Week 2 Notes
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This 3 page Class Notes was uploaded by Xiao Lin on Sunday October 11, 2015. The Class Notes belongs to I BUS 300 at a university taught by Leta Beard in Fall 2015. Since its upload, it has received 15 views.
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Date Created: 10/11/15
Week 2 Topic Covered Globalization vs Localization broadening and deepening of interactions and interdependences among people and countries of the world 0 Broadening extension of economic amp geographic linkages to encompass virtually all major societies and states 0 Deepening an increase in the frequency amp intensity of state and societal interactions Forces of Globalization 0 Technology 0 Openness Liberalization Collapse of communism in Eastern Europe Economic development in China Free market reform and democracy in Latin America 0 Market Opportunities 0 Collective Goods amp Global Governance Driver for greater globalization 0 Corporate drive for pro ts Increased consumption pattern Countries want to be more integrated in the global market Easier communication abundant info technological advancement Reduction in trade barriers Top talents Globalization of markets ex convergence of taste Moving away from an economic system in which national markets are distinct entities toward a system in which national markets are merging into one global market 0 Globalization of production Trend by rms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality of factors of production land labor energy capital OOOOOO segmentation amp contraction of the interactions among people and countries of the world Forces of o CAGE Distance Framework Ghemawat Cultural Distance different language ethnicities religions values norms Administrative Distance differences in corruption legal rules political risk amp instability govt policies colonies ties Geographic Distance physical remoteness lack of common border lack of sea or river access size of country weak transportation system Economic Distance differences in consumer income costs human amp natural resources Drivers of Localization o Nationalism Buy local things 0 Cultural Diversity amp Values 0 History War in the past amp Tradition 0 Securities concerns Intellectual Properties or it39s physically unsafe to operate there Quality control issues 0 Morale problems in American workers if rms outsource jobs 0 How globalized are we 0 Views differ widely regarding globalization39s opportunities vs risks 0 Are we more of a quotGlobaloneyquot or quotGlobal Villagequot quotSemiglobalizationquot GDP vs GNI 0 Gross Domestic Product GDP total market value of all nal goods and services including those manufactured by foreign companies produced within a country in a given period of time most likely one year 0 Gross National Income GNI GDP income of domestic residents assets in foreign countries income of foreign workers assets within the domestic country 0 When US GNIgt GDP US residents earn more abroad than foreigners earn here in the US PIIGS counties are Portugal Ireland Italy Greece Spain 0 Economies with substantial instabilities esp in the 2008 recession BRICS countries are Brazil Russia India China South Africa 0 5 major emerging national economies Ex of Globalization The Travels of a TShirt Glocalization tension btw globalization and localization 0 Both forces are taking place at the same time o It is the fundamental source of uncertainty in international business as the world is not entirely globalized nor localized Glocalization seen in Firm Strategies 0 Global Integration of Value Chain globally connect our value chain vs separate it by region Adaptation of Product Marketing develop and sell a standardized product vs one that is adapted adapted to local conditions Organizational Centralization Decentralization centralize control in global headquarters vs decentralize it to local subsidiaries Market Entry Decision Political and regulatory uncertainty shapes rms39 nonmarket strategy choices and market entry decisions Integrated NonMarket Strategy should rms integrate their resources and capabilities into building relations with local politicians and regulators