Chapter 1 - Globalization. The objectives of this chapter: Understand what is meant by the term globalization, recognize the main drivers of globalization. describe the changing nature of the global economy, explain the main arguments in the debate over the impact of globalization, understand how the process of globalization is creating opportunities and challenges for business managers.
Trang 1Global Business Today 8e
by Charles W.L Hill
Trang 2Globalization
Trang 3Question: What is globalization?
• Globalization the trend towards a more integrated global economic system
• Globalization of markets the merging of historically
distinct and separate national markets into one huge global marketplace
• Globalization of production 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 (labor energy, land, and capital)
Trang 4Institutions
Global institutions:
place
treaties to govern the global business system
Notable global institutions include the:
Trang 5Question: What is driving the move toward greater
globalization?
• Two macro factors:
• 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
Trang 6Average Annual Percentage Growth in Volume of Exports and World GDP, 1950-2010
Trang 7Changing World Output
and World Trade
Question: How has world output and world trade
changed over the last 50 years?
• In the 1960s:
trade picture
• U.S. multinationals dominated the international business scene
• About half the world the centrally planned economies of the communist world was off limits to Western
international business
• Today, much of this has changed
Trang 8Changing World Output and World Trade Picture
The Changing Demographics of World GDP and Trade
Trang 9Changing Foreign Direct Investment
Question: How has the foreign direct investment picture changed over the last 50 years?
• The share of world output generated by developing
countries has been steadily increasing since the 1960s
• The stock of foreign direct investment (total cumulative value of foreign investments) generated by rich
industrial countries is declining
• Crossborder flows of foreign direct investment are
rising
Trang 10Changing FDI Picture
Percentage Share of Total FDI Stock, 1980 - 2010
Trang 11Changing FDI Picture
Trang 12Question: What is a multinational enterprise?
• A multinational enterprise is any business that has productive activities in two or more
countries
• Since the 1960s:
Trang 13The Changing World Order
Question: Why is the changing world order important
for firms?
• The collapse of communism in Eastern Europe
• Economic development in China
• Free market reforms and democracy in Latin America
Trang 14
A more integrated global economy:
plans into disarray
Trang 15Question: Is the shift toward a more integrated
and interdependent global economy
a good thing?
• Many believe that globalization is promoting greater prosperity in the global economy,
more jobs, and lower prices for goods and
services
• Others feel that globalization is not beneficial
Trang 16Question: What does the shift toward a global
economy mean for managers within
an international business?
Managing an international business (any firm that engages in international trade or
investment) differs from managing a domestic business in four key ways
Trang 17Marketplace
1 Country differences require companies to
vary their practices country by country
2 Managers face a greater and more complex
range of problems
3 International companies must work within
the limits imposed by governmental
intervention and the global trading system
4 International transactions require converting funds and being susceptible to exchange rate changes