Emergence of the Globally Integrated Business World

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Globalization

Learning objectives

• Understand what is meant by the term globalization.

• Be familiar with the main drivers of globalization.

• Appreciate the changing nature of the global economy.

• Understand the major arguments in the debate over the impact of globalization.

• Appreciate how the process of globalization is creating opportunities and challenges for business managers.

This chapter introduces the emergence of the globally integrated business world. Globalization has reduced the traditional barriers to cross-border trade and investment (distance, time zones, language, differences in government regulations, culture, business systems).

To begin the discussion of contemporary issues in international business, macro-economic and political changes in the last 30 years are reviewed.

Information technology and other technological innovations have put global markets within the reach of even small firms in remote locations. Yet, in spite of all its benefits, globalization has an underside. Critics point out its adverse effects, including those on developing nations.

The opening case explores the globalization of the flat panel television industry. The closing case illustrates how one company, IKEA, has benefited from the globalization of markets and the globalization of production.

OUTLINE OF CHAPTER 1: GLOBALIZATION

Opening Case: Flat Panel Televisions and the Global Economy

Introduction

What is Globalization?
The Globalization of Markets
The Globalization of Production

Country Focus: Outsourcing American Healthcare

The Emergence of Global Institutions

Drivers of Globalization
Declining Trade and Investment Barriers
The Role of Technological Change

The Changing Demographics of the Global Economy
The Changing World Output and World Trade Picture
The Changing Foreign Direct Investment Picture
The Changing Nature of the Multinational Enterprise
The Changing World Order
The Global Economy of the Twenty-First Century

Country Focus: India’s Software Sector

Management Focus: China’s Hisense-An Emerging Multinational

The Globalization Debate
Anti-globalization Protests,
Globalization, Jobs, and Income
Globalization, Labor Policies, and the Environment
Globalization and National Sovereignty
Globalization and the World’s Poor

Country Focus: Protesting Globalization in France

Managing in the Global Marketplace

Chapter Summary

Critical Thinking and Discussion Questions

Closing Case: IKEA—The Global Retailer

Classroom Discussion Point

Ask students to describe how international business has affected them in their day so far. Ash them about who made the clothes they’re wearing, what type of food they ate for breakfast or lunch (muesli cereal, sushi, Italian-style coffee), what type of cell phone they have and where it was made, where their car was design and manufactured, where the components for their computer was manufactured, and so on. Many students will be surprised at just how often international business affects their daily lives. Some will recognize that companies like Nissan have design facilities and manufacturing operation in the United States, but will be surprised to learn that Sodexho, a cafeteria operator for many universities, is a French company; or that many supermarket chains have been acquired by foreign operators (Stop and Shop by the Dutch Ahold, Trader Joe’s by the German Albrechts). The point to drive home is that our consumption patterns are already very dependent on international business.

Next, ask students the why aspect of this issue: Why, for example, are so many of our clothes made outside North America?

Finally, encourage students to think about the integrated world economy versus distinct national economies by asking about the type of car they own....
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