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    Chap 001 Fall 12

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    gfdsa12345
    International business offers opportunities and challenges. It provides companies access to new markets and consumers access to higher quality, lower cost products. However, it also raises issues regarding jobs, the environment, and national sovereignty. Supporters argue globalization increases economic growth but critics argue it can negatively impact domestic industries and workers. Overall, international business increases interdependence among nations but also requires management of risks.

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    Chap 001 Fall 12

    Uploaded by

    gfdsa12345
    69 views27 pages
    International business offers opportunities and challenges. It provides companies access to new markets and consumers access to higher quality, lower cost products. However, it also raises issues regarding jobs, the environment, and national sovereignty. Supporters argue globalization increases economic growth but critics argue it can negatively impact domestic industries and workers. Overall, international business increases interdependence among nations but also requires management of risks.

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    International business offers opportunities and challenges. It provides companies access to new markets and consumers access to higher quality, lower cost products. However, it also raises issues regarding jobs, the environment, and national sovereignty. Supporters argue globalization increases economic growth but critics argue it can negatively impact domestic industries and workers. Overall, international business increases interdependence among nations but also requires management of risks.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    69 views27 pages

    Chap 001 Fall 12

    Uploaded by

    gfdsa12345
    International business offers opportunities and challenges. It provides companies access to new markets and consumers access to higher quality, lower cost products. However, it also raises issues regarding jobs, the environment, and national sovereignty. Supporters argue globalization increases economic growth but critics argue it can negatively impact domestic industries and workers. Overall, international business increases interdependence among nations but also requires management of risks.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 27

    The Need for International Business

    Successful participation in international business

    improves quality of life for society and leads to a more peaceful world Students are likely to be involved in international business in their careers International business offers companies more new markets International business causes the flow of ideas, services, and capital across the world International business offers consumers higher quality products, more choices, and reduced prices through international competition 1-1

    International Business Defined


    International business consists of transactions that are

    devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations

    1-2

    Impact on Consumers
    As international business continues to grow, consumers benefit from greater choices, higher quality, and lower costs

    1-3

    Chapter 1

    Globalization

    What Is Globalization?
    The world is moving away from self-contained

    national economies toward an interdependent, integrated global economic system Globalization refers to the shift toward a more integrated and interdependent world economy

    1-5

    What Is The Globalization of Markets?


    Historically distinct and separate national markets are merging It no longer makes sense to talk about the German market or the American market Instead, there is the global market
    falling trade barriers make it easier to sell globally consumers tastes and preferences are converging on

    some global norm firms promote the trend by offering the same basic products worldwide
    1-6

    What Is The Globalization of Production?


    Firms source goods and services from locations around

    the globe to capitalize on national differences in the cost and quality of factors of production like land, labor, and capital Companies can
    lower their overall cost structure improve the quality or functionality of their product

    offering

    1-7

    Why Do We Need Global Institutions?


    Institutions
    help manage, regulate, and police the global

    marketplace promote the establishment of multinational treaties to govern the global business system

    Examples include

    the General Agreement on Tariffs and Trade (GATT) the World Trade Organization (WTO) the International Monetary Fund (IMF) the World Bank the United Nations (UN)
    1-8

    What Do Global Institutions Do?


    The World Trade Organization (like its predecessor GATT)
    polices the world trading system makes sure that nation-states adhere to the rules laid down in trade treaties promotes lower barriers to trade and investment

    The International Monetary Fund (1944) maintains order in the

    international monetary system The World Bank (1944) promotes economic development The United Nations (1945)

    maintains international peace and security develops friendly relations among nations cooperates in solving international problems and in promoting respect for

    human rights is a center for harmonizing the actions of nations

    1-9

    What Is Driving Globalization?


    The decline in barriers to the free flow of goods, services, and capital that has occurred since the end of World War II
    since 1950, average tariffs have fallen significantly and

    are now at 4 percent countries have opened their markets to FDI

    Technological change
    microprocessors and telecommunications the Internet and World Wide Web transportation technology
    1-10

    Declining Trade And Investment Barriers


    Average Tariff Rates on Manufactured Products as Percent of Value

    1-11

    What Does Globalization Mean For Firms?


    Lower barriers to trade and investment mean firms can
    view the world, rather than a single country, as their market base production in the optimal location for that activity

    Technological change means


    lower transportation costs - firms can disperse production to

    economical, geographically separate locations lower information processing and communication costs - firms can create and manage globally dispersed production systems low cost global communications networks - help create an electronic global marketplace low-cost transportation - help create global markets global communication networks and global media - create a worldwide culture, and a global market for consumer products
    1-12

    The Changing Demographics Of The Global Economy

    1. 2. 3. 4.

    There has been a drastic change in the demographics of the world economy in the last 30 years Four trends are important: the Changing World Output and World Trade Picture the Changing Foreign Direct Investment Picture the Changing Nature of the Multinational Enterprise the Changing World Order
    1-13

    How Has World Output And World Trade Changed?


    In 1960, the United States accounted for over 40% of world economic activity By 2008, the United States accounted for just over 20% of world economic activity A similar trend occurred in other developed countries The share of world output accounted for by developing nations is rising and is expected to account for more than 60% of world economic activity by 2020
    1-14

    How Has World Output And World Trade Changed?


    The Changing Demographics of World GDP and Trade

    1-15

    How Has Foreign Direct Investment Changed Over Time?


    In the 1960s, U.S. firms accounted for about twothirds of worldwide FDI flows Today, the United States accounts for less than one-fifth of worldwide FDI flows Other developed countries have followed a similar pattern In contrast, the share of FDI accounted for by developing countries has risen Developing countries, especially China, have also become popular destinations for FDI
    1-16

    How Has Foreign Direct Investment Changed Over Time?


    Percentage Share of Total FDI Stock 1980-2007

    1-17

    How Has Foreign Direct Investment Changed Over Time?


    FDI Inflows 1988-2008

    1-18

    What Is A Multinational Enterprise?


    A multinational enterprise (MNE) is any business

    that has productive activities in two or more countries Since the 1960s, there has been a rise in non-U.S. multinationals, and a growth of mini-multinationals

    1-19

    The Changing World Order


    Many former Communist nations in Europe and Asia are now committed to democratic politics and free market economies
    so, there are new opportunities for international

    businesses but, there are signs of growing unrest and totalitarian tendencies in some countries like Russia

    China and Latin America are also moving toward greater free market reforms
    between 1983 and 2008, FDI in China increased from

    less than $2 billion to $90 billion annually but, China also has many new strong companies that could threaten Western firms

    1-20

    How Will The Global Economy Of The 21st Century Look?


    The world is moving toward a more global economic system
    But globalization is not inevitable
    there are signs of a retreat from liberal economic

    ideology in Russia

    Globalization brings risks


    the financial crisis that swept through South East Asia in

    the late 1990s the recent financial crisis that started in the U.S. in 2008, and moved around the world
    1-21

    Is An Interdependent Global Economy A Good Thing?


    Supporters believe that increased trade and crossborder investment mean
    lower prices for goods and services greater economic growth higher consumer income, and more jobs

    Critics worry that globalization will cause


    job losses environmental degradation the cultural imperialism of global media and MNEs

    Anti-globalization protesters now regularly show up at most major meetings of global institutions
    1-22

    How Does Globalization Affect Jobs And Income?


    Critics argue that falling barriers to trade are

    destroying manufacturing jobs in advanced countries Supporters contend that the benefits of this trend outweigh the costs
    countries will specialize in what they do most efficiently

    and trade for other goodsand all countries will benefit

    1-23

    How Does Globalization Affect Labor Policies And The Environment?


    Critics argue that firms avoid costly efforts to adhere to labor and environmental regulations by moving production to countries where such regulations do not exist, or are not enforced
    Supporters claim that tougher environmental and labor standards are associated with economic progress
    as countries get richer from free trade, they implement

    tougher environmental and labor regulations


    1-24

    How Does Globalization Affect National Sovereignty?


    Is todays interdependent global economy shifting economic power away from national governments toward supranational organizations like the WTO, the EU, and the UN? Critics argue that unelected bureaucrats have the power to impose policies on the democratically elected governments of nation-states Supporters claim that the power of these organizations is limited to what nation-states agree to grant
    the power of the organizations lies in their ability to get

    countries to agree to follow certain actions

    1-25

    How Is Globalization Affecting The Worlds Poor?


    Is the gap between rich nations and poor nations is getting wider? Critics believe that if globalization was beneficial there should not be a divergence between rich and poor nations Supporters claim that the best way for the poor nations to improve their situation is to
    reduce barriers to trade and investment implement economic policies based on free market

    economies receive debt forgiveness for debts incurred under totalitarian regimes

    1-26

    How Does The Global Marketplace Affect Managers?


    Managing an international business differs from managing a domestic business because
    countries are different the range of problems confronted in an international

    business is wider and the problems more complex than those in a domestic business firms have to find ways to work within the limits imposed by government intervention in the international trade and investment system international transactions involve converting money into different currencies
    1-27

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