal products.

Benefits of Global Production

1 - *

Lower-cost labor

Technical expertise

Production inputs

Photo – Gerry Taft, Mount Royal University

A produce factory in Thailand

The benefits of global production include:

Access to lower-cost workers to help cut overall production costs.
Access to technical expertise otherwise unobtainable.
Access to production inputs unavailable or more costly at home.

Think-Pair-Share

1 - *

Assume this woman has no benefits, she is paid for each yellow connector she stamps a label on and nothing else.

While this type of “piecework” labour reduces costs of production, are workers like this being exploited?

Photo – Gerry Taft, Mount Royal University

This person in Chon Buri, Thailand is stamping a company logo

on electrical connectors used by global electronics manufacturers

Students can explore the advantages that come with this type of opportunity for individuals to make more money, vs the incentive this creates for organizations to outsource manual labour to the lowest bidder at the expense of “home country labour”

Slide 11 is the first “Think-Pair-Share” These slides are intended to stimulate discussion between students. The activity requires students to consider the question individually, and then share their thoughts with one classmate or a small group. The goals of these slides are to 1) improve students’ conceptual understanding of the material, 2) hone critical thinking skills, and 3) improve problem solving.

The woman in this picture was sitting at a small table at a restaurant with a number of bags containing yellow electrical connecters manufactured by the Yeonho Corporation. Her job was to stamp an identifying mark (brand/part number) on each of the connectors. This work is often referred to as the “bottom” of the supply chain. These people are typically paid for finished product on a piecework basis. When demand increases, they are offered more work, when demand decreases they might receive no work at all. They receive no “benefits” of any description.

The debate question is “While this type of “piecework” labour reduces costs of production, are workers like this being exploited?” Students can explore the advantages that come with this type of opportunity for individuals to make more money, vs. the incentive this creates for organizations to outsource manual labour to the lowest bidder at the expense of “home country labour”

Global Challenges:
Managing Security

1 - *

One downside of globalization is that it creates new risks and accentuates old challenges for companies.

First, managers should carefully examine the security of company facilities and create a disaster recovery plan.
Second, a company should closely guard proprietary information and internal communications to maintain privacy.
And third, all companies must strive for high levels of ethical and lawful behavior because bad news spreads quickly today.

Discussion Question

What benefits might companies obtain from the globalization of markets and the globalization of production?

1 - *

What benefits might companies obtain from the globalization of markets and the globalization of production?

Answer to Discussion Question

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.

1 - *

Answer:

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.

Globalization Drivers (1)
Falling Barriers

Remove barriers to trade and investment

GATT

WTO

Regional trade

agreements

1 - *

Photo: Gerry Taft, Mount Royal University

Airlines around the world benefit from trade agreements through increased demand for their services and the ability to “partner” with other airlines

One main driver of globalization is falling barriers to trade and investment.

The General Agreement on Tariffs and Trade (or GATT) promoted free trade by reducing tariffs and nontariff barriers.
A revision of that Agreement lowered tariffs and subsidies for agricultural products, protected intellectual property rights, and created the World Trade Organization.
World Trade Organization goals include helping the free flow of trade, negotiating the further opening of markets, and settling trade disputes among member nations.
Regional trade agreements involve smaller groups of nations outside the framework of the World Trade Organization that are integrating their economies.

Trade Exceeds Output

1 - *

Global and regional trade agreements are increasing global trade and cross-border investing.
So much so that the pace of growth in global trade is exceeding the pace of growth in world output.

Chart3

0.1	0.1
0.2	0.22
0.3	0.43
0.4	0.7
0.5	1
0.6	1.3
0.7	1.7
0.8	2.1
0.9	2.6
1	3.1

GDP

Global Exports

Years

$ Value

Sheet1

GDP	Global Exports
0.1	0.1
0.2	0.22
0.3	0.43
0.4	0.7
0.5	1
0.6	1.3
0.7	1.7
0.8	2.1
0.9	2.6
1	3.1

Sheet1

GDP

Global Exports

Years

$ Value

Sheet2

Sheet3

Factory employees are celebrating the production of

more than 15 million vehicles in VW’s 50-plus

years in Brazil.

Globalization Drivers (2)
Technological Innovation

Email and videoconferencing

Better coordination and control

Internet, intranets, and extranets

Improved communications and management

Transportation Advancements

More efficient, dependable shipping

1 - *

A second driver of globalization is technology—which makes it easier, faster, and less costly to move data, goods, and equipment around the world.

E-mail and videoconferencing speeds information flows and improves coordination and control tasks across borders.
The Internet and a company’s intranets and extranets provide several key benefits:
The Internet helps sharpen forecasting, lower inventories and costs, and improve communication with distant managers.
Intranets give employees access to company information from distant locations while on business travel.
Extranets give customers and suppliers access to a company’s database to place orders or restock inventories electronically and automatically.
Advancements in transportation technologies (such as global positioning satellite, or GPS, technology) are making global shipping more efficient and dependable.

Measuring Globalization

1 - *

The globalization index ranks nations on their levels of economic integration, personal contact, technological connectivity, and political engagement.
Richest nations are the most global, with many in Europe.
The least global nations are found in Africa, East Asia, South Asia, Latin America, and the Middle East—where low technological connectivity slows global integration.

The first age of globalization
mid-1800s to the 1920s

Highly mobile

labor market

Fear of jobs

moving abroad

Backlash among

the disaffected

Free-flowing

capital and trade

1 - *

A first age of globalization extended from the mid-1800s to the 1920s.

Back then, like today, migration levels reached record highs, workers feared cheaper labor abroad, and trade and capital flowed freely.
But a backlash to globalization in the early 1930s led to high tariffs and other barriers.
The geographic divide between East and West became an ideological divide between communism and capitalism.

From Anarchy to Debate
over the last decade

Violence

Rage

Carnage

Exclusion

Legitimacy

Reason

Civility

Debate

1 - *

Anarchy

Debate

The globalization debate a decade ago was characterized by rage and violent protests.
But today, to the benefit of all parties involved, the tone of the debate is more civil and reasoned.

Discussion Question

__________ 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

1 - *

__________ 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

Answer to Discussion Question

__________ 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

1 - *

The correct answer is b. Gross national product

Jobs and Wages

Eliminates jobs in developed nations
Lowers wages in developed nations
Exploits workers in developing nations

Increases wealth and

efficiency everywhere

Generates labor market

flexibility in developed

countries

Advances economies

of developing nations

1 - *

Opponents

Supporters

On jobs and wages, globalization opponents argue that it:

Eliminates jobs in developed nations as good-paying manufacturing jobs go abroad to developing countries.
Lowers wages in developed nations because the new jobs that replace lost manufacturing jobs often pay less.
Exploits low-wage workers in developing nations who work servicing western consumers.

Supporters of globalization disagree, saying that it:

Increases wealth and efficiency in all nations as firms grow more efficient and pass savings on to consumers.
Generates labor market flexibility in developed nations that allows an economy to rapidly deploy labor where it is needed.
Advances developing economies by injecting capital that creates higher-paying jobs that, in turn, expands the middle class and raises living standards.

Labor, Environment, & Markets

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

1 - *

Opponents

Supporters

On labor standards:

Globalization opponents claim that it causes firms to move to nations with low labor standards, which lowers labor standards and reduces labor’s bargaining power.
Supporters say that investments in developing nations’ export processing zones raise labor standards.

On environmental protection:

Globalization opponents say it creates a “race to the bottom” in environmental conditions and regulations—in other words, countries compete in reducing environmental protection laws.
Supporters show evidence that pollution-intensive U.S. firms tend to invest in countries with stricter environmental standards, and note that closed economies historically are the worst polluters.

On future markets:

Globalization opponents claim that international firms pay local production workers the lowest possible wage and export finished goods back to the home country.
Supporters note that firms want to build local markets in developing nations and not simply exploit foreign workers and create local animosity.

Global Manager’s Briefcase:
Keys to Global Success

Communicate effectively

Know the customer

Emphasize global awareness

Market effectively

Monitor business environments

1 - *

Several pointers can help global managers succeed in unfamiliar markets:

Grow competent in a culture to better navigate business relationships.
Understand how to customize products to meet the needs of international customers.
Integrate foreign markets into business strategy and product design from the outset.
Match quality products with top-notch marketing to avoid obscurity and blunders.
Monitor business environments for political, legal, and socioeconomic changes.

Critics claim that income disparity in rich nations is increasing as firms move factory jobs to poor nations

Supporters say poor people in developing nations benefit most from an open economy

Inequality within Nations

1 - *

We see the result of embracing globalization in this photo of skyscrapers in the Lujiazui Financial and Trade Zone of the Pudong New Area in Shanghai, China.

On the debate over inequality within nations:

Globalization critics claim that income disparity in rich nations is increasing as firms move factory jobs to poor nations.
Supporters of globalization say that, although the evidence is mixed, poor people in developing nations seem to benefit from an open economy.

Globalization opponents say that it is widening the gap in average incomes between rich and poor nations

Supporters cite evidence that open nations are benefiting from trade while closed ones are not.

Inequality between Nations

1 - *

Photo: Gerry Taft, Mount Royal University

A wholesale flower shop in Bangkok where Marigolds are sold to retailers

On the debate over inequality between nations:

Globalization opponents say that it is widening the gap in average incomes between rich and poor nations.
Supporters cite evidence that open nations are benefiting from trade while closed ones are not.

Globalization opponents say that it is widening income inequality between all people of the world.

Supporters claim that global inequality has fallen in recent decades

Global Inequality

1 - *

Photo: Gerry Taft, Mount Royal University

A street in Panang, Malaysia where evidence of rising prosperity can be observed through the late model vehicle in front of the residence.

On the debate over global inequality:

Globalization opponents say that it is widening income inequality between all people of the world.
Supporters point to studies showing that global inequality has fallen in recent decades, although the extent of the decline is uncertain.

Think-Pair-Share

What does the evidence suggest for each branch of the debate on globalization and income inequality?

1 - *

The Debate questions are as follows:

Inequality within nations

Inequality between nations

Global inequality

The picture on slide 29 was taken in Penang, Malaysia, less than 10 meters from the ocean. 180 degrees opposite to this picture, the landscape was littered with the by-products of commerce – plastic containers and bags, wire, fishing nets, old clothes, motor oil and Styrofoam. The picture on slide 29 displays the benefits of commerce – a “newer” vehicle in front of a residence, and in the background tall office buildings and of course the ever-present MacDonald’s.

The debate question is “What does the evidence suggest for each branch of the debate on globalization and income inequality?” Students can explore the advantages and disadvantages that come with Globalization, and consider the perspective from those benefiting from Globalization vs. those who have been unable to take advantage of Globalization (this is often a function of access to education)

Answer to Discussion Question

On the inequality within nations debate, studies suggest that developing nations can boost incomes of their poorest members of society by integrating them into the global economy.

On the inequality between nations debate, it appears that nations more open to trade and investment grow faster than wealthy nations, while sheltered economies are worse off.

On the global inequality debate, it is generally agreed that global poverty has fallen in recent decades, though there is disagreement on the extent of the drop.

1 - *

Answer:

On the inequality within nations debate, studies suggest that developing nations can boost incomes of their poorest members of society by integrating them into the global economy.

On the inequality between nations debate, it appears that nations more open to trade and investment grow faster than wealthy nations, while sheltered economies are worse off.

On the global inequality debate, it is generally agreed that global poverty has fallen in recent decades, though there is disagreement on the extent of the drop.

National Sovereignty

Globalization has benefited societies by helping to spread democracy worldwide

Supranational institutions reduce autonomy of national, regional, and local governments

1 - *

Opponents

Supporters

On national sovereignty:

Globalization opponents argue that:

Supranational institutions with international goals and appointed officials undermine national sovereignty and democracy.
And elected officials undercut democracy and local and regional authority with ‘inter-national’ agreements on citizens’ behalf.

Supporters of globalization note that:

It has helped spread democracy worldwide—for example, there are a larger number of democratic nations than ever before.
And some losses of sovereignty have had positive social impacts—such as in human rights, workers’ rights, and discrimination.

Impact on Culture

Destroys cultural diversity
Homogenizes our world
Bankrupts local small businesses

Specialize and trade to obtain other goods
Import cultural goods from other nations
Protects deeper moral and cultural norms

1 - *

Opponents

Supporters

On globalization’s impact on culture:

Globalization critics say that it:

Homogenizes our world.
Destroys cultural diversity.
And lets multinational companies wipe out small local businesses.

Supporters say globalization lets nations:

Specialize and trade for goods they do not produce.
Import other peoples’ cultural goods.
And still protect their deeper moral and cultural norms.

Culture Matters:
The Global Consumer

Material Desire

A Force for Good

Artistic Influence

Deeper Values

Western Values

1 - *

Here are just a few additional arguments regarding culture and globalization:

Critics say that global marketing promotes material desires in developing nations.
But globalization supporters argue that the artistic influence of poor nations is strong in rich nations.
Critics also say that local values and traditions are being replaced by “Western” values.
But supporters say that globalization fosters tolerance and diversity and is a force for good.
In conclusion, although globalization may cause consumer purchases to converge, deeper aspects of culture remain steadfast.

International Business Players

1 - *

Business that has direct investments abroad in multiple countries

Small companies and individuals becoming increasingly active in international trade and investment

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

Multinational

Corporation

Small Businesses

and Entrepreneurs

Born Global Firm

Multinational corporations generate significant jobs, investment, and tax revenue for the nations they enter.

Some multinational companies have more employees than the smallest nations have citizens.

Entrepreneurs and small businesses are exporting earlier and growing internationally faster.

Today, born global firms arise from developed and developing nations alike.
Many small companies reach global customers solely through the Internet.

How They Stack Up

1 - *

This graphic illustrates the relative power of the world’s largest multinational corporations.
If Wal-Mart were a country, it would rank just behind Switzerland in terms of economic power.

Facts of Small Business Exporting

Most exporters have

fewer than 50 employees

Comprehensive help

is available

Most products do not

need an export license

Export financing

is available

1 - *

Here are several facts that dispel the myths of small business exporting:

First, most exporters are small and medium-sized firms with fewer than 50 employees.
Second, exporters can receive comprehensive export assistance from federal agencies and trade specialists.
Third, most products do not need an export license, which is generally reserved for high-tech or defense-related goods.
And fourth, promising exporters can obtain financing from the Small Business Administration and other agencies.

Global Business Environment

1 - *

International business is special because it occurs within a dynamic, integrated system that weaves together four distinct elements.

Globalization is transforming our societies and commercial activities and increasing competition everywhere.
Each national business environment consists of unique cultural, political, legal, and economic characteristics that force companies to adapt products and practices as needed.
Events in the international business environment have a strong influence on how business is conducted, so firms must closely monitor events.
The context of international firm management means that the duties of international managers can differ greatly from those of primarily domestic managers.

Discussion Question

The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.

a. Cultural Business Model

b. Globalization Environment

c. Global Business Environment

1 - *

The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.

a. Cultural Business Model

b. Globalization Environment

c. Global Business Environment

Answer to Discussion Question

The textbook you are using in this course describes a model of international business as occurring within a dynamic and integrated system called the __________.

a. Cultural Business Model

b. Globalization Environment

c. Global Business Environment

1 - *

The correct answer is c. Global Business Environment

$ ValueYears

GDPGlobal Exports