Globalization Chapter One Globalization • • • • • 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. Globalization What is it? Is it affecting me and you? How? 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……. Globalization 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 Bank. • 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 environment - 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 followings: • 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 poor. 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. • 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 resources • Ethical • Environmental standards • And many questions must be asked with regard to exporting, and licensing and other concerns 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 systems. • Converting money into different currencies.