Ch 1 book notes - Summary International Business: the Challenges of Globalization PDF

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Professor Carole Cangioni...

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ECO 305 Ch 1 notes Introduction: - International business - commercial transaction that crosses the borders of two or more nation - Imports - goods and services purchased abroad and brought into a country - Exports - goods and services sold abroad and sent out of a country 1.1 – Key Players in International Business - Multinational corporation (MNC) - business that has direct investments abroad in multiple countries - Born global firm - company that adopts a global perspective and engages in inter-national business from or near its inception 1.2 – What is globalization? - Globalization - trend toward greater economic, cultural, political, and technological interdependence among national institutions and economies - Globalization of markets – refers to the convergence in buyer preferences in markets around the world o Reduces marketing costs – standardizing certain marketing activities o Creates new market opportunities – online business o Levels uneven income streams – matching season to location o Local buyers’ needs – match firm’s products with markets o Global sustainability – social responsibility (recycle)  Sustainability – development that meets the needs of the present without compromising the ability of future generations to meet their own needs - Globalization of production – refers to the dispersal of production activities to locations that help a company achieve its cost-minimization or quality-maximization objectives for a good or service o Access lower-cost workers – reduce production costs by using low-wage workers o Access technical expertise – produce services abroad for tech knowledge o Access production inputs – allows access to resources unavailable elsewhere 1.3 – Forces Driving Globalization - Falling barriers to trade & investment  General Agreement on Tariffs & Trade (GATT) – treaty designed to promote free trade by reducing both tariffs & nontariff barriers to international trade o World Trade Organization (WTO) – international organization that enforces the rules of international trade  Help the free flow of trade  Help negotiate the further opening of marketing  Settle trade disputes among its members o Other international organizations  World Bank – agency created to provide financing for national economic development efforts  International Monetary Fund – agency created to regulate fixed exchange rate & to enforce the rules of the international monetary system o Regional Trade Agreements – ex. north American free trade agreement o Trade & National Output – boosted world trade

Gross Domestic Product – value of all goods & services produced by a domestic economy during a one-year period  Gross National Output – value of all goods & services produced by a country’s domestic & international activities during a one-year period  GDP or GNP per capita – nations GDP or GNP divided by its population - Technological Innovation  E-business – use of computer networks to purchase, sell, or exchange products; to service customers; & to collaborate with partners o Email & Videoconferencing – allows face-to-face interaction across nations o The Internet – contact managers in distant locations, marketing tool, eliminates intermediaries o Company Intranets & Extranets  Intranet - access to company data from personal computers  Extranet – gives distributors & suppliers access to a company’s database o Advancements in transportation technologies – shipping is more efficient, dependable, simple and safe. - Measuring Globalization o Ranks nations on economic variables o Large nations often don’t make it into higher ranks because they depend less on external trade & investment 1.4 – Debate about Jobs & Wages - Against Globalization o Eliminates manufacturing jobs in developed nations o Lowers wages in developed nations - causes worker dislocation that gradually lowers wages o Exploits workers in developing nations – international outsourcing exploit workers in low-wage nations - For Globalization o Increases wealth & efficiency in all nations – increases national product & raises per capita income o Generates labor market flexibility in developed nations – allows employees to change jobs easily with few negative effects o Advances on the economies of developing nations – elevates living standards - Summary of the Jobs & Wages Debate – are overall gains that accrue to national economies worth the lost livelihoods that individuals suffer 1.5 – Debate about Income Inequality - Inequality within Nations – contradictory evidence; developing nations can boost the incomes of their poorest residents - Inequality between Nations – one group of poor nations is closing the gap with rich economies, while a second group of poor countries is falling further behind; increasing personal incomes, extending life expectancies & improve education systems - Global Inequality – inequality has fallen, can forgive poor countries debt o Summary of the income inequality debate  Within – developing nations can boost incomes of their poorest people but embracing globalization  Between – nations open to world trade grow faster than rich nations do 1.6 – Debate about Culture, Sovereignty & the Environment 

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Globalization & Culture – homogenizes our world & destroys diversity, allows us all to profit from our differing circumstances & skills - Globalization & National Sovereignty  Sovereignty means that a nation state is autonomous, can freely select its government, cannot intervene in the affairs of other nations, can control movements across its borders and can enter into binding international agreements o Menace to Democracy? – erodes sovereignty & intrudes on local & state governments o Guardian of Democracy? – spreads democracy worldwide & sovereignty must be viewed form a long-term perspective - Globalization & the Environment – US firms tend to invest in countries with stricter environmental standards 1.7 – Developing Skills for your Career o Employability skills o Critical thinking o Business ethics & Social responsibility o Communication skills o Knowledge application & analysis - The Global Business Environment o The forces of globalization  Creates increasing competition  Technological innovation, increasing competition, falling trade o The international business environment  Influences how firms conduct their operations, causes flow of trade, investment & capital to grow  International monetary system, international trade theory, etc. o Many national business environments  Can cause collaboration or tension  Political economy & ethics, economic development of nations, etc. o International firm management  Anticipate events & forces that can affect operations  Developing & marketing products, analyzing international opportunities, etc. - The Road Ahead for International Business o Ch 2-4 – national business environments o Ch 5-10 – international business environment o Ch 11-16 – international business management...