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Chapter 5

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Simon Fraser University
Business Administration
BUS 201
Maureen Fizzell

Chapter 5The Global Context of BusinessThe Contemporary Global Economytotal volume of world trade today is around 8 trillion each yearglobalization is a process by which the world economy is becoming a single interdependent system importsproduct made or grown abroad but sold domesticallyexportsproduct made or grow domestically but shipped and sold abroad past many nations followed strict policies to protect domestic companies today more and more countries are aggressively encouraging international tradegovernments and businesses have simply become more aware of the benefits of flobaliziation to their countries and stock holdersnew technologies have made international travel communication and commerce easier faster and cheaper than ever beforeconventional transatlantic travel takes less than a dayinternet took down barrierscompetitive pressures sometimes a firm simply must enter foreign markets just to keep up with its competitors Globalization charge that it allows businesses to exploit workers in less developed countries and bypass domestic environmental land tax regulationsglobalization leads to the loss of cultural heritages and often benefits the rich than the poorGlobe and Mail article listed five key trends1 the economic centre of gravity will shift away from North America Europe Japan to Asia and Latin America2 the productivity imperative improved productivityis essential to compete in the highly competitive marketplace3 the global grid increasing complex global networks of people and capital 4 Environmental sustainability will take on even more importance5 there will be increased controls on businesses and markets are governments try to cope with financial crisisThe Major World MarketplacesThe World Bank an agency of the UN uses percapita income average income per person to make distinctions among countries1Highincome countries have an annual per capita income greater than US 11906 Ex Canada US Australia Europe New Zealand Japan South Korea Kuwait 2Upper middleincome countries have an annual per capita income between US 3856 and US 11905Ex Peru Lebanon Hungary Poland Turkey3Low middle income countries have an annual percapita income between US 976 and US 3855Ex Cote DIvoire Guatemala Samoa and Thailand4Lowincome countries developing countrieshave an annual per capita income of US 975 or less ex Benin Ethiopia Haiti and Vietnam Geographic Clustersworld economy revolves around north America Europe and Asia
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