Introduction to Administrative Studies
ADMS1000 – Summer 2012 – Eytan Lasry
Lecture 7 – The Global Context [Part 1] – June 26
- A process involving the integration of world economies – facilitated by bodies
such as NAFTA, EU, APEC, ASEAN etc.
- The integration of world markets
- Free movement of goods/services, capital and labour is critical to globalization
- Increased cross border transactions, FDI & economic interdependence
Channels of Global Business Activity
- What strategies can firms use to do business abroad?
o Exporting goods/services
o Contractual agreements and Strategic Alliances:
o Foreign Direct Investment:
Wholly-owned subsidiaries (greenfield ventures or acquisitions)
The Borderless Corporation – Transnational Corporations
- Indicates that the nationality of the organization is unclear
- There is no allegiance to a particular country or location
o e.g. Nestle, Coca Cola, McDonalds…
- Financial, technological, human…capital are easily transferred between countries
- Ownership & management are international
- Firms follow the profits!!
- The purchase, sale or exchange of goods or services across countries.
- The Logic of Trade: encourages nations to specialize in goods/services in which
they are most efficient and trade with other countries for goods/services not
o Comparative Advantage (David Ricardo)
International Trade: A Brief History
- Mercantilism (1500-1800): encourages trade surpluses where exports of goods
or services exceeds imports.
o Colonial powers (Britain, France, Spain, Netherlands) conquered countries