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Unformatted text preview: Chapter 01 - Globalization Globalization Chapter Summary This opening chapter introduces the reader to the concepts of globalization and international trade, and provides an introduction to the major issues that underlie these topics. The components of globalization are discussed, along with the drivers of globalization and the role of the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization (WTO) in lowering trade barriers. The influence of technological change in facilitating globalization is also discussed, along with the role of multinational firms in international business. The chapter also describes the changing demographics of the global economy, with a special emphasis on the increasingly important role of developing countries in world trade. This discussion is complemented by a description of the changing world order, which was brought on by the collapse of communism in Eastern Europe and republics of the former Soviet Union. The chapter ends with a candid overview of the pros and cons of the trend towards globalization. Opening Case: Globalization at General Electric Summary The opening case explores General Electrics quest to become the number 1 or 2 company globally in every business in which it participates. General Electric, the largest industrial conglomerate in America, produces a range of goods and services including home appliances, jet engines, power generators, medical equipment, and television broadcasting. Over 40 percent of its revenues today come from international sales, and it is expected that by 2012, some 55-60 percent of its business will be international. During the 1980s and 1990s, when General Electric was led by Jack Welch, the company was an American company doing business in foreign markets. Today, under the leadership of Jeffery Immelt, General Electric is moving toward becoming a global corporation. A discussion of the case can revolve around the following questions: Chapter Outline with Lecture Notes, Video Notes, and Teaching Tips 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. 1-1 Chapter 01 - Globalization 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...
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This note was uploaded on 09/23/2011 for the course ECON 101 taught by Professor Smith during the Spring '11 term at North Shore.
- Spring '11