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Globalization

Globalization. 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. E-Biz Surprise.

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Globalization

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  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 International Business 3e

  3. 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 International Business 3e

  4. Advice of Global Managers • Know the customer • Emphasize global awareness • Develop world-class products • Market effectively • Improve logistics • Analyze problems correctly International Business 3e

  5. 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 International Business 3e

  6. Benefits of Globalization • Globalization of markets • Reduces marketing costs • New market opportunities • Levels income stream • Globalization of production • Access low-cost labor • Acquire technical expertise • Obtain production inputs International Business 3e

  7. Globalization Drivers I • Remove barriers to trade / investment • GATT • WTO • Regional trade agreements International Business 3e

  8. Globalization Drivers IITechnological Innovation • Email and videoconferencing • Better coordination and control • Internet, intranets and extranets • Improved communications and management • Transportation advancements • More efficient, dependable shipping International Business 3e

  9. Globalization Then and Now • Highly mobile labor market • Fear of jobs moving abroad • Free-flowing capital and trade • Backlash among the disaffected International Business 3e

  10. Challenges to Business • Physical security • Assess company vulnerability and create a disaster recovery plan • Digital security • Guard proprietary information and confidential communications • Reputational risk • Require ethical and lawful behavior from all employees and business partners International Business 3e

  11. From Carnage to Civility • Rage • Violence • Carnage • Exclusion Vs. • Reason • Legitimacy • Civility • Debate International Business 3e

  12. Jobs and Wages • Opponents • Eliminates jobs in developed nations • Forces wages lower in developed nations • Exploits workers in developing nations • Supporters • Increases wealth and efficiency • Generates labor market flexibility • Creates jobs in developed countries • Advances economies of developing nations International Business 3e

  13. Labor and Environment • Opponents • Globalization lowers labor standards • Weakens protection of the environment • Exploits workers in poor nations • Supporters • Investment raises labor standards • Open economies most environment friendly • Companies concerned for future markets International Business 3e

  14. Income Inequality • Inequality within nations • Poor people in developing nations benefit most from open economy • 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 International Business 3e

  15. National Sovereignty • Opponents • Supranational institutions reduce autonomy of national, regional and local governments • Supporters • Globalization has benefited societies by helping to spread democracy worldwide International Business 3e

  16. 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 International Business 3e

  17. International Business Players • Multinational Corporation • Business that has direct investments abroad in multiple countries • Small Businesses and Entrepreneurs • Small companies and individuals becoming increasingly active in international trade and investment • Born-Global Firm • Takes a global perspective on its market and engages in international business from or near its inception International Business 3e

  18. Global Business Environment • Globalization • International • National • Firm International Business 3e

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