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    Chap 1

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    Chen Qing
    This chapter examines the implications of globalization for countries, industries, firms, and communities. It also examines the major trends in global and regional integration. International management involves Adapting management practices to different economic, political, and cultural environments.

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    Chap 1

    Uploaded by

    Chen Qing
    49 views36 pages
    This chapter examines the implications of globalization for countries, industries, firms, and communities. It also examines the major trends in global and regional integration. International management involves Adapting management practices to different economic, political, and cultural environments.

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    Chap1

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    This chapter examines the implications of globalization for countries, industries, firms, and communities. It also examines the major trends in global and regional integration. International management involves Adapting management practices to different economic, political, and cultural environments.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    49 views36 pages

    Chap 1

    Uploaded by

    Chen Qing
    This chapter examines the implications of globalization for countries, industries, firms, and communities. It also examines the major trends in global and regional integration. International management involves Adapting management practices to different economic, political, and cultural environments.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 36

    Chapter One

    Globalization and International Linkages

    McGraw-Hill/Irwin

    Copyright 2012 by The McGraw-Hill Companies, Inc. All Rights Reserved.

    Globalization and International Linkages


    The specific objectives of this chapter are to 1. ASSESS the implications of globalization for countries, industries, firms, and communities. 2. REVIEW the major trends in global and regional integration. 3. EXAMINE the changing balance of global economic power and trade and investment flows among countries. 4. ANALYZE the major economic systems and recent developments among countries that reflect those systems.
    1-3

    International Management
    International management involves
    Applying management concepts and techniques in a multinational environment and Adapting management practices to different economic, political, and cultural environments.

    Multinational corporation (MNC)


    Operations in more than one country International sales Nationality mix of managers and owners
    1-4

    The Worlds Top Nonfinancial MNCs


    Ranked by Foreign Assets, 2007

    1-5

    The Worlds Top Nonfinancial MNCs from Developing Countries


    Ranked by Foreign Assets, 2007

    1-6

    Globalization and Internationalization


    Globalization
    Process of social, political, economic, cultural, and technological integration among countries around the world.

    Hastened by
    Offshoring Process by which companies undertake some activities at offshore locations instead of their countries of origin. Outsourcing Subcontracting or contracting out of activities to external organizations that had previously been performed by the firm.
    1-7

    Globalization: Pros and Cons


    Benefits of Globalization
    Wealth Jobs Technology Lower prices

    Criticisms of Globalization
    off-shoring of business service jobs to lower-wage countries growing trade deficits slow wage growth environmental and social impacts
    1-8

    Global and Regional Integration


    Global Agreements
    World Trade Organization (WTO) General Agreement on Tariffs and Trade (GATT)

    Regional Agreements
    North American Free Trade Agreement (NAFTA) U.S.-Central American Free Trade Agreement (CAFTA) European Union (EU) Association of Southeast Asian Nations (ASEAN) Free Trade Agreement of the Americas (FTAA)
    1-9

    International Economic Power in the Global Economy


    Shifting landscape due to
    Economic integration Economic potential of emerging markets BRIC countries (Brazil, Russia, India, and China) could be among the four most dominant economies by 2050

    1-10

    The Worlds Largest Economies 2005 and 2020


    (Projected) Measured by GDP at Market Exchange Rates

    1-11

    The Worlds Largest Economies 2005 and 2020


    (Projected)
    Measured by GDP at Purchasing Power Parity

    1-12

    Changing Demographics: Developing Countries on the Rise


    (ranked by size)

    1-13

    Trends in Trade and International Investments


    International Trade
    In 2009 merchandise and commercial services exports declined

    Foreign direct investment (FDI)


    Investment in property, plant, or equipment in another country Growing at healthy rate Outpacing domestic growth in most countries Declined in 2009 due to the global recession

    1-14

    World Merchandise Trade by Region and Selected Country, 2009


    (in U.S.$ billions or percent)

    1-15

    World Foreign Direct Investment Inflows


    (in U.S.$ millions)

    1-16

    World Foreign Direct Investment Inflows


    (in U.S.$ millions)

    1-17

    Global Economic Systems


    Market Economy Command Economy Mixed Economy

    1-18

    Economic Performance by Major World Region


    Established Economies
    North America European Union Japan

    Emerging Economies
    Central and Eastern Europe China Other Emerging Markets of Asia India

    Developing Economies on the Verge


    South America Middle East and Central Asia Africa

    1-19

    Economic Performance Established Economies


    North America
    One of the four largest trading blocs in the world Combined purchasing power of U.S., Canada and Mexico approaches $12 trillion Free-market-based economy is attractive to private firms

    United States
    Foreign MNCs find U.S. a lucrative expansion market Foreign firms welcomed as investors in U.S. market U.S. firms hold market dominance in many European markets; gaining market share in Asia
    1-20

    Economic Performance Established Economies


    Canada
    U.S.s largest trading partner Most of the largest foreign-owned Canadian companies are totally or heavily U.S.-owned Legal and business environment in Canada is similar to that in U.S.

    Mexico
    Strongest Latin American economy Very strong maquiladora industry Trade with both Europe and Asia has increased Now competitive with Asia for the U.S. market
    1-21

    Economic Performance Established Economies


    European Union
    Ultimate objective
    Eliminate all trade barriers among member countries Emergence of the EU as an operational economic union
    A unified Europe could become the largest economic market in terms of purchasing power in the world

    Foreign MNCs trying to gain foothold in EU


    Acquisitions, alliances, cooperative R&D efforts

    Economic linkages between the EU and newly emerging Central and Eastern European countries
    Challenge is to absorb former communist bloc countries

    Financial crises in Greece and Ireland putting pressure on the euro


    1-22

    Economic Performance

    Established Economies
    Japan
    Huge economic success in 1970s and 1980s Ministry of International Trade and Industry (MITI) Keiretsus
    Vertically integrated industries Holdings provide assistance needed in providing goods and services to end users

    Decade long recession in 1990s


    More competition from emerging economies Poor management decisions

    Remains a formidable competitor in the Pacific Rim, 1-23 North America, and Europe

    Economic Performance Emerging Economies


    Central and Eastern Europe Russia
    Dismantling of price controls and privatization Membership in International Monetary Fund (IMF) controlling inflation Crime and political uncertainty

    Czech Republic, Hungary, Poland


    Privatization Inflation
    Political uncertainty
    1-24

    Economic Performance Emerging Economies


    China
    Real economic growth of 12 percent in 2007, 9 percent in 2008, and 11.5 percent in 2009 Savings glut in corporate sector Vast developmental needs Unemployment concerns Attractive to investors despite political risk Product pirating is a major problem Currency value Government policies favor domestic firms
    1-25

    Economic Performance Emerging Economies


    South Korea
    Chaebols Very large family-held conglomerates Solid economy, moderate growth and inflation, low unemployment

    Hong Kong
    Part of Peoples Republic of China Uncertainty about the role the Chinese government

    1-26

    Economic Performance Emerging Economies


    Singapore
    Success story Leader and financial center for region

    Taiwan
    Progressed from labor-intensive economy to one dominated by technologically sophisticated industries
    banking, electricity generation, petroleum refining and computers

    1-27

    Economic Performance Emerging Economies


    Thailand, Malaysia, Indonesia
    Large population base Inexpensive labor Considerable natural resources Attractive to outside investors

    1-28

    Economic Performance Emerging Economies


    India
    Large population Recent trend of locating software and high valueadded services to this country boosting middle- and upper-class market for goods and services Attractive to U.S. and British investors
    well educated, English speaking, technologically sophisticated workers

    1-29

    Economic Performance Developing Economies on the Verge


    South America
    Hampered by foreign debt and severe inflation But, intercountry trade is increasing
    Countries looking to do business with U.S.

    Brazil
    Economy is now flourishing and attracting investment from MNCs
    Privatization and stable government

    1-30

    Economic Performance Developing Economies on the Verge


    Chile
    Uncertain future, but helped by trade agreements

    Argentina
    Abundant natural resources Economic problems persist

    1-31

    Economic Performance Developing Economies on the Verge


    Middle East and Central Asia
    Large oil reserves Highly unstable geopolitical and religious forces Plagued by continuing economic problems

    1-32

    Economic Performance Developing Economies on the Verge


    Africa Considerable natural resources African nations remain very poor and undeveloped International trade is not a major sources of income Populace divided into 3,000 tribes that speak 1,000 languages and dialects Major political instability Poverty, starvation, illiteracy, corruption, overcrowding among many social problems negatively affecting economic sector
    1-33

    Worlds Most Competitive Nations, 2010

    1-34

    Market Potential Indicators Ranking for Emerging Markets, 2009

    1-35

    Review and Discuss


    1. How has globalization affected different world regions? What are some of the benefits and costs of globalization for different sectors of society? How has NAFTA affected the economies of North America and the EU affected Europe? What importance do these economic pacts have for international managers in North America, Europe and Asia? Why would MNCs be interested in South America, India, the Middle East, Central Asia, and Africa, the less developed and emerging countries of the world?

    2.

    3.

    1-36

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