Look at the example of where they made

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Business Internal environment org, structure, value system

environment
micro (small factors): suppliers,
customers, competitors,...

External environment

macro (big factors): currency

exchange rate, political issues,...

The increasing global relationships of culture, people and economic activity

Globalization

starbucks in numerous
Global distribution of production of goods and services
countries

the process that shifts toward a more integrated and interdependent world economy.

Where the company does business is more important than where it is located

Describe how trade and technology have made the world

into a more connected and interdependent place

Increase GDP growth for countries involved in trade

falling trade barriers make it easier to sell globally

“global market” consumers’ tastes and preferences are converging on some global norm

firms promote the trend by offering the same basic products worldwide
Globalization
WHAT IS
of Markets
GLOBALIZATION? merges historically distinct and separate national
markets into one huge global marketplace
All sizes of firms can join in the
globalization of the market
By offering the same basic product
worldwide, they help create a global market

Capitalizing on national the sourcing of goods and services from locations around the globe
differences (cost and to take advantage of national differences in the cost and quality of
quality of factors) factors of production (such as labor, energy, land, and capital)
Globalization
of Production
lower their overall cost structure

Companies can

improve the quality or functionality of their product offering

associations that work for different

EQUATING GLOBAL BUSINESS
purposes but remain the same big goal

Global help manage, regulate, and police the global marketplace

Institutions
Functions
promote the establishment of multinational treaties to
govern the global business system

Examples GATT, WTO, IMF, World Bank, UN, G20,...

view the world, rather than a

single country, as their market

Lower barriers to trade and investment

Globalization
base production in the optimal
Mean For Firms
location for that activity

home markets under attack by foreign firms

lower transportation costs

low cost information processing and communication

Technological change

low cost global communications networks

global communication networks and global media

Declining barriers to the free flow of goods, services, and capital

Declining Trade &
Investment Barriers
facilitates global International trade: when a firm exports goods or services
production to consumers in another country

DRIVERS OF favorable when a firm invests resources in business activities outside

GLOBALIZATION FDI its home country

Tariffs (4%) protect domestic industries from foreign competition

microprocessors and telecommunications

Technology Change

Internet: information backbone of the global economy

transportation technology

the share of world output accounted

world output and world trade picture
for by developing nations is rising

Developing countries (China) have also

foreign direct investment picture
become popular destinations for FDI
CHANGING
DEMOGRAPHICS
nature of the Any business that has productive
multinational enterprise (MNE)
multinational corporation activities in two or more countries

world order politics → international relations

CHAPTER 1:
lower prices for goods and services
GLOBALIZATION
increased trade and
greater economic growth
cross-border investment

higher consumer income, and more jobs

INTERDEPENDENT
GLOBAL ECONOMY
job losses

Drawbacks environmental degradation

cultural imperialism of global media and MNCs

countries are different

range of problems confronted in an international

business is wider and the problems more complex
than those in a domestic business
Managing an international business
Global Marketplace
differs from
Affect Managers managing a domestic business firms find ways to work within the limits
imposed by government intervention in the
international trade and investment system

international transactions = converting

money into different currencies