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Questions and Answers
What is globalization primarily about?
What is one of the key drivers of globalization?
What is a characteristic of globalization?
What is a result of globalization on business?
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What is a consequence of globalization for companies?
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What is facilitated by globalization?
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Study Notes
Globalization
Definition
- Globalization refers to the increasing integration and interdependence of economies and societies around the world.
- It involves the free flow of goods, services, ideas, and capital across national borders.
Key Drivers
- Advancements in technology: Improved communication, transportation, and information technologies have reduced transaction costs and increased connectivity.
- Trade liberalization: Reduction of tariffs, quotas, and other trade barriers has increased international trade.
- Investment and outsourcing: Multinational corporations (MNCs) have expanded their operations globally, seeking lower production costs and new markets.
Characteristics
- Increased international trade: Growth in exports and imports of goods and services.
- Foreign direct investment (FDI): MNCs invest in foreign countries to establish operations or acquire assets.
- Global supply chains: Companies source materials, components, and services from around the world.
- Cultural exchange: Globalization has facilitated the exchange of ideas, cultures, and values across nations.
Impacts on Business
- New market opportunities: Globalization offers access to new customers, markets, and resources.
- Increased competition: Companies face competition from foreign firms, leading to increased pressure to innovate and reduce costs.
- Diversification of supply chains: Companies can source materials and services from a global network of suppliers.
- Challenges in managing global operations: Companies must navigate different cultural, legal, and regulatory environments.
Impacts on Society
- Economic growth: Globalization can lead to increased economic growth, job creation, and improved living standards.
- Income inequality: Globalization can exacerbate income inequality within and between countries.
- Cultural homogenization: The spread of global brands and cultures can lead to the loss of local traditions and cultural diversity.
- Environmental concerns: Globalization can lead to increased environmental degradation and resource depletion.
Globalization
Definition and Drivers
- Globalization refers to the increasing integration and interdependence of economies and societies worldwide, involving the free flow of goods, services, ideas, and capital across national borders.
- Key drivers include advancements in technology, trade liberalization, and investment and outsourcing by multinational corporations (MNCs).
Key Characteristics
International Trade and Investment
- Growth in exports and imports of goods and services
- Foreign direct investment (FDI) by MNCs to establish operations or acquire assets in foreign countries
- Global supply chains, where companies source materials, components, and services from around the world
Cultural Exchange
- Facilitated exchange of ideas, cultures, and values across nations
Impacts on Business
Opportunities and Challenges
- Access to new customers, markets, and resources
- Increased competition from foreign firms, leading to pressure to innovate and reduce costs
- Diversification of supply chains through global sourcing
- Challenges in managing global operations, including navigating different cultural, legal, and regulatory environments
Impacts on Society
Economic and Social Consequences
- Economic growth, job creation, and improved living standards
- Exacerbation of income inequality within and between countries
- Cultural homogenization, leading to the loss of local traditions and cultural diversity
- Environmental concerns, including increased degradation and resource depletion
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Description
Learn about the increasing integration and interdependence of economies and societies around the world, including key drivers and effects.