Global Context - THE GLOBAL BUSINESS CONTEXT Confidential -...

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1 Confidential - for classroom use only THE GLOBAL BUSINESS CONTEXT
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2 Confidential - for classroom use only Global Business Companies involved in cross-border business transactions Process by which the world economy is becoming a single interdependent system A definition of economics from Erich Roll: If, then, we regard the economic system as an enormous conglomeration of interdependent markets, the central problem of economic enquiry becomes the explanation of the exchanging process, or, more particularly, the explanation of the formation of price.
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3 Confidential - for classroom use only The Origins of Global Business Silk Road Silk was known in Egypt at least by 1000 BC The Silk Road is the main route from the Iranian Plateau to Western China, leading from oasis to oasis, and skirting the deserts of Central Asia, which was in use long before it was officially sanctioned. Cost was so high it had to concentrate on high value luxury items, the items that only princes could buy Rarely did one person go the whole route (Marco Polo was an exception) – usually the route was broken apart into many players In 408 AD when Alaric, a Goth, besieged Rome, his price for sparing the city included 5000 pounds of gold, 3000 pounds of pepper, 30,000 pounds of silver and 4000 tunics of silk.
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4 Confidential - for classroom use only Ancient Long Distance Trade Routes http://en.wikipedia.org/wiki/Image:Transasia_trade_routes_1stC_CE_gr2.png Other ancient trade routes: Nile River Amber Road from the Baltic regions to the Mediterranean Incense Road around Arabia Trans-Saharan Road Tea Road from Southern China to India
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5 Confidential - for classroom use only The Origins of Money Commodity money The first instances of money were objects with intrinsic value, i.e. commodity money Historical examples include pigs, rare seashells, iron nails, whale's teeth, cocoa beans, and (often) cattle Salt and spices have been used as money. From 550 BC, accepting salt from a person was synonymous with drawing a salary, taking pay, or being in that person's service. Representative money The system of commodity money in many instances evolved into a system of representative money In this system, the material that constitutes the money itself had very little intrinsic value, but none the less such money achieves significant market value through being scarce as an artifact. Gold It was the discovery of the touchstone that paved the way for metal-based commodity money and coinage. Any soft metal can be tested for purity on a touchstone, allowing one to quickly calculate the total content of a particular metal in a lump. Gold is a soft metal, which is also hard to come by, dense, and storable. For these reasons gold as a money spread very quickly from Asia Minor where it first gained wide use, to the entire world. Using such
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This note was uploaded on 04/07/2008 for the course BUSINESS 105 taught by Professor Aronhime during the Fall '08 term at Johns Hopkins.

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Global Context - THE GLOBAL BUSINESS CONTEXT Confidential -...

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