Chapter 1- Globalization – Lecture Notes
Chapter 1- Globalization – Lecture Notes MGT 302
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This 3 page Class Notes was uploaded by Sophia Mattera on Sunday August 21, 2016. The Class Notes belongs to MGT 302 at Arizona State University taught by Christopher Clark in Fall 2016. Since its upload, it has received 8 views. For similar materials see Principles of International Business in Business Management at Arizona State University.
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Date Created: 08/21/16
MGT 302 Chapter 1- Globalization – Lecture Notes Globalization: a shift towards a more integrated and interdependent world economy Components of globalization: Globalization of markets Globalization of production Globalization of markets: how separate markets are merging into one larger marketplace – merging of historically distinct and separate markets into one huge global marketplace *Firms still need to consider differences between countries markets because… Consumer tastes and preferences vary between markets, differing distribution channels, differing cultural values, and different regulations 3 Causes of the “global market” 1.Falling trade barriers make it easier to sell globally 2.Consumers’ tastes and preferences are converging on some global norm 3.Firms promote the trend by offering the same basic products worldwide Globalization of production: the way firms source goods and services from around the globe to capitalize on national differences in the cost and quality of factors of production Things holding back globalization of production: Formal and informal barriers to trade Barriers to foreign direct investment Transportation costs Issues associated with economic risk Issues associated with political risk *There have been organizations created to police and create regulation on trade and international business What is driving globalization? 1.Declining trade and investment barriers 2.Technological change Changing demographics of global economy: 1.Changing world outputs and world trade a.The United States dominated world trade in the 1960s, but then by 2012 the U.S. only held 23% of world trade. b.Output and the United States economy continued to increase, but just not as quickly as other competing countries. 2.Changing foreign direct investment 3.Changing nature of multinational enterprise Multinational Enterprise (MNE): any business that has productive activities in two or more countries 4.World order has changed a.The collapse of communism in many countries in Asia and Latin America, has pushed those counties to now embrace free trade markets Is globalization a good thing? Pros: Lower prices Greater economic growth Higher consumer income and more jobs Cons: Job losses Environmental degradation Labor exploitation Elimination of differing culture *More educated populations are not being exploited, only unskilled laborers are, and the only way to solve this problem is by educating people.
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