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International Business notes.docx

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Chapter One International Business GlobalizationMeaning of globalizationRefers to the shift towards a more integrated and interdependent world economy Factors leading to a greater globalizationGlobalization of markets and production Become 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 FundWTO World Trade OrganizationWorld BankUN United NationsDrivers of globalizationThe first is the decline in barriers to the free flow of goods services and capital that has occurred since the end of World War 2 One major barrier is the high cost of tariff imports and exports The second factor is technological change particularly the dramatic developments in recent years in communication information processing and transportation technologiesInternational trade occurs when a firm exports goods or services to consumers in another country Foreign direct investment occurs when a firm invests resources in business activities outside its home countryAntiglobalization protests page 28Street demonstrations against globalization date to December 1999 when more than 40000 protestors blocked the streets of Seattle in an attempt to shut down a WTO meeting being held in the city
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