INTL BUSINESS BEHAVIOR
INTL BUSINESS BEHAVIOR SOCI 325
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This 3 page Class Notes was uploaded by Jo Bailey on Wednesday October 21, 2015. The Class Notes belongs to SOCI 325 at Texas A&M University taught by Hiroshi Ono in Fall. Since its upload, it has received 14 views. For similar materials see /class/225840/soci-325-texas-a-m-university in Sociology at Texas A&M University.
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Date Created: 10/21/15
Chapter 1 Globalization eX of globalization Starbucks expanding to Japan across Asia and Europe Accomplished by joint ventures with foreign local retailers US has highest level of output in the world GDP 144 trillion produces 25 of global GDP 0 Globalization 0 The shift from distinct national economic units toward a more integrated and interdependent world economy 0 Globalizations ofmarkets 0 Moving away from an economic system in which national markets are separate entities isolated by trade barriers of distance time and culture toward a system in which national markets are merging into one global market 0 EX of rms displaying globalization of markets Coca cola Starbucks IKEA Citigroup 0 Globalization of Production 0 Trend by individual rms to disperse parts of the productive process to different locations around to globe to take advantage of national differences in the cost and quality of factors of production I EX Boeing outsourcing 65 of the production of their 787 s 0 Factors of production 0 Inputs into the productive process of a film including labor management land capital and technological knowhow The emergence of 6 global institutions to help manage regulate and police the global marketplace and to promote the establishment of multinational treaties to govern the global business system 0 General Agreement on Tariffs and Trade GATT 0 International treaty that committed signatories to lowering barriers to free ow of goods across national borders and led to the WTO 0 World Trade Organization WTO 0 Organization that succeeded the GATT as a result of the successful completion of the Uruguay round of GATT negotiations WTO is primarily responsible for policing the world trade system and making sure nationstates adhere to the rules laid down in trade treaties signed by the WTO members I 154 member nations 97 of nations involved in world trade 0 International Monetary Fund IMF 0 International institution set up to maintain order in the intemational monetary system I Along with the World Bank it was created in 1944 by 44 nations meeting was held in Bretton Wodds New Ham 0 World Bank 0 International institution set up to promote general economic development in the world s poorer nations I Makes lowinterest loans to cashstrapped governments in poor nations that wish to undertake signi cant infrastructure investments World Bank and IMF are the two least controversial sister institutions of the 5 0 United Nations 0 An international organization made up of 191 countries to promote peace security and cooperation formed in 1945 and headquartered in NYC I Also mandates a higher strd of living full employment and eco social progress 0 G20 0 Comprises the nance ministers and central bank governors of the 19 largest economies in the world plus representatives from the European Union and the European Central Bank Originally established to formulate a coordinated policy response to nancial crises in developing nations Drivers of Globalization 7 Two macro factors decline in barriers amp technological change 0 Declining trade barriers and investment barriers 0 International Trade 0 Occurs when a firm exports goods or services to consumers in another country 0 Foreign Direct Investment FDI 0 Direct investment in business operations in a foreign country 0 Beggar thy Neighbor policy during the 1930 s countries were raising their tariffs of foreign trade to protect domestic industries from foreign competition Every country kept raising tariffs against each other in retaliatory trade policies and eventually depressed world demand and contributed to the Great Depression of the 1930 s I Led to the creation of GATT and quickly barriers were decreased to create a free ow of goods services and capital between nations 0 The Role of technological change 0 Microprocessors and telecommunications I Microprocessors enabled the explosive growth of highpower lowcost computing increase in information that could be processed 0 Moore s law 0 The power of microprocessors technology doubles and its cost of production cuts in half every 18 months I Telecommunications 0 Satellite optical ber wireless technologies internet and www 0 World Wide Web I 2009 16 billion users increases ecommerce I Web is an equalizer makes it easier for buyers and sellers to nd each other I Allows business to expand their global presence at a lower cost than ever 0 Transportation technology I Commercial jet aircraft superfreighters I Containerization simplifies tr39ansshipment from one mode of transport to another 0 Signi cantly lowering the cost of shipping goods over long distances 0 Implications for the globalization of production 0 Implications for the globalization of markets the changing demographics of the world economy 0 FDI changes 0 Stock of foreign direct investment I The total cumulative value of foreignowned assets at a given time 0 Changing nature of the multinational enterprise 0 Multinational Enterprise MNE I A rm that owns business operations in more than one country 0 Mini multinationals I Smaller rms are able to build international sales revenue through the rise of the intemet which has allowed them to compete with fewer barriers managing the global market place 0 International business 0 Any rm that engages in intemational trade or investment I Ex MNE but don t have to be MNE to be an international business I To be an International business all a rm has to do is export or import products from other countries 0 Managing an international business is different from managing a domestic business for at least 4 reasons I Countries are different I The range of problems confronted by a manager in an intemational business is wider and the problems themselves more complex than those confronted by a manager in a domestic business I Managers in an international business must nd ways to work within the limits imposed by governments intervention in the international trade and investment system International transactions involve converting money into different currencies Extra notes Since the end of WWII barriers to the free ow of goods services and capital have been lowered signi cantly 7 this has facilitated the trend toward the globalization of production One of the most dramatic developments of the past 20 years has been the collapse of communism in Eastern Europe which has created enormous longrun opportunities for intemational businesses In addition the move toward free market economies in china and Latin America is creating opportunities and threats for Western international businesses
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