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Lecture 1

GEO 334 Lecture Notes - Lecture 1: Toyota Sienna, Economic Globalization, Fiscal Policy

Course Code
GEO 334
michael lecky

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Chapter 1- Part A Slides
International management- the process of developing strategies, designing and
operating systems, and working with people around the world to ensure sustained
competitive advantage
Challenges Managers Face
1. Politics
2. Cultural differences
3. Global competition
4. Terrorism
5. Technology
6. Sustainability
7. Social obligations
Global competition characterized by networks of international linkages that bind
countries, institutions, and people in an interdependent global economy.
Globalization has also been described as the emergence of a level playing field
due to decreasing differences in regional output growth rates, increased
economic activity, and other non-economic factors.
Examples of international linkages:
•Only 65% of the Ford Mustang’s content comes from the
US or Canada
•90% of the Toyota Sienna is made with US components,
and it is assembled in Indiana
Example of the level playing field:
•China’s recent growth (9.9% in 2005)
Five key global trends:
Changing balance of growth towards emerging markets
Need for increased productivity and consumption in developed countries
Increasing global interconnectivity
Increasing gap between supply and demand of natural resources

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Challenge for governments to develop policies for economic growth and financial
Measuring Globalization
1. —Political Engagement
-Foreign aid, treaties, organizations and peacekeeping
2. —Personal Contact
-Including telephone calls, travel, and remittances.
3. —Technological Connectivity
-—Number of internet users, hosts, and secure servers
4. —Economic Integration
-—International trade and foreign direct investment
*—Countries are ranked within each category and given a rank and overall score
Foreign Direct Investment
The main types of FDI are:
acquisition of a subsidiary,
joint ventures
investing in new facilities or expansion
FDI results can show confidence in the economic recovery of the United States and
Rapidly developing economies continue to struggle for foreign investor confidence
Challenges to Globalization
- backlash against capitalism and rekindling of own country’s nationalism
Increased protectionism of high-demand resources
Need to develop top managers with international understanding and experience
Increasing pressure and publicity for companies to consider the social
responsibility of their actions

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The backlash against globalization comes from those who feel that it benefits advanced
industrial nations at the expense of many other countries and the people within them
who are not sharing in those benefits.
While the debate about the effects of globalization continues, it is clear that
economic globalization will be advanced by:
-corporations looking to maximize their profits with global efficiencies,
-by politicians wishing to advance their countries’ economies, and
-by technological and transportation advances that make their production
and supply networks more efficient.
Political and economic factors and changes influence the opportunities that
companies face
Opportunity vs Risk!
Risks differ depending on region and country
- poor workforce
- poor infrastructure
- unstable government
Opportunities bourne from trade blocs & changes in globalization variables such
- technology, global reach, lower cost of connectedness
- trade tariff changes…example… recent ‘retaliatory’ tarriffs by Chinese
on US pork opens opportunity for Brazillian pork farmers to fill the gap
- shipping and other transportation route changes….
- ie new London to Beijing rail 18 days
- ie new Panama canel open to ships nearly 2x in size
Benefits of Globalization
Access to more markets
Growth in developing economies
Increased flexibility
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