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INTERNATIONAL BUSINESS TRADEChapter 1Overview of International Business and GlobalizationGlobalizationrefers to growinginterdependence of the world's economies, cultures, and populations, brought about bycross-border trade in goods and services, technology, and flows of investment, people, and information.It also refers to the widening set of interdependent relationships among people from different parts of a world that happensto be divided into nations.The term sometimes refers to the elimination of barriers to international movements of goods, services, capital, technology,and people that influence the integration of world economies.Throughout history, wider human connections have expandedpeople’s access to more varied resources, products, services, and markets. We’ve altered the way we want and expect tolive, and we’ve become more deeply affected (positively and negatively) by conditions outside our immediate domains.The opening case shows how far-flung global contact allows the world’s best sports talent to compete, and their fans towatch them, just about anywhere. Likewise, managers in almost every industry consider ever more distant places as sourcesof supplies and markets. As consumers we know from “Made in” labels that we commonly buy products from all over theworld, but these labels do not tell us everything. So many different components, ingredients, and specialized businessactivities from different countries go into products that it’s often a challenge to say exactly where they were made. Belgiumis renowned for its chocolate, but a Belgian Neuhaus bonbon includes ingredients from the Ivory Coast, Philippines,Ecuador, Sao Tome˙, and Venezuela.Because Apple ships its iPhones from China, they appear to be Chinese products,but less than 4 percent of their value is created in China.How DoesInternational BusinessFit In?Globalization enables us to get more variety, better quality, or lower prices. Our daily meals contain spices that aren’t growndomestically and fresh produce that’s out of season in one local climate or another. Our cars cost less than they would if allthe parts were made and the labor performed in one place. All of these connections between supplies and markets resultfrom the activities ofinternational business,defined as all commercial transactions, including sales, investments, andtransportation, that take place between two or more countries. Private companies undertake such transactions for profit;governments may undertake them either for profit or for other reasons.The Study of International BusinessWhy should you study international business? Simply, it makes up a large and growingportion of the world’s business. Global events and competition affectalmost all companies, large and small, regardless ofindustry. They sell output and secure supplies and resources abroad, and they compete against products, services, andcompanies from foreign countries. Thus, most managers need to take into account international business when setting their