The objectives of this chapter: Understand what is meant by the term globalization, recognize the main drivers of globalization. describe the changing nature of the global economy, explain the main arguments in the debate over the impact of globalization, understand how the process of globalization is creating opportunities and challenges for business managers. | Global Business Today 6e by Charles . Hill McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 1 Globalization What Is Globalization? Question: What is globalization? Globalization refers to the trend towards a more integrated global economic system Two key facets of globalization are: the globalization of markets the globalization of production What Is Globalization? The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor energy, land, and capital) The Emergence of Global Institutions Several global institutions have emerged to help manage, regulate, and police the global market place promote the establishment of multinational treaties to govern the global business system Notable global institutions include the World Trade Organization (WTO) the International Monetary Fund (IMF) the World Bank the United Nations (UN) Drivers of Globalization Question: What is driving the move toward greater globalization? There are two macro factors underlying the trend toward greater globalization declining trade and investment barriers technological change Drivers of Globalization Growth in World Merchandise Trade and Production, 1950 - 2006 Drivers of Globalization International trade occurs when a firm exports goods or services to consumers in another country Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country The Changing Demographics of the Global Economy In the 1960s: the . dominated the world economy and the world trade picture the . dominated world FDI . multinationals dominated the international business scene about half the world-- the centrally planned . | Global Business Today 6e by Charles . Hill McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 1 Globalization What Is Globalization? Question: What is globalization? Globalization refers to the trend towards a more integrated global economic system Two key facets of globalization are: the globalization of markets the globalization of production What Is Globalization? The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor energy, land, and capital) The Emergence of Global Institutions Several global institutions have emerged to help manage, regulate, and police the global market place promote the establishment of multinational treaties to govern
