11 discussion

11 discussion - 1. Discuss how the two cases in this...

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1. Discuss how the two cases in this chapter illustrate the major theme of this text: Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost, and profitability. Drawing on current business publications, find some updated facts for each case that support this theme. China has transformed itself from the world’s greatest opponent of globalization, and Greatest disrupter of the global institutions we created, into a committed member of those Institutions and advocate of globalization. All of China’s economic successes are associated with liberalization and globalization, And each aspect of globalization has brought China further successes. Never in world history have so many workers improved their standards of living so rapidly. China has effectively become an ally of U.S. and Southeast Asian promotion of freer trade and investment than is acceptable to Japan, India and Brazil. Chinese growth has brought American companies new markets. The flow of profits from China to the U.S. is as disproportionate as the flow of goods. Inexpensive products have substantially improved the living standards of poorer Americans. Inexpensive Chinese goods and Chinese financing of our deficit have kept U.S. inflation and interest rates down and prolonged our economic booms. At the same time, it has caused trade deficits and social adjustments. Chinese misappropriation of intellectual property creates losses for many of our companies. A manic construction and transportation boom has raised global raw materials prices, to the great benefit of producers and a great cost to consumers. China’s GDP passed the $2 trillion mark in 2005 with GDP annual growth averaging 10% since 2003.Entry into the World Trade Organization created substantial surge in trade and investment, especially in the exporting of toys, textiles and other light manufactures. Import rose but with a strong emphasis on raw material oil and investment equipments. In 1988 the Mexican government passed an agreement called the “Pacto “which included commitments to reductions of the fiscal deficit tightening of monetary policy, liberalization of trade and an incomes policy that covered wages prices and exchanges rates. In early 1990 s Mexico faced currency crisis which led to the financial crisis because investors that had their funds in the stock market or other instruments withdrew their capitals which in turn led to devaluation of the currency this all caused Wal-Mart to suspend its ambitious plans of expansion in Mexico until the Country’s economy showed signs of improvement.Wal Mart also temporarily halted shipment from the United States to its 63 Mexican stores until the Mexican government gave permission for retailers to raise prices for imported goods to reflect their higher cost in pesos. Farnham, P. G. (2010). Economics for managers (2nd ed.). Upper Saddle River, NJ: Pearson
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This note was uploaded on 07/27/2011 for the course ECON 550 taught by Professor Tracy during the Spring '10 term at Strayer.

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11 discussion - 1. Discuss how the two cases in this...

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