Charles W.L. Hill, International Business Competing in the global marketplace, McGrawHill Irwin, 7th edition, 2011 http://www.mediafire.com/download/i60reeck79ouit5/Charles_W.L._Hill%2C_International_Business_Competing_in_the_global_marketplace%2C_McGrawHill_Irwin%2C_7th_edition%2C_2011.mobi
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1. InternationalBusiness 7eMcGraw-Hill/Irwin Copyright 2009 by
The McGraw-Hill Companies, Inc. All rights reserved.
2. Chapter 1Globalization
3. 1-3What Is Globalization?The world is moving away from
self-contained nationaleconomies toward an interdependent,
integrated globaleconomic systemGlobalization refers to the shift
toward a more integratedand interdependent world
economyGlobalization has two facets:1) the globalization of
markets2) the globalization of production
4. 1-4The Globalization Of MarketsThe globalization of markets
refers to the merging ofhistorically distinct and separate national
markets into onehuge global marketplaceIn many industries, it is no
longer meaningful to talkabout the German market or the American
marketInstead, there is only the global market
5. 1-5The Globalization Of MarketsFalling trade barriers make
it easier to sell internationallyThe tastes and preferences of
consumers are convergingon some global normFirms help create the
global market by offering the samebasic products worldwide
6. 1-6Classroom Performance SystemThe shift toward a more
integrated and interdependentworld economy is referred to asa)
economic integrationb) economic interdependencyc) globalizationd)
internationalization
7. 1-7The Globalization Of ProductionThe globalization of
production refers to the sourcing ofgoods and services from
locations around the globe to takeadvantage of national differences
in the cost and quality offactors of production like land, labor,
and capitalCompanies compete more effectively by lowering
theiroverall cost structure or improving the quality
orfunctionality of their product offering
8. 1-8Classroom Performance SystemThe merging of historically
distinct and separatenational markets into one huge global
marketplace isknown asa) global market facilitationb) cross-border
tradec) supranational market integrationd) the globalization of
markets
9. 1-9Classroom Performance SystemFirms that are involved in
international business tend tobea) largeb) smallc) medium-sizedd)
large, small, and medium-sized
10. 1-10The Emergence Of Global InstitutionsInstitutions are
needed to:help manage, regulate, and police the global
marketplacepromote the establishment of multinational treaties
togovern the global business system
11. 1-11The Emergence Of Global InstitutionsInstitutions
created over the past half century include:the General Agreement on
Tariffs and Trade (GATT)the World Trade Organization (WTO)the
International Monetary Fund (IMF)the World Bankthe United Nations
(UN)
12. 1-12The Emergence Of Global InstitutionsThe World Trade
Organization (like its predecessorGATT) is primarily responsible
for policing the world tradingsystem and making sure that
nation-states adhere to therules laid down in trade treaties signed
by WTO membersIn 2007, the 150 nations that accounted for 97% of
worldtrade were WTO membersThe WTO promotes lower barriers to trade
andinvestment
13. 1-13The Emergence Of Global InstitutionsThe International
Monetary Fund and the World Bankwere created in 1944The IMF was
established to maintain order in theinternational monetary
systemThe World Bank was established to promote
economicdevelopment
14. 1-14The Emergence Of Global InstitutionsThe United Nations
was established in 1945 to:maintain international peace and
securitydevelop friendly relations among nationscooperate in
solving international problems and inpromoting respect for human
rightsbe a center for harmonizing the actions of nations
15. 1-15Classroom Performance SystemWhich is not a factor of
production?a) tradeb) landc) capitald) energy
16. 1-16Drivers Of GlobalizationTwo macro factors underlie the
trend toward greaterglobalization:the decline in barriers to the
free flow of goods, services,and capital that has occurred since
the end of World War IItechnological change
17. 1-17Declining Trade AndInvestment BarriersInternational
trade occurs when a firm exports goods orservices to consumers in
another countryForeign direct investment (FDI) occurs when a
firminvests resources in business activities outside its
homecountryAfter World War II, advanced countries made acommitment
to lower barriers to trade and investmentSince 1950, average
tariffs have fallen significantly andare now at about 4%Countries
have also been opening markets to FDI
18. 1-18Classroom Performance SystemThe sourcing of good and
services from around the worldto take advantage of national
differences in the cost andquality of factors of production is
calleda) economies of scaleb) the globalization of productionc)
global integrationd) global sourcing
19. 1-19Declining Trade AndInvestment BarriersTable 1.1:
Average Tariff Rates on Manufactured Productsas Percent of
Value
20. 1-20Declining Trade AndInvestment BarriersLower barriers to
trade and investment mean:that firms can view the world, rather
than a singlecountry, as their marketthat firms can base production
in the optimal location forthat activity
21. 1-21Classroom Performance SystemWhich organization is
responsible for policing the worldtrading system?a) the
International Monetary Fundb) the United Nationsc) the World Trade
Organizationd) the World Bank
22. 1-22The Role Of Technological ChangeTechnological change
has made the globalization ofmarkets a realityImportant advances
have occurred in:microprocessors and telecommunicationsthe Internet
and World Wide Webtransportation technology
23. 1-23The Role Of Technological ChangeImplications of
technological change for the globalization ofproduction
include:lower transportation costs that enable firms to
disperseproduction to economical, geographically
separatelocationslower information processing and communication
coststhat enable firms to create and manage globally
dispersedproduction systems
24. 1-24The Role Of Technological ChangeImplications of
technological change for the globalization ofmarkets include:low
cost global communications networks help createelectronic global
marketplacelow-cost transportation help create global marketsglobal
communication networks and global media arecreating a worldwide
culture, and a global market forconsumer products
25. 1-25The Changing DemographicsOf The Global EconomyThere has
been a drastic change in the demographics ofthe world economy in
the last 30 yearsFour trends are important:the Changing World
Output and World Trade Picturethe Changing Foreign Direct
Investment Picturethe Changing Nature of the Multinational
Enterprisethe Changing World Order
26. 1-26The Changing World OutputAnd World Trade PictureIn
1960, the United States accounted for over 40% ofworld economic
activityBy 2006, the United States accounted for less than 20%of
world economic activityA similar trend occurred in other developed
countriesThe share of world output accounted for by
developingnations is rising and is expected to account for more
than60% of world economic activity by 2020
27. 1-27The Changing World OutputAnd World Trade PictureTable
1.2: The Changing Demographics of World GDP andTrade
28. 1-28The Changing Foreign DirectInvestment PictureIn the
1960s, U.S. firms accounted for about two-thirds ofworldwide FDI
flowsToday, the United States accounts for less than one-fifthof
worldwide FDI flowsOther developed countries have followed a
similarpatternIn contrast, the share of FDI accounted for by
developingcountries has risen from less than 2% in 1980 to
almost12% in 2005Developing countries, especially China, have
alsobecome popular destinations for FDI
29. 1-29The Changing Foreign DirectInvestment PictureFigure
1.2: Percentage Share of Total FDI Stock 1980-2005
31. 1-31Classroom Performance SystemWhat is the single most
important innovation to theglobalization of markets and
production?a) advances in transportation technologyb) the
development of the microprocessorc) advances in communicationd) the
Internet
32. 1-32The Changing Nature OfThe Multinational EnterpriseA
multinational enterprise (MNE) is any business that hasproductive
activities in two or more countriesSince the 1960s, there has been
a rise in non-U.S.multinationals, and a growth of
mini-multinationals
33. 1-33The Changing World OrderMany former Communist nations
in Europe and Asia arenow committed to democratic politics and free
marketeconomies and so, create new opportunities forinternational
businessesChina and Latin America are also moving toward
greaterfree market reforms
34. 1-34The Global Economy OfThe Twenty-first CenturyThe world
is moving toward a more global economicsystem, but globalization is
not inevitableGlobalization also brings risks like the financial
crisis thatswept through South East Asia in the late 1990s
35. 1-35Classroom Performance SystemWhich of the following
trends is true?a) the United States is accounting for a greater
percentageof world trade than ever beforeb) the United States is
accounting for a greater percentageof foreign direct investment
than ever beforec) the share of world trade accounted for by
developingcountries is risingd) the share of foreign direct
investment by developingcountries is declining
36. 1-36The Globalization DebateIs the shift toward a more
integrated and interdependentglobal economy a good thing?Supporters
believe that increased trade and cross-borderinvestment mean lower
prices for goods and services,greater economic growth, higher
consumer income, andmore jobsCritics worry that globalization will
cause job losses,environmental degradation, and the cultural
imperialism ofglobal media and MNEs
37. 1-37Anti-Globalization ProtestsMore than 40,000
anti-globalization protesters took to thestreet at the WTO meeting
in Seattle in 1999Protesters now regularly show up at most
majormeetings of global institutions
38. 1-38Globalization, Jobs, And IncomeGlobalization critics
argue that falling barriers to trade aredestroying manufacturing
jobs in advanced countriesSupporters of globalization contend that
the benefits ofthis trend outweigh the coststhat countries will
specializein what they do most efficiently and trade for other
goodsand all countries will benefit
39. 1-39Globalization, Labor Policies,And The
EnvironmentGlobalization critics argue that firms avoid costly
effortsto adhere to labor and environmental regulations by
movingproduction to countries where such regulations do not
exist,or are not enforcedGlobalization supporters claim that
tougherenvironmental and labor standards are associated
witheconomic progress, so as countries get richer from freetrade,
they get tougher environmental and labor regulations
40. 1-40Globalization AndNational SovereigntyCritics of
globalization worry that todays interdependentglobal economy is
shifting economic power away fromnational governments toward
supranational organizationslike the WTO, the EU, and the
UNSupporters of globalization contend that the power ofthese
organizations is limited to what nation-states agree togrant, and
that the power of the organizations lies in theirability to get
countries to agree to follow certain actions
41. 1-41Globalization And The Worlds PoorCritics of
globalization argue that the gap between richnations and poor
nations is getting widerSupporters of globalization claim that the
best way for thepoor nations to improve their situation is to
reduce barriersto trade and investment and implement economic
policiesbased on free market economies, and to receive
debtforgiveness for debts incurred under totalitarian regimes
42. 1-42Classroom Performance SystemWhich of these is not a
concern of anti-globalizationprotesters?a) globalization raises
consumer incomeb) globalization contributes to environmental
degradationc) globalization is causing a loss of manufacturing jobs
indeveloping countriesd) globalization implies a loss of national
sovereignty
43. 1-43Managing In The Global MarketplaceAn international
business is any firm that engages ininternational trade or
investment
44. 1-44Managing In The Global MarketplaceManaging an
international business differs from managinga domestic business
because:countries are differentthe range of problems confronted in
an internationalbusiness is wider and the problems more complex
thanthose in a domestic businessfirms have to find ways to work
within the limits imposedby government intervention in the
international trade andinvestment systeminternational transactions
involve converting money intodifferent currencies