Chapter 1: Globalization
Global Bus s Today 7e ine s by Charles W.L. Hill
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapte 1 r Globalization
1-2
Introduction
In the world economy today, we see
fewer self-contained national economies with high barriers to cross-border trade and investment
a more integrated global economic system with lower barriers to trade and investment
over $4 trillion in foreign exchange transactions daily
over $12 million of goods and $3.3 trillion of services being sold across national borders
the establishment of international institutions
1-3
What Is Globalization?
Question: What is globalization?
Answer:
Globalization refers to the trend towards a more integrated global economic system
Two key facets of globalization are:
the globalization of markets
the globalization of production
1-4
The Globalization of Markets
Globalization of markets - the merging of historically distinct and separate national markets into one huge global marketplace
In many markets today, the tastes and preferences of consumers in different nations are converging upon some global norm
Coca Cola, Starbucks, Sony PlayStation, and
McDonald’s hamburgers, IKEA furniture
1-5
The Globalization of Production
Globalization of production - the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production
(labor energy, land, and capital)
Goal: lower overall cost structure or improve the quality or functionality of their product and gain competitive advantage
Boeing and Vizio
1-6
The Emergence of Global Institutions
Global institutions
manage, regulate, and police the global market place
promote the establishment of multinational treaties to govern the global business system
the World Trade Organization (WTO) - polices world trading system and ensures nations
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapte 1 r Globalization
1-2
Introduction
In the world economy today, we see
fewer self-contained national economies with high barriers to cross-border trade and investment
a more integrated global economic system with lower barriers to trade and investment
over $4 trillion in foreign exchange transactions daily
over $12 million of goods and $3.3 trillion of services being sold across national borders
the establishment of international institutions
1-3
What Is Globalization?
Question: What is globalization?
Answer:
Globalization refers to the trend towards a more integrated global economic system
Two key facets of globalization are:
the globalization of markets
the globalization of production
1-4
The Globalization of Markets
Globalization of markets - the merging of historically distinct and separate national markets into one huge global marketplace
In many markets today, the tastes and preferences of consumers in different nations are converging upon some global norm
Coca Cola, Starbucks, Sony PlayStation, and
McDonald’s hamburgers, IKEA furniture
1-5
The Globalization of Production
Globalization of production - the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production
(labor energy, land, and capital)
Goal: lower overall cost structure or improve the quality or functionality of their product and gain competitive advantage
Boeing and Vizio
1-6
The Emergence of Global Institutions
Global institutions
manage, regulate, and police the global market place
promote the establishment of multinational treaties to govern the global business system
the World Trade Organization (WTO) - polices world trading system and ensures nations