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Book Notes.docx

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University of Ottawa

ADM 3318 ABook NotesChapter 1 GlobalizationGlobalization refers to the broadening set of interdependent relationships among people from different parts of a world that happen to be divided into nations The term sometimes refers to the integration of world economies through the reduction of barriers to the movement of trade capital technology and peopleGlobalization enables us to get more variety better quality or lower pricesNBA teams look globally for human resources on court talent and additional markets that exist abroadAs a manager in almost any industry youll need to consider both1Where to obtain the inputs you need of the required quality and at the best possible price2Where you can best sell the product or service that youve put together from those inputsUnderstanding the EnvironmentOperations RelationshipUnderstand that the best way of doing business abroad may not be the same as the best way at home WhyWhen companies operate internationally it engages in modes of business importexport that differ from those in which it engages domesticallyPhysical social and competitive conditions differ among countries and affect the optimum ways to conduct businessCompanies operating internationally have more diverse and complex operating environments than those that conduct business only locally7The Forces Driving GlobalizationGlobalization has been increasing since at least the midtwentieth century Restrictions on imports have been generally decreasing Output from foreignowned investments as a percentage of world production has been increasing World trade has grown more rapidly than world production in almost every year since WWII However in recessionary periods global trade and investment contract even more than global economyParts of the world such as rural Africa and Latin America lack the resources to establish more than the barest connection with anyone beyond the outskirts of their isolated spheres Most of the worlds goods and services are still sold in the countries in which theyre produced Moreover the principal source of capital in most countries is domestic and NOT internationalCountries can be highly globalized in some dimensions and not in others There are four dimensions1Economic international trade and investment2Technological Internet connectivity3Personal contact international travel and tourism international telephone traffic and personal transfers of funds internationally4Political participation in international organizations and government monetary transfersAnalysis of 72 different countriesIn recent years Singapore and Hong Kong are the most globalizedIndia and Iran are the least globalizedstUSA ranks first on technological but only 71 on economicFactors that contribute to the increased growth in globalization in recent decades are the following1Increase in and expansion of technology2Liberalization of crossborder trade and resource movements3Developments of services that support IB4Growing consumer pressures5Increased global competition6Changing political situations7Expanded crossnational cooperationEach factor is interrelatedIncrease in and expansion of technologyDue to increased productivity there is an increased demandMore than half the scientists who have ever lived are alive todayPopulation growthEconomic growthAdvances in communications and transportationCosts of improved communications and transportation have risen slower than costs in general in recent yearsMore countries can compete for sales to a given market due to innovations in transportationSpeeds up interactions which enhance a managers ability to oversee foreign operationsCourtesy of the Internet small companies can reach global customers and suppliersLiberalization of crossborder trade and resource movementsTo protect their own industries every country restricts movement across their borders of1Goods2Services3Resources workers and capitalOver time most governments have reduced restrictions on international movements of products and services for 3 reasons1Citizens want a greater variety of goods and services at lower prices2Competition spurs domestic producers to become more efficient3Hope to induce other countries to lower their barriers in turnDevelopment of services that support IBExamples such as bank credit agreements clearing arrangements to convert one currency to another and insurance to cover such risks as transportation damage insurance and nonpaymentMany other supporting services such as paying postage fees for international mailings and packagesGrowing consumer pressuresConsumer pressure from being able to afford foreign products that were once considered luxuries are a causeThis has caused for companies to spend more heavily on RD and to search worldwide for innovations and products they can sell to demanding customersIncreased global competitionThese pressures persuade companies to sell or buy abroad
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