International Business: The Challenges of Globalization Tenth Edition PDF

International Business: The Challenges of Globalization Tenth Edition Chapter 1 Globalization Today Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Learn...

International Business: The Challenges of Globalization Tenth Edition Chapter 1 Globalization Today Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Learning Objectives 1.1 Identify the types of companies active in international business. 1.2 Explain globalization and the significance of global markets and production. 1.3 Detail the forces that drive globalization. 1.4 Summarize the main arguments in the debate about globalization. 1.5 Identify the skills this course will help you develop for your career. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Apple’s Global Impact Supports millions of apps Globalization allows Apple to: – Produce and sell worldwide with little or no modification – Reduce production and marketing costs – Support a global brand strategy Challenges of globalization David Grossman/Alamy Stock Photo – Rising nationalism – Trade wars Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Introduction (1 of 2) International Business Commercial transaction that crosses the borders of two or more nations Imports Goods and services purchased abroad and brought into a country Exports Goods and services sold abroad and sent out of a country Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Introduction (2 of 2) International business reflects the cultural, political, economic, and legal systems of countries. Geopolitical tension and cooperation creates challenges and opportunities. – U.S.-China tensions – Supply chain vulnerabilities – COVID-19 disruptions The 21st century digital economy requires new technical and social skills. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (1 of 6) Jenson/Shutterstock Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Key Players in International Business (1 of 2) Large companies from the wealthiest nations Firms from emerging markets Small and medium-sized companies Multinational corporation (MNC) A business that has direct investments abroad in multiple countries. Foreign direct investment (FDI) The purchase of physical assets or a significant amount of ownership in another country to gain a measure of management control. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.1 Comparing the World’s Largest Companies with Selected Countries Source: Based on data obtained from “Fortune Global 500: The 500 Largest Corporations in the World,” ( fortune.com/global500/ ), August/September 2021; World Bank data set ( data.worldbank.org ). Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Key Players in International Business (2 of 2) Born global firm A company with a global perspective that engages in international business from inception and quickly achieves a competitive advantage. – Born global firms have innovative and knowledge- based organizational capabilities. – Examples: Airbnb, Uber, Spotify, TikTok Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 1.1 1. How do you define the terms international business, imports, and exports? 2. What is a multinational corporation, and why is it significant to our study of international business? 3. Why might a company be referred to as a “born global firm”? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (1 of 6) Globalization The trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies. – Characterized by denationalization – Different from internationalization Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.2: Home Country of the World’s Largest Corporations Source: Based on data obtained from “Fortune Global 500: The 500 Largest Corporations in the World” http://www.fortune.com/global500 ), August/September 2020 ( Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (2 of 6) Gross domestic product (GDP) The value of all goods and services produced by a domestic economy during a one-year period. Gross national product (GNP) The value of all goods and services produced by a country’s domestic and international activities during a one-year period. GDP or GNP per capita A nation’s GDP or GNP divided by its population. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (3 of 6) First age of globalization (mid-1800s to the 1920s) – Labor was highly mobile – Trade and capital flowed relatively freely – Large cargo ships connected markets for raw inputs and for finished exports – Transatlantic cable offered faster communications – Countries traded about 10% of their total annual output – Era ended with the start of the First World War Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.3: World Trade as a Percentage of GDP Source: Based on data obtained from World Development Indicators Database (Washington, D.C.: The World Bank), www.worldbank.org ), various years. ( Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (4 of 6) Second age of globalization (1989 to present) – Fall of the Berlin Wall and rejection of communism by former Soviet states – Advances in technology: communication satellites, fiber optics, microchips, and the internet – Growth of regional economic blocs: EU, NAFTA (now the USMCA) – China joined the WTO and became the world’s factory floor – Global supply chains – U.S.-China trade dispute hampered trade flows – COVID-19 disruptions Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Globalization Score of Countries Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (5 of 6) Globalization of Markets The convergence in buyer preferences in markets around the world. Benefits of Globalization of Markets – Reduces marketing costs – Creates new market opportunities – Levels uneven income streams – Local buyers’ needs – Global sustainability Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (2 of 6) Chonlachai/Shutterstock Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved What is Globalization? (6 of 6) Globalization of Production The dispersal of production activities worldwide to minimize costs or maximize quality. Benefits of Globalization of Production – Access lower-cost workers – Access technical expertise – Access production inputs Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 1.2 1. How does globalization influence the institutions and economies of nations? 2. What has been the evolution of globalization and what is its recent history? 3. What benefits might a company obtain from the globalization of markets? 4. For what reasons might a company wish to globalize its production activities? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Drivers of Globalization: Falling Barriers to Trade and Investment (1 of 2) General Agreement on Tariffs and Trade (GATT) A treaty designed to promote free trade by reducing tariffs and nontariff barriers to international trade. – Tariffs are essentially taxes levied on traded goods. – Nontariff barriers are limits on the quantity of an imported product. World Trade Organization (WTO) The international organization that enforces the rules of international trade. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Drivers of Globalization: Falling Barriers to Trade and Investment (2 of 2) Regional Trade Agreements – United States-Mexico-Canada Agreement (USMCA) – European Union (EU) – Asia Pacific Economic Cooperation (APEC) Other International Organizations – The World Bank ▪ An agency created to provide financing for national economic development efforts. – The International Monetary Fund ▪ An agency created to regulate fixed exchange rates and to enforce the rules of the international monetary system. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (3 of 6) Sunshine Seeds/Shutterstock Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Drivers of Globalization: E-Commerce E-commerce – The use of computer networks to purchase, sell, or exchange products; to service customers; and to collaborate with partners. The Internet – The Internet of Things (IoT) ▪ All devices and equipment that are readable, recognizable, locatable, addressable, and/or controllable via the internet. Company Intranets and Extranets Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.4: World Internet Users Source: Based on data obtained from Internet World Stats www.internetworldstats.com ). ( Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Drivers of Globalization: Digital Transformation Digitization The process of changing information from analog to digital form for use by computers and other information technologies. Digitalization The use of digital data and technology to develop new business operations, strategies, or business models. Digital transformation Fundamental change in which digital technologies penetrate all areas of operations, strategy, and culture to produce customer- focused competitive advantage. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Drivers of Globalization: Communication and Transportation Communication – Videoconferencing Transportation – Innovations in shipping – GPS and RFID technology – Eco-friendly policies Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (4 of 6) Andriy Popov/123R F Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 1.3 1. How have falling barriers to trade and investment encouraged globalization? 2. What role has e-commerce, the internet, and digitization played in propelling globalization? 3. How have advancements in communication and transportation technologies affected globalization? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: Jobs and Wages (1 of 2) Globalization Harms Jobs and Wages Eliminates manufacturing jobs in developed nations Causes worker dislocation that lowers wages Exploits workers in lower-wage nations Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.5: Comparing Salaries of Information Technology Workers Source: Based on data obtained from the International Average Salary Income Database (www.worldsalaries.org ). Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: Jobs and Wages (2 of 2) Globalization Improves Jobs and Wages Increases wealth and efficiency in all nations Generates labor market flexibility in developed nations Advances the economies of developing nations and raises living standards Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: Income Inequality Inequality Within Nations Wage gap between white-collar and blue-collar occupations in rich nations Inequality Between Nations Widening the gap in average incomes between rich and poor nations Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (5 of 6) Fabian Plock/Shutterstock Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: Culture For Globalization Allows us to profit from our differing circumstances and skills Against Globalization Homogenizes our world and destroys our rich diversity of cultures Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: National Sovereignty Menace to Democracy? Empowers supranational institutions at the expense of national governments Guardian of Democracy? Globalization spreads democracy worldwide Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved The Globalization Debate: The Environment For Globalization Most international firms today support reasonable environmental laws Against Globalization “Race to the Bottom” Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 1.4 1. How would you summarize the debate about globalization’s impact on jobs and wages? 2. What does the evidence tell us about globalization’s effect on income inequality within and between nations? 3. What are the main arguments surrounding the debate about globalization’s impact on cultures? 4. What do supporters and opponents of globalization argue regarding national sovereignty and the environment? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Workplace Skills Employability skills this course will help you develop: Application of knowledge Reflective (critical) thinking – Analytical thinking Communication skills Ethical understanding and social responsibility Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Photo and Discussion Question (6 of 6) Rawpixel.com/Shutterstock Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Figure 1.6 The Global Business Environment Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Quick Study 1.5 1. Why are certain workplace skills becoming increasingly important? 2. What are some employability skills this course will help you develop for your career? 3. How would you describe the Global Business Environment model used in this text? Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved