Chapter One
What is meant by the terms globalization
Drivers of globalization
The changing nature of the global economy
Debate over the impact of globalization
Globalization creating opportunities and
challenges for business managers.
What is it?
Is it affecting me and you?
Over $4 Trillion in foreign exchange transactions
are made every day.
-$15 Trillion of goods and 3.7 trillion of services
are sold across national borders.
And more…….
The shift toward a more integrated and
interdependent world economy.
Globalization has several facets:
1- the globalization of markets
2- the globalization of production.
1-The globalization of markets
• Globalization of Markets refers to the merging
of distinct and separate national markets into
one huge global marketplace.
• Check your city!
2- The Globalization of Production
• Globalization of Production refers to sourcing
goods and services from locations around the
globe to take advantage of national differences in
the cost and quality of factors of production such
as labor, energy, land, and capital.
• Check the case of Boeing 777- suppliers from
Japan, Singapore, Italy, 30% of the 777 is built by
foreign companies. We call this outsourcing.
Global institutions
• GATT: General Agreement on Tariffs and Trade
• The WTO: The World Trade Organization
• International Monetary Fund and the World
• G20- finance ministers.
Drivers of Globalization
1- declining trade and investment barriers
2- the role of technology
3- the role of telecommunication- the internet
and transportation technology.
The Globalization Debate
Are you with or against Globalization?
- Globalization, Jobs, and Income.
- Globalization, Labor policies and the
- Globalization and National Sovereignty
- Globalization and the Poor.
Managing the Global Market Place
Quick questions:
1- the study of IB is not different from the study
of domestic business. Do you agree.
2- how do you see IB in KSA?
3- is SABIC an International business?
Chapter one
Summary of chapter
• You need to have a general knowledge of the
• Define globalization
• Globalization of markets and production
• Drivers of globalization
• Declining trade and investment barriers
• Technology
• Telecommunications
Summary of chapter
• The internet
• Transportation efficiency
• Implications for globalization of production
and markets
• The globalization debate in terms of Jobs,
income, the environment culture and the
Managing in global market place
• First – managers need to understand that the task of
managing a local business is different than managing an
international business. The simple fact is that countries are
• Different in what?
• Culture
• Political system
• Democratic versus bureaucratic systems
• Legal
• Economic development
• So managers must customize their policies with different
countries according to the above differences.
Managing in global market place
• Also the over all complexity of managing an
international business is an added challenge.
• Also the manager must search for efficiency in
• Ethical
• Environmental standards
• And many questions must be asked with
regard to exporting, and licensing and other
Managing in global market place
• Watch currency exchange rates.
• Overall, an international business id different for
four reasons:
• Countries are different
• Confronting complex problems
• Work within the limits imposed by governments
in the international trade and investment
• Converting money into different currencies.