Hill_6CE_PPT_Ch_01.ppt

GLOBAL BUSINESS TODAY Sixth Canadian Edition...

GLOBAL BUSINESS TODAY Sixth Canadian Edition CHARLES W. L. HILL G. TOMAS M. HULT THOMAS McKAIG FRANK COTAE ©2021 McGraw-Hill Ryerson All rights reserved Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 1 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Part 1 Globalization Bombardier Challenger Paul Chauncey / Alamy Stock Photo Chapter 1 Globalization Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 2 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Learning objectives (1) 1. Define the terms globalization, globalization of markets, and globalization of production. 2. Examine the rise and functions of global institutions. 3. Examine Drivers of Globalization. 4. Illustrate the changing demographics of the global economy. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 3 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Learning objectives (2) 5. Globalization debate: Impact of globalization on job security, income levels, labour and environmental policies, and national sovereignty. 6. Understand opportunities and challenges that business managers must confront in Canada and beyond. 7. Understand how establishing and committing to a global supply chain code of conduct can result in sustainable international operations. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 4 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Globalization Opening Case: Globalization of Production at Bombardier Designated Metal Connection (DMC) from the United States, Kobe Steel LTD from Japan, Chengdu Sigma Precision Components from China, Chemetall GMBH from Germany, Cheltenham Tool Co. Ltd. from the U.K., Centro Tratamientos from Spain, Castle Metals from Mexico. Lack of Barriers to Trade and Investment Transportation – sold to Alstom SA (France) Commercial Line – sold to Airbus (multinational – France, Spain, Netherlands) Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 5 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  What Is Globalization? (1) Globalization refers to the shift toward a more integrated and interdependent world economy. Globalization has several different facets, including: Globalization of Markets Globalization of Production Globalization of Consumers Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 6 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  What Is Globalization? (2) Globalization of Markets and Consumers Refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross-border trade have made it easier to sell internationally. Tastes and preferences of consumers in different nations converge on some global norm, thereby helping to create a global market Consumer products such as Citicorp credit cards, Apple iPhones, offer a standardized product worldwide, helping create a global market. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 7 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  What Is Globalization? (3) Globalization of Production Refers to the sourcing of goods and services from locations around the world to take advantage of national differences in costs and quality of factors of production(labor, energy, land and capital). Companies lower overall cost structure and/or improve quality or functionality of product offering, thereby allowing them to compete more effectively. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 8 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (1) Global institutions help manage, regulate, and police the global marketplace; Promote the establishment of multinational treaties to govern the global business system. Including the following organizations: United Nations (1945) World Trade Organization (WTO) preceded by the GATT International Monetary Fund (IMF) World Bank Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 9 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (2) World Trade Organization (WTO) www.wto.org Responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states. In Chapter 6 we will take a close look at the WTO See also witiger.com/internationalbusiness/wto.htm Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 10 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (3) International Monetary Fund and World Bank (created in 1944) IMF was to maintain order in the international monetary system Lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value World Bank was to promote economic development Provides low interest rate loans to cash-strapped governments that wish to undertake infrastructure investments (building dams or road systems,..). Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 11 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (4) International Monetary Fund The IMF loans come with strings attached: Countries are required to adopt specific policies aimed at returning their troubled economies to stability and growth. Some critics charge that the IMF’s policy recommendations are often inappropriate; We will look at the debate over the role of the IMF in Chapter 10. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 12 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (5) The World Bank (WB) WB is a group comprised of the following: IBRD- the Int’l Bank for Reconstruction and Development IDA- International Development Association IFC- International Finance Corporation MIGA- Multilateral Investment Guarantee Agency ICSID- International Centre for Settlement of Investment Disputes Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 13 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Global Institutions (6) The World Bank Most often it is the IBRD that is involved in international business opportunities for Canadian companies Canada's Dept. of Foreign Affairs has a section on their website providing an overview of the steps a company must take to be involved with World Bank projects http://www.tradecommissioner.gc.ca/eng/development- humanitarian-aid-markets/world-bank.jsp Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 14 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (1) Two macro factors seem to underlie the trend toward greater globalization: Decline in barriers to the free flow of goods, services, and capital, since the end of World War II Technological change in communication, information processing, and transportation Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 15 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (2) Declining Trade and Investment Barriers Lowering barriers to international trade enables firms to view the world, rather than a single country, as their market. Reducing and eliminating trade and investment barriers allows firms to base production at the optimal location, serving the world market from that location. A firm might design a product in one country, produce component parts in two other countries, assemble the product in yet another country, and then export the finished product around the world. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 16 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (3) Technological Change Technological change has made globalization of markets and production a tangible reality. Since the end of World War II, the world has seen major advances in: Communication, Information processing, Transportation technology and Explosive emergence of the Internet and World Wide Web. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 17 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (4) Technological Change Microprocessors and Telecommunications Development of the microprocessor enabled the explosive growth of high-power, low-cost computing, vastly increasing the amount of information that can be processed. Satellite, Optical fiber, wireless and Internet technologies rely on microprocessor to encode, transmit, and decode the vast amount of information that flows along these electronic highways. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 18 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (5) Technological Change Internet In 1990, fewer than 1 million users were connected to the Internet. By 2019, approximately 4 billion Internet users. The Web makes it much easier for buyers and sellers to find each other, wherever they may be located and whatever their size. It enables enterprises to coordinate and control a globally dispersed production system in a way that was not possible 25 years ago Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 19 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Drivers of Globalization (6) Technological Change Transportation Technology Several major innovations in transportation Before the advent of containerization, it technology have occurred since World War II: could take several days and several hundred longshoremen to unload a ship and reload goods onto trucks and trains. Development of commercial jet aircraft and superfreighters reducing time needed to get from one location to another; has effectively shrunk the globe Introduction of containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 20 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(1) The Changing World Output and World Trade Picture Table 1.1. Historical Changing World Output and Trade Share World Share World Share World Countr Output, 1960 Output 2018 Exports, 2018 y (%) (%) (%) USA 38.3% 24.4% 8.6% German 8.7 4.6 8 y France 4.6 3.3 3 Italy 3.0 2.4 2.8 United 5.3 3.3 2.5 Kingdom Canada 3.0 2.1 2.3 Japan 3.3 6.1 Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved 3.8 Chapter 1 Slide 21 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(2) The Changing World Output and World Trade Picture Table 1.2. Canadian Exports and Imports—Major Trading Partners Country—Exports Year US$ (millions) United States 2018 319,067 China 2018 18,187 United Kingdom 2018 13,636 Japan 2018 9,118 Mexico 2018 6,052 South Korea 2018 4,089 Country—Imports United States 2018 221,967 China 2018 54,661 Mexico 2018 27,352 Germany 2018 13,826 Japan 2018 13,503 United Kingdom 2018 6,852 Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 22 PowerPoints by Associate Professor Frank Cotae, Mount Royal University The Changing Demographics of the Global Economy(3) Changes in Foreign Direct Investment (FDI) Among developing nations, the largest recipient of FDI has been China (received between 2004 and 2012 between $60B to $100B a year, followed by Brazil, Mexico, and India. Sustained flow of FDI into developing nations is an important stimulus for economic growth in these countries Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 23 PowerPoints by Associate Professor Frank Cotae, Mount Royal University The Changing Demographics of the Global Economy(4) The Changing Nature of the Multinational Enterprise A multinational enterprise (MNE) is any business that has productive activities in two or more countries. Since the 1960s, there have been two notable trends in the demographics of the multinational enterprise: The rise of non-U.S. multinationals, particularly Japanese multinationals, and The growth of mini-multinationals. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 24 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(5) The Changing Nature of the Multinational Enterprise Non-U.S. multinationals The large number of U.S. multinationals reflected U.S. economic dominance in the three decades after World War II while, The large number of British multinationals reflected that country’s industrial dominance in the early decades of the twentieth century Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 25 PowerPoints by Associate Professor Frank Cotae, Mount Royal University The Changing Demographics of the Global Economy(6) The Changing Nature of the Multinational Enterprise Non-U.S. multinationals Globalization of the world economy and Japan’s rise to the top rank of economic powers has resulted in a relative decline in the dominance of U.S. and British firms in the global marketplace If we look at smaller firms, we see significant growth in the number of multinationals from developing economies. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 26 PowerPoints by Associate Professor Frank Cotae, Mount Royal University The Changing Demographics of the Global Economy(7) The Changing Nature of the Multinational Enterprise The Rise of Mini-Multinationals Most Int’l trade and investment still conducted by large firms but, Many medium-sized and small businesses are becoming increasingly involved in international trade and investment. Example: International Road Dynamics (IRD) of Saskatchewan has subsidiaries in the United States, Chile, China, Belgium. Iceculture Inc., based in Ontario with a staff of 15 export to Britain, Europe, South Africa, Iceland, etc. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 27 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(8) The Changing World Order World merchandise exports and imports by level of development, 2012Q1–2018Q4; Volume index, 2012Q1+100 Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 28 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(9) The Changing World Order The economies of most of the former communist states are in very poor condition, and their continued commitment to democracy and free market economics cannot be taken for granted. More quiet revolutions have been occurring in India, China, and Latin America. Their implications for international businesses may be just as profound as the collapse of communism in Eastern Europe. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 29 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(10) The Changing World Order China continues to move progressively toward greater free market reforms. If what is occurring in China continues for two more decades, China may move from developing economy to industrial superpower status even more rapidly than Japan did. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 30 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Changing Demographics of the Global Economy(11) The Changing World Order Throughout most of Latin America debt and inflation are down; Governments are selling state-owned enterprises to private investors; FDI is welcomed and the region’s economies are growing; These changes have increased the attractiveness of Latin America, both as a market for exports and as a site for FDI. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 31 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Globalization Debate (1) Is the shift toward a more integrated and interdependent global economy a good thing? Anti-globalization arguments: Harmful effects on jobs and income Labor policies Environmental impact National sovereignty World’s poor Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 32 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Globalization Debate(2) Globalization, Jobs and Income Outsourcing of Canadian jobs to developing countries: fears of a long-term harmful effects on Canada’s well- being. (Example Gildan Activewear Inc. Montreal). Technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labour. The solution is not in limiting free trade and globalization, but in increasing society’s investment in education to reduce the supply of unskilled workers Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 33 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Globalization Debate(3) Globalization, Labour Policies A second source of concern is less developed countries lack adequate regulations to protect labour and the environment from abuse by the unscrupulous. Globalization critics often argue that adhering to labour and environmental regulations significantly increases the costs of manufacturing enterprises and puts them at a competitive disadvantage in the global marketplace Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 34 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Globalization Debate(4) Globalization and National Sovereignty Another concern is increasingly interdependent global economy shifts economic power away from national governments toward organizations such as WTO, EU and UN. The WTO is a favourite target of those who attack the headlong rush toward a global economy Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 35 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  The Globalization Debate(5) Globalization and the World’s Poor Critics of globalization argue that despite the supposed benefits associated with free trade and investment, the gap between the rich and poor is widening. While some of the world’s poorer nations are capable of rapid periods of economic, there is stagnation among the world’s poorest nations economies. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 36 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Managing in the Global Marketplace The task of managing an international business Differences between countries require that an international business vary its practices country by country; Cross-border transactions also require that money be converted from the firm’s home currency into a foreign currency and vice versa. Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 37 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Sustainability in Practice ADIDAS GROUP: APPROACH to SUSTAINABILITY and SUPPLY-CHAIN MANAGEMENT APPROACH to LABOUR STANDARDS What has been the result and benefit to Adidas Group? Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 38 PowerPoints by Associate Professor Frank Cotae, Mount Royal University  Implications for Business International Organizations – Open Environment for goods and services The North – South Divide The Role of Technology in International Trade Global Business Today 6th Edition ©2021 McGraw Hill Ryerson All rights reserved Chapter 1 Slide 39 PowerPoints by Associate Professor Frank Cotae, Mount Royal University