Chapter 1 - Globalization -summary

The process of globalization affects markets and production.

The trend toward greater economic, cultural, political, and technological independence among national institutions and economies is called globalization. It is marked by "denationalization," and which national borders are becoming somewhat less relevant. It is affecting markets in several ways. Companies that sell global products can standardize aspects of their marketing activities to reduce costs. They are also able to explore international markets for their products if the home market is small or become saturated. Finally, makers of seasonal products can rely on global markets to level their income streams. Globalization also affects production. Firms take advantage of the globalization of production by assessing low-cost labor to make their goods more price competitive. They can also benefit by gaining access to technical know-how or natural resources that are either nonexistent or too expensive at home.

Two major forces causing increase to globalization.

The first main force behind increasing globalization is falling barriers to trade and investment. The world has made great strides in reducing trade barriers through institutions such as the General Agreement on Tariffs and Trade and the World Trade Organization -- an international organization with the power to enforce the rules of international trade. Smaller groups of nations are also beating together in regional trade agreements to reduce trade barriers. Technological innovation is also a main force behind globalization. Companies are more able than ever to monitor their global business activities with the use of e-mail, videoconferencing, intranets, and extranets. These devices increase the speed with which companies can manage their far-flung activities. Innovations in transportation technologies are also making the shipment of goods between nations more efficient and dependable.

The globalization debate.

Regarding jobs and wages, there is agreement that globalization causes dislocation and labor markets. The disagreement lies in that those supporting globalization believed overall gains of national economies are worth potential lost jobs for individuals. And the debate over labor and environmental regulation, labor unions and rich countries argue globalization causes a "race to the bottom" and labor and environmental regulation. Yet evidence tends not to support this argument.

Regarding income inequality, it appears developing nations can boost incomes of their poorest members of society by embracing globalization. Also, nations open to world trade and investment tend to grow faster than rich nations. Groups tend to agree that global poverty has fallen in recent decades. In terms of national sovereignty, globalization has helped to spread democracy worldwide, and has aided progress globally on many important issues. In the debate over Coulter, evidence suggests that the called jurors of developing nations are thriving, and that although globalization may promote convergence of political and economic ideologies, deeper elements of culture are not easily abandoned.

International business company profiles.

Almost any company can participate in international business. Thanks to the Internet and other technologies that permit them to surmount such obstacles as prohibitively high advertising and distribution costs, many small businesses have become increasingly active in international trade and investment. However, large multinational corporations (NMC's) conduct most international business transactions.

Multinationals dominate the international business news for two reasons:

1. they are highly visible because of their economic and political muscle
2. their mergers and acquisitions are often valued in the billions of dollars

Globalization has given rise to a new international entity, the born-global firm -- a company that takes a global perspective on its market and engages in international business from one year its inception. Born-global firms tend to be innovative and have knowledge-based capabilities.

The four main elements of the global business environment.

1. First, globalization is the dynamic force transforming our societies in commercial activities and causing increased competition for all firms.
2. Second, separate national business environments are composed of unique cultural, political, legal, and economic characteristics that define business activity within the nation's borders.
3. Third, the international business environment is where the actions of consumers, workers, companies, financial institutions, and governments from different nations converge.
4. Fourth, international business management differs from management of a purely domestic firm in nearly all aspects