CHAPTER 1 GLOBALIZATION international sales; eliminate variations

International Business due to seasons

 Any commercial transaction that crosses the o Local Buyers’ Needs: monitor match
borders of two or more nations between products and market;
 Imports: goods and services purchased abroad sometimes requires small modifications
and brought into a country to suit tastes
 Exports: goods and services sold abroad and o Global Sustainability: development that
sent out of a country meets the needs of the present without
 Approached from diff perspectives: compromising the ability of future
o Businessman: source low-cost goods generations to meet their own needs;
o Economist: examine impact of redesigning and reimagining products
globalization Globalization of Production
o Anthropologist: influence on culture  Refers to the dispersal of production activities
 Forces companies to grow more competitive to help achieve cost-minimization or quality-
and face more competition due to lower maximization objectives
barriers to trade and investment  Sourcing key production inputs and services
Key Players in International Business  Benefits:
1. Multinational Corporation o Access Lower-Cost Workers
 Business that has direct investments o Access Technical Expertise
(marketing or manufacturing subsidiaries) o Access Production Inputs: access
in multiple countries resources unavailable or costly at home
2. Entrepreneurs and Small Businesses Forces Driving Globalization
 Born Global Firm: company that adopts a 1. Falling barriers to trade and investment
global perspective and engages in  General Agreement on Tariffs and Trade
international business from or near its (GATT)
inception o Treaty designed to promote free
o Become international competitors in trade by reducing tariffs and
less than 3 years nontariff barriers to international
o Innovative cultures and knowledge- trade
based capabilities o Tariffs: tax on traded goods
 Small firms benefit from tech that lowers o Nontariff barriers: limits on quantity
costs and difficulties of global  World Trade Organization (WTO)
communication (for sourcing and o Enforces rules of international trade
distribution)  Free flow of trade
Globalization  Help negotiate opening of
 Freer flow of goods, services, money, people markets and
and ideas across international borders  Settle trade disputes among
 Trend toward greater economic, cultural, members
political and technological interdependence  World Bank: provides financing for
among national institutions and economies national economic development efforts
 Denationalization: national boundaries  International Monetary Fund: regulates
becoming less relevant fixed exchange rates and to enforce the
 Different from internationalization: entities rules
cooperation across national boundaries o Promote international monetary
Globalization of Markets cooperation
 Convergence in buyer preferences in markets o Facilitate the expansion and
around the world balanced growth of international
trade
 Benefits: o Avoid competitive exchange
o Reduced Marketing Costs: standardizing devaluation
marketing activities (ex. change language o Make financial resources temporarily
per market) available to members
o Creates New Market Opportunities:  Regional Trade Agreements: NAFTA, EU,
bigger audiences (ex. online businesses) APEC; foster trade and boost cross-
o Levels Uneven Income Streams: border investments
supplement domestic sales with  Trade and National Output
 o Trade theory tells us that openness
to trade helps a nation produce a
greater amount of output
o Gross Domestic Product (GDP): value
of all goods and services produced by
a domestic economy over a one-year
period; excludes exports, imports
and international operations
o Gross National Product (GNP):
domestic and international activities
2. Technological Innovation
 Innovations in information tech and
transportation are making it easier, faster
and less costly to move data, goods and
equipment around the world
 E-business (e-commerce): use of
computer networks to purchase, sell or
exchange products, service customers
and collaborate with partners
 Email and Videoconferencing
 Internet
 Company Intranets and Extranets
 Advancements in Transportation
Technologies: GPS, RFID
Job and Wages
Against Globalization
 Eliminates jobs in developed nations
o Manufacturing jobs are done in
developing countries due to low
costs of wages
 Lower wages in developed nations
o Worker dislocation gradually lowers
wages
 Exploits workers in developing nations
o Forces workers to disguise
nationality (adopt accents)
o Companies have operations in places
where labor laws are less restrictive,
diminishing labor’s bargaining power
and labor laws internationally
For Globalization