1、International Business 7eby Charles W.L.HillMcGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies,Inc.All rights reserved.Chapter 1 Globalization1-3What Is Globalization?vThe world is moving away from self-contained national economies toward an interdependent,integrated global economic syste
2、mvGlobalization refers to the shift toward a more integrated and interdependent world economyGlobalization has two facets:1)the globalization of markets 2)the globalization of production1-4The Globalization Of MarketsvThe globalization of markets refers to the merging of historically distinct and se
3、parate national markets into one huge global marketplacevIn many industries,it is no longer meaningful to talk about the“German market”or the“American market”vInstead,there is only the global market1-5The Globalization Of MarketsvFalling trade barriers make it easier to sell internationallyvThe tast
4、es and preferences of consumers are converging on some global normvFirms help create the global market by offering the same basic products worldwide1-6Classroom Performance SystemThe shift toward a more integrated and interdependent world economy is referred to asa)economic integrationb)economic int
5、erdependencyc)globalizationd)internationalization1-7The Globalization Of ProductionvThe globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land,labor,
6、and capitalvCompanies compete more effectively by lowering their overall cost structure or improving the quality or functionality of their product offering1-8Classroom Performance SystemThe merging of historically distinct and separate national markets into one huge global marketplace is known asa)g
7、lobal market facilitationb)cross-border tradec)supranational market integrationd)the globalization of markets1-9Classroom Performance SystemFirms that are involved in international business tend to bea)largeb)smallc)medium-sizedd)large,small,and medium-sized1-10The Emergence Of Global Institutions I
8、nstitutions are needed to:vhelp manage,regulate,and police the global marketplacevpromote the establishment of multinational treaties to govern the global business system1-11The Emergence Of Global Institutions Institutions created over the past half century include:vthe General Agreement on Tariffs
9、 and Trade(GATT)vthe World Trade Organization(WTO)vthe International Monetary Fund(IMF)vthe World Bankvthe United Nations(UN)1-12The Emergence Of Global InstitutionsvThe World Trade Organization(like its predecessor GATT)is primarily responsible for policing the world trading system and making sure
10、that nation-states adhere to the rules laid down in trade treaties signed by WTO membersvIn 2007,the 150 nations that accounted for 97%of world trade were WTO membersvThe WTO promotes lower barriers to trade and investment1-13The Emergence Of Global InstitutionsvThe International Monetary Fund and t
11、he World Bank were created in 1944vThe IMF was established to maintain order in the international monetary systemvThe World Bank was established to promote economic development1-14The Emergence Of Global InstitutionsThe United Nations was established in 1945 to:vmaintain international peace and secu
12、rityvdevelop friendly relations among nationsvcooperate in solving international problems and in promoting respect for human rightsvbe a center for harmonizing the actions of nations1-15Classroom Performance SystemWhich is not a factor of production?a)tradeb)landc)capitald)energy1-16Drivers Of Globa
13、lization Two macro factors underlie the trend toward greater globalization:vthe decline in barriers to the free flow of goods,services,and capital that has occurred since the end of World War IIvtechnological change 1-17Declining Trade And Investment BarriersvInternational trade occurs when a firm e
14、xports goods or services to consumers in another countryvForeign direct investment(FDI)occurs when a firm invests resources in business activities outside its home countryvAfter World War II,advanced countries made a commitment to lower barriers to trade and investmentvSince 1950,average tariffs hav
15、e fallen significantly and are now at about 4%vCountries have also been opening markets to FDI1-18Classroom Performance SystemThe sourcing of good and services from around the world to take advantage of national differences in the cost and quality of factors of production is calleda)economies of sca
16、leb)the globalization of productionc)global integrationd)global sourcing1-19Declining Trade And Investment BarriersTable 1.1:Average Tariff Rates on Manufactured Products as Percent of Value 1-20Declining Trade And Investment BarriersLower barriers to trade and investment mean:vthat firms can view t
17、he world,rather than a single country,as their marketvthat firms can base production in the optimal location for that activity1-21Classroom Performance SystemWhich organization is responsible for policing the world trading system?a)the International Monetary Fundb)the United Nationsc)the World Trade
18、 Organizationd)the World Bank1-22The Role Of Technological Change vTechnological change has made the globalization of markets a realityImportant advances have occurred in:vmicroprocessors and telecommunicationsvthe Internet and World Wide Webvtransportation technology 1-23The Role Of Technological C
19、hangeImplications of technological change for the globalization of production include:vlower transportation costs that enable firms to disperse production to economical,geographically separate locationsvlower information processing and communication costs that enable firms to create and manage globa
20、lly dispersed production systems1-24The Role Of Technological ChangeImplications of technological change for the globalization of markets include:vlow cost global communications networks help create electronic global marketplacevlow-cost transportation help create global marketsvglobal communication
21、 networks and global media are creating a worldwide culture,and a global market for consumer products1-25The Changing Demographics Of The Global Economy vThere has been a drastic change in the demographics of the world economy in the last 30 yearsFour trends are important:vthe Changing World Output
22、and World Trade Picturevthe Changing Foreign Direct Investment Picturevthe Changing Nature of the Multinational Enterprisevthe Changing World Order 1-26The Changing World Output And World Trade PicturevIn 1960,the United States accounted for over 40%of world economic activityvBy 2006,the United Stat
23、es accounted for less than 20%of world economic activityvA similar trend occurred in other developed countriesvThe share of world output accounted for by developing nations is rising and is expected to account for more than 60%of world economic activity by 20201-27The Changing World Output And World
24、 Trade PictureTable 1.2:The Changing Demographics of World GDP and Trade 1-28The Changing Foreign Direct Investment PicturevIn the 1960s,U.S.firms accounted for about two-thirds of worldwide FDI flowsvToday,the United States accounts for less than one-fifth of worldwide FDI flowsvOther developed cou
25、ntries have followed a similar patternvIn contrast,the share of FDI accounted for by developing countries has risen from less than 2%in 1980 to almost 12%in 2005vDeveloping countries,especially China,have also become popular destinations for FDI1-29The Changing Foreign Direct Investment PictureFigur
26、e 1.2:Percentage Share of Total FDI Stock 1980-2005 1-30The Changing Foreign Direct Investment PictureFigure 1.3:FDI Inflows 1988-2006 1-31Classroom Performance SystemWhat is the single most important innovation to the globalization of markets and production?a)advances in transportation technologyb)
27、the development of the microprocessorc)advances in communicationd)the Internet1-32The Changing Nature Of The Multinational EnterprisevA multinational enterprise(MNE)is any business that has productive activities in two or more countriesvSince the 1960s,there has been a rise in non-U.S.multinationals
28、,and a growth of mini-multinationals1-33The Changing World OrdervMany former Communist nations in Europe and Asia are now committed to democratic politics and free market economies and so,create new opportunities for international businessesvChina and Latin America are also moving toward greater fre
29、e market reforms1-34The Global Economy Of The Twenty-first Century vThe world is moving toward a more global economic system,but globalization is not inevitablevGlobalization also brings risks like the financial crisis that swept through South East Asia in the late 1990s1-35Classroom Performance Sys
30、temWhich of the following trends is true?a)the United States is accounting for a greater percentage of world trade than ever beforeb)the United States is accounting for a greater percentage of foreign direct investment than ever beforec)the share of world trade accounted for by developing countries
31、is risingd)the share of foreign direct investment by developing countries is declining1-36The Globalization Debate Is the shift toward a more integrated and interdependent global economy a good thing?vSupporters believe that increased trade and cross-border investment mean lower prices for goods and
32、 services,greater economic growth,higher consumer income,and more jobsvCritics worry that globalization will cause job losses,environmental degradation,and the cultural imperialism of global media and MNEs1-37Anti-Globalization ProtestsvMore than 40,000 anti-globalization protesters took to the stre
33、et at the WTO meeting in Seattle in 1999vProtesters now regularly show up at most major meetings of global institutions 1-38Globalization,Jobs,And Income vGlobalization critics argue that falling barriers to trade are destroying manufacturing jobs in advanced countriesvSupporters of globalization co
34、ntend that the benefits of this trend outweigh the coststhat countries will specialize in what they do most efficiently and trade for other goodsand all countries will benefit1-39Globalization,Labor Policies,And The EnvironmentvGlobalization critics argue that firms avoid costly efforts to adhere to
35、 labor and environmental regulations by moving production to countries where such regulations do not exist,or are not enforcedvGlobalization supporters claim that tougher environmental and labor standards are associated with economic progress,so as countries get richer from free trade,they get tough
36、er environmental and labor regulations1-40Globalization And National Sovereignty vCritics of globalization worry that todays interdependent global economy is shifting economic power away from national governments toward supranational organizations like the WTO,the EU,and the UNvSupporters of globali
37、zation contend that the power of these organizations is limited to what nation-states agree to grant,and that the power of the organizations lies in their ability to get countries to agree to follow certain actions1-41Globalization And The Worlds Poor vCritics of globalization argue that the gap bet
38、ween rich nations and poor nations is getting widervSupporters of globalization claim that the best way for the poor nations to improve their situation is to reduce barriers to trade and investment and implement economic policies based on free market economies,and to receive debt forgiveness for deb
39、ts incurred under totalitarian regimes1-42Classroom Performance SystemWhich of these is not a concern of anti-globalization protesters?a)globalization raises consumer incomeb)globalization contributes to environmental degradationc)globalization is causing a loss of manufacturing jobs in developing c
40、ountriesd)globalization implies a loss of national sovereignty1-43Managing In The Global Marketplace vAn international business is any firm that engages in international trade or investment1-44Managing In The Global Marketplace Managing an international business differs from managing a domestic busi
41、ness because:vcountries are differentvthe range of problems confronted in an international business is wider and the problems more complex than those in a domestic businessvfirms have to find ways to work within the limits imposed by government intervention in the international trade and investment systemvinternational transactions involve converting money into different currencies
