Lecture 2 - Lecture 2 Slides Global Business Environment...

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Lecture 2 Slides Global Business Environment International Trade and World Organizations Managing Global Business Strategy; Structure; People Markets Economic and Cultural Systems International Business “Any firm that engages in international trade or investment.” Globalization “The shift toward a more integrated and interdependent world economy.” Global Debate Population Urban areas house half of all the world’s people, and continue to grow in both rich and poor countries Economic Activity Remarkably concentrated Patents Few places produce most of the world’s innovations. Innovation remains difficult without a critical mass of financiers, entrepreneurs, and scientists, often nourished by world-class universities and flexible corporations Scientific Citations World’s most prolific and influential scientific researchers overwhelmingly reside in U.S. and European cities Market Motives for Going Global To gain, protect, or hold a market position Limited expansion opportunities in home country, increased competition at home, following a customer, prevent loss of a customer Strategic Motives for Going Global To help a firm capitalize on distinctive resources or develop capabilities i.e. gain a “first-mover” advantage by securing rare resource or market share before the competition, piggybacking Economic Motives for Going Global Firms seeking: Higher returns on investments Recoup large investment, capitalize on patents, government incentives, need for additional resources Lower costs Economies of scale Requirements for Globalization Relatively free movement of goods and services across national borders Relatively stable political and economic environment IMF and World Bank created to foster economic stability; UN created as a forum for political negotiations Adequate infrastructure Communication; Technology support
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Adequate transportation Air, ocean, ground Supporting international institutions To manage, regulate and police the international market GATT, WTO, IMF, World Bank, UN Host Country Country where business is being done Home Country Country of origin of the organization doing business Global Organizations WTO, United Nations, World Bank, IMF Why Globalization has Occurred Technology- Microprocessors, Internet, Communication Declining trade and investment barriers- GATT, WTO Globalizing Business Facets 1. Markets - New markets; Many markets are exhibiting greater uniformity 2. Production - Access to lower cost workers, technical expertise and production inputs Globalization Pros: Lower prices for goods and services Economic growth stimulation Increase in average consumer income Creates jobs Countries specialize in goods and services that are produced most efficiently—closer to economic scale Greater competition Cons: Reduces blue-collar jobs and wages in developed countries
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Lecture 2 - Lecture 2 Slides Global Business Environment...

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