1、Chapter1Globalization1-2What Is Globalization?Globalization-the shift toward a more integrated and interdependent world economyThe world is moving away from self-contained national economies toward an interdependent,integrated global economic system1-3What Is The Globalization of Markets?Historicall
2、y distinct and separate national markets are merging It no longer makes sense to talk about the“German market”or the“American market”Instead,there is the“global market”falling trade barriers make it easier to sell globallyconsumers tastes and preferences are converging on some global normfirms promo
3、te the trend by offering the same basic products worldwide1-4What Is The Globalization of Markets?Firms of all sizes benefit and contribute to the globalization of markets97%of all U.S.exporters have less than 500 employees98%of all small and mid-sized German companies participate in international m
4、arkets1-5What Is The Globalization of Production?Firms source goods and services from locations around the globe to capitalize on national differences in the cost and quality of factors of production like land,labor,energy,and capitalCompanies can lower their overall cost structure improve the quali
5、ty or functionality of their product offering1-6Why Do We Need Global Institutions?Global institutionshelp manage,regulate,and police the global marketplacepromote the establishment of multinational treaties to govern the global business system1-7Why Do We Need Global Institutions?Examples includeth
6、e General Agreement on Tariffs and Trade(GATT)the World Trade Organization(WTO)the International Monetary Fund(IMF)the World Bankthe United Nations(UN)the G201-8What Do Global Institutions Do?The World Trade Organization(like its predecessor GATT)polices the world trading systemmakes sure that natio
7、n-states adhere to the rules laid down in trade treaties promotes lower barriers to trade and investment154 members in 20111-9What Do Global Institutions Do?The International Monetary Fund(1944)maintains order in the international monetary systemlender of last resort for countries in crisisArgentina
8、,Indonesia,Mexico,Russia,South Korea,Thailand,Turkey,Ireland,and GreeceThe World Bank(1944)promotes economic development via low interest loans for infrastructure projects1-10What Do Global Institutions Do?The United Nations(1945)maintains international peace and securitydevelops friendly relations
9、among nationscooperates in solving international problems and in promoting respect for human rightsis a center for harmonizing the actions of nationsThe G20forum through which major nations tried to launch a coordinated policy response to the 2008-2009 global financial crisis1-11What Is Driving Glob
10、alization?Declining barriers to the free flow of goods,services,and capital average tariffs are now at just 4%more favorable environment for FDIglobal stock of FDI was$15.5 trillion in 2009facilitates global productionTechnological change microprocessors and telecommunicationsthe Internet and World
11、Wide Webtransportation technology 1-12What Does Globalization Mean For Firms?Lower barriers to trade and investment mean firms canview the world,rather than a single country,as their marketbase production in the optimal location for that activityBut,firms may also find their home markets under attac
12、k by foreign firms1-13Declining Trade And Investment BarriersAverage Tariff Rates on Manufactured Products as Percent of Value 1-14What Does Globalization Mean For Firms?Technological change meanslower transportation costs help create global markets and allow firms to disperse production to economic
13、al,geographically separate locations low cost information processing and communicationfirms can create and manage globally dispersed productionlow cost global communications networks help create an electronic global marketplaceglobal communication networks and global mediacreate a worldwide culture
14、and a global consumer product market 1-15The Changing Demographics Of The Global Economy Four trends are important:The changing world output and world trade picture The changing foreign direct investment picture The changing nature of the multinational enterprise The changing world order1-16How Has
15、World Output And World Trade Changed?In 1960,the U.S.accounted for over 40%of world economic activity,but by 2009,the U.S.accounted for just 24%a similar trend occurred in other developed countriesIn contrast,the share of world output accounted for by developing nations is risingexpected to account
16、for more than 60%of world economic activity by 20201-17How Has World Output And World Trade Changed?The Changing Demographics of World GDP and Trade 1-18How Has Foreign Direct Investment Changed Over Time?In the 1960s,U.S.firms accounted for about two-thirds of worldwide FDI flows Today,the United S
17、tates accounts for less than one-fifth of worldwide FDI flowsOther developed countries have followed a similar patternIn contrast,the share of FDI accounted for by developing countries has risen Developing countries,especially China,have also become popular destinations for FDI1-19How Has Foreign Di
18、rect Investment Changed Over Time?Percentage Share of Total FDI Stock 1980-2007 1-20How Has Foreign Direct Investment Changed Over Time?FDI Inflows 1988-2008 1-21What Is A Multinational Enterprise?Multinational enterprise(MNE)-any business that has productive activities in two or more countriesSince
19、 the 1960sthe number of non-U.S.multinationals has risenthe number of mini-multinationals has risen1-22The Changing World OrderMany former Communist nations in Europe and Asia are now committed to democratic politics and free market economiescreates new opportunities for international businessesbut,
20、there are signs of growing unrest and totalitarian tendencies in some countries China and Latin America are also moving toward greater free market reformsbetween 1983 and 2010,FDI in China increased from less than$2 billion to$100 billion annuallybut,China also has many new strong companies that cou
21、ld threaten Western firms1-23How Will The Global Economy Of The 21st Century Look?The world is moving toward a more global economic systemBut globalization is not inevitablethere are signs of a retreat from liberal economic ideology in RussiaGlobalization brings risks the financial crisis that swept
22、 through South East Asia in the late 1990sthe recent financial crisis that started in the U.S.in 2007-2008,and moved around the world1-24Is An Interdependent Global Economy A Good Thing?Supporters believe that increased trade and cross-border investment mean lower prices for goods and servicesgreate
23、r economic growthhigher consumer income,and more jobsCritics worry that globalization will causejob lossesenvironmental degradationthe cultural imperialism of global media and MNEsAnti-globalization protesters now regularly show up at most major meetings of global institutions 1-25How Does Globaliza
24、tion Affect Jobs And Income?Critics argue that falling barriers to trade are destroying manufacturing jobs in advanced countriesSupporters contend that the benefits of this trend outweigh the costscountries will specialize in what they do most efficiently and trade for other goodsand all countries w
25、ill benefit1-26How Does Globalization Affect Labor Policies And The Environment?Critics argue that firms avoid the cost of adhering to labor and environmental regulations by moving production to countries where such regulations do not exist,or are not enforcedSupporters claim that tougher environmen
26、tal and labor standards are associated with economic progressas countries get richer from free trade,they implement tougher environmental and labor regulations1-27How Does Globalization Affect National Sovereignty?Is todays global economy shifting economic power away from national governments toward
27、 supranational organizations like the WTO,the EU,and the UN?Critics argue that unelected bureaucrats have the power to impose policies on the democratically elected governments of nation-states Supporters claim that the power of these organizations is limited to what nation-states agree to grant the
28、 power of the organizations lies in their ability to get countries to agree to follow certain actions1-28How Is Globalization Affecting The Worlds Poor?Is the gap between rich nations and poor nations getting wider?Critics believe that if globalization was beneficial there should not be a divergence
29、 between rich and poor nationsSupporters claim that the best way for the poor nations to improve their situation is toreduce barriers to trade and investmentimplement economic policies based on free market economiesreceive debt forgiveness for debts incurred under totalitarian regimes1-29How Does Th
30、e Global Marketplace Affect Managers?Managing an international business differs from managing a domestic business because countries are differentthe range of problems confronted in an international business is wider and the problems more complex than those in a domestic businessfirms have to find ways to work within the limits imposed by government intervention in the international trade and investment systeminternational transactions involve converting money into different currencies
