International Business Exam 1 Study Guide
Globalization – a shift toward a more integrated and interdependent economy
Globalization of Markets – refers to the merging of historically distinct and separate national markets into one huge global marketplace; moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market
Converging tastes and preferences of consumers in different nations, helping create one global market
Rise of emerging markets
Ex: coca cola, mcdonalds, ikea, starbucks
Globalization of Production – trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quantity of factors of production
Sourcing goods and services from location around the globe to take advantage of national differences in cost and quality of factor production (labor, energy, land, capital)
Factors of production – inputs into the productive process of a firm, including land, management, land, technology, etc.
Concepts and trends of trade, FDI, and MNE – two macro factors underlie the trend toward greater globalization: 1) decline in barriers to the free flow of goods, services, and capital that has occurred since the end of WW1 2) technological change, dramatic development in communication, info processing, and transportation
FDI – (foreign direct investment) occurs when a firm invests resources in business activities outside its home country
MNE – any business that has productive activities in 2 or more countries; companies that are involved in FDI, are multinational enterprises
Drivers of Globalization
Technological change – telecommunication, the internet, transportation
Declining trade and investment barrier – GATT, WTO: removed restrictions and created rules, which resulted in fewer national FDI restrictions and more
Globalization of Markets – refers to the merging of historically distinct and separate national markets into one huge global marketplace; moving away from an economic system in which national markets are distinct entities, isolated by trade barriers and barriers of distance, time, and culture, and toward a system in which national markets are merging into one global market
Converging tastes and preferences of consumers in different nations, helping create one global market
Rise of emerging markets
Ex: coca cola, mcdonalds, ikea, starbucks
Globalization of Production – trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quantity of factors of production
Sourcing goods and services from location around the globe to take advantage of national differences in cost and quality of factor production (labor, energy, land, capital)
Factors of production – inputs into the productive process of a firm, including land, management, land, technology, etc.
Concepts and trends of trade, FDI, and MNE – two macro factors underlie the trend toward greater globalization: 1) decline in barriers to the free flow of goods, services, and capital that has occurred since the end of WW1 2) technological change, dramatic development in communication, info processing, and transportation
FDI – (foreign direct investment) occurs when a firm invests resources in business activities outside its home country
MNE – any business that has productive activities in 2 or more countries; companies that are involved in FDI, are multinational enterprises
Drivers of Globalization
Technological change – telecommunication, the internet, transportation
Declining trade and investment barrier – GATT, WTO: removed restrictions and created rules, which resulted in fewer national FDI restrictions and more