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International Business Complete Note for Final

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University of Ottawa

Chapter One International Business GlobalizationMeaning of globalizationRefers to the shift towards a more integrated and interdependent world economy Factors leading to a greater globalizationFree trade After World War II many obstacles to free trade were removed Trade agreements such as the North American Free Trade Agreement NAFTA as well as the World Trade Organization WTO have contributed to the spread of globalizationCapitalism The switch of many nations to marketbased economies and capitalism has advanced globalizations reachesDemocracy Events such as the fall of the Berlin Wall and the end of the Soviet Union have led to more open societiesInternet The Internet aided in the rapid spread of ideas and has helped in the formation of global society Popular culture The popularity of movies music actors musicians and television and the availability of them across the globe expanded globalizationBecome aware of changing trade patterns flows of foreign direct investment and the increasing importance of multinational corporations Become familiar with the principle controversies over globalizationJob security Wage and income levels Labour policies Environmental policies and effects National sovereignty Global economic management The core or principle advantages of globalization Consumer prices and choice Returns to capital Payoff to innovations Labour mobility and returns to human capital Greater levels of competition Figure 1 diagram at the end is a useful scheme of globalization It captures all the essential components of globalization and shows the impact on a country in this case Canada Globalization of marketsGlobalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace Moving away from an economic system in which national markets are distinct entities isolated by trade barriers and barriers of distance time and culture and toward a system in which national markets are merging into one global marketConsumer products such as Citicorp credit cards CocaCola McDonalds and Apple are examples of this trendThere is a significant difference that exists between national markets along many relevant dimensions including consumer tastes and preferences distribution channels culturally embedded value systems business systems and legal regulationsGlobalization of productionGlobalization of production refers to the outsourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production such as labour energy land and capitalThe trend by individual firms to disperse parts of their productive processes to different locations around the globe to take advantage of differences in cost and quality factorsGlobal institutions IMF International Monetary Fund primary purpose is to ensure the stability of the international monetary systemthe system of exchange rates and international payments that enables countries and their citizens to transact with one other WTO World Trade Organization the only global international organization dealing with the rules of trade between nationsWorld Bank A vital source of financial and technical assistance to developing countries around the worldUN United Nations aims are facilitating cooperation in international law international security economic development social progress human rights and achievement of world peaceDrivers of globalization
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