Chap001 Notes - Chapter 01 - Globalization Globalization...

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Chapter 01 - Globalization Globalization MANAGING IN THE GLOBAL MARKETPLACE INTRODUCTION A) Globalization refers to the trend towards a more integrated global economic system where barriers to cross-border trade and investment are declining, perceived distance is shrinking thanks to advances in transportation and telecommunications, and material cultures are more similar across borders. The effects of globalization can be seen everywhere, from the cars people drive and the food they eat, to the jobs where they work and the clothes they wear. Today, some $3 trillion in foreign exchange transactions are made daily. B) The rapidly emerging global economy raises a multitude of issues for businesses including all sorts of new opportunities for business to expand their revenues, drive down their costs, and boost their profits. It also gives rise to challenges and threats such as how best to expand into a foreign market, whether and how to customize their product offerings, marketing policies, human resources practices, and business strategies in order to deal with national differences in culture and how best to deal with the threat posed by efficient foreign competitors entering their home market place. C) Globalization is also unleashing new anxieties for people who, until recently, had felt fairly secure in their jobs. Thanks to advances in technology, lower transportation costs, and an increase in skilled workers in low cost nations such as India, China, and Brazil, services have become a hot new export. WHAT IS GLOBALIZATION? A) Globalization refers to the shift towards a more integrated and interdependent world economy. The Globalization of Markets B) The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace in which the tastes and preferences of consumers in different nations are beginning to converge upon some global norm. The global acceptance of Coca-Cola, Citicorp credit cards, IKEA furniture, and McDonald's hamburgers are all examples. These firms not only benefit from the globalization of markets, they also, by offering the same basic products worldwide, facilitate the trend. Yet there are still significant differences that frequently require that marketing strategies, product features, and operating practices be customized in a country. In fact, the most global markets are for industrial goods and materials that serve a universal need around the world like microprocessors, rather than for consumer products. In many industries, there is no such thing as a “German market” or an “American market,” there is only a global market. 1-1
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Chapter 01 - Globalization The Globalization of Production C) The globalization of production refers to the sourcing 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 land, labor, capital, and energy), thereby allowing them to compete more effectively against
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Chap001 Notes - Chapter 01 - Globalization Globalization...

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