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Similaire à International Business_Chapter 1_Globalization_Charles W. Hill
Similaire à International Business_Chapter 1_Globalization_Charles W. Hill (20)
International Business_Chapter 1_Globalization_Charles W. Hill
- 3. Globalization: Chapter Objectives
• Globalization
– What is it? What are its key causes?
– Why is it expanding rapidly?
– What is its impact on: jobs, incomes, labor policies,
environmental policies, national sovereignty?
– How does it affect an international business manager’s
opportunities and challenges?
• What is the impact on the world economy of
– Foreign direct investment flows
– Country economic growth rate differences
– Multinational corporations’ growth/size
McGraw-Hill/Irwin
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- 4. Slide
1-1
Globalization:
• World Economy becoming more integrated and
interdependent
– Accelerating rate of change of this trend
• National economies less isolated due to:
–
–
–
–
–
Lower cross-border trade and investment barriers
“Smaller” geographic and time (zones) distance
Fewer national government regulations
Less idiosyncratic business systems
Lower impact of national culture differences
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 5. Slide
1-2
Globalization of Markets
• Historically distinct and separate markets are
merging into a huge global marketplace
– Mostly not consumer product markets
– Mostly industrial products
– Tastes and preferences of consumers converging (??)
• MNCs creating global marketplace?
• MNCs’ foreign operations becoming more
vulnerable to competition in their home markets
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 6. Slide
1-3
Globalization of Production
• Individual MNCs disperse different parts
of their operations to narrow set of
locations around the world because of:
– National advantages in factors of production
key to the “where to produce?” decision
• Labor, land, capital, energy, expertise
– Global web of suppliers
– Stake of foreign governments in MNC
operations
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 7. Slide
1-4
“Drivers” of Globalization:
Declining Trade and Investment Barriers
• GATT, WTO; Removal of FDI
restrictions/barriers
• Average Tariff Rates on Manufactured
Products
(% value)
•
•
•
•
•
•
•
•
McGraw-Hill/Irwin
France
Germany
Italy
Japan
Holland
Sweden
Britain
USA
1913
21
20
18
30
5
20
–
21
1950
18
26
25
–
11
9
23
18
1990
5.9
5.9
5.9
5.3
5.9
4.4
5.9
5.9
2000
3.9
3.9
3.9
3.9
3.9
3.9
3.9
3.9
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 8. Slide
1-5
More evidence of Globalization
• World trade increased about 20x since 1950 while
• Global production has increased about 6.5x
• Between ’90 and ’00 FDI increased 5x, trade by
2x and world output by 0.2x
• By 2000:
– 60,000 parent companies operated away from home
markets through 820,000 subsidiaries/affiliates
– Produced US$14 trillion in global sales, twice the value
of global exports
– US, Japanese, Western European companies the major
investors in Europe, Asia, and North America
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 9. Slide
1-6
Technological Change and
Globalization
• Globalization of markets and production
– the result of lowering of trade barriers
– enabled by technological change
• Telecommunications & microprocessors
– High power/low cost computing
– Increase in information processing capacity
• The internet and the world-wide web
• Transportation technology
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 10. World Output and Trade
% Share
of World:
USA
Japan
Germany
France
UK
Italy
Canada
China
S. Korea
McGraw-Hill/Irwin
Output
’63
40.3
5.5
9.7
6.3
6.5
3.4
3.0
n.a.
n.a.
Output Exports
’00
’98
27
12.7
14.2
7.3
7.3
10
5.2
5.7
4.1
4.5
4.1
4.5
2.0
4.0
3.2
3.4
1.4
2.5
Exports
’01
11.9
6.6
9.2
5.2
4.4
3.9
4.3
4.3
2.4
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 11. Slide
1-8
Globalization and the MNE
• A multinational enterprise (MNE) is any
business that has productive activities in two or
more countries
• The national heritage of the largest MNCs
United States
Japan
United Kingdom
France
Germany
1976
45%
9
18.8
7.3
8.1
1990
31.5%
12
16.8
10.4
8.9
1997
32.4%
15.7
6.6
9.8
12.7
2000
26%
17
8
13
12
• “Mini-multinationals” now a factor in the world
economy
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 12. Slide
1-9
Globalization: Does it cause
Prosperity or Impoverishment?
• Impact of barrier removal on jobs and incomes
– Do jobs move away from wealthy advanced
economies in search of lower wage rates?
• Impact of trade liberalization on labor policies
and the environment
– Do manufacturing facilities move to developing
countries with weaker labor laws and environmental
protection?
• Its impact on national sovereignty
– WTO, EU, UN: supplanting national governments?
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
- 13. Slide
1-10
Managing the Global Marketplace
• An international business is any firm that engages
in international trade or investment
• An MNE engages in international investment over
which it has managerial control
• International business involves managing across:
– Differences in cultures, political, legal and economic
systems and levels of economic development
– Such differences endure in spite of globalization trends
• International managers confronted with a greater
range of complexity
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.