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INTERNATIONAL
BUSINESS I
2
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Participation Group Group Final exam
presentatio presentation Time: 90
n minutes
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Explain how and why the world’s cultures, countries, and regions
differ.
Cover economics and politics of international trade and investment.
Tackle international issues related to ethics, corporate social
responsibility, and sustainability.
Explain the functions and form of the global monetary system.
Examine the strategies and structures of international businesses.
Assess the special roles of the various functions of an international
business.
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Chapter 1
Globalization
© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
Learning Objectives
1-1 Understand what is meant by the term
globalization.
1-2 Recognize the main drivers of globalization.
1-3 Describe the changing nature of the global
economy.
1-4 Explain the main arguments in the debate over
the impact of globalization.
1-5 Understand how the process of globalization is
creating opportunities and challenges for
management practice.
© McGraw Hill 7
Opening Case
Detroit Bikes
By 2018, about 95 percent of bikes sold in U.S.
were assembled in China; about 65 percent of
component parts were also produced in China.
• American consumers benefitted from lower prices.
© McGraw Hill 9
What Is Globalization? 1
Globalization
A shift toward a more integrated and interdependent world
economy.
Two facets:
• Globalization of markets.
• Globalization of production.
© McGraw Hill 10
What Is Globalization? 2
The most global of markets are for industrial goods and materials
that serve universal needs around the world.
• Aluminum, oil, wheat, microprocessors.
© McGraw Hill 11
What Is Globalization? 3
© McGraw Hill 12
What Is Globalization? 4
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The Emergence of Global Institutions 1
Global Institutions
• Manage, regulate, and police the global marketplace.
• Promote the establishment of multinational treaties to govern
the global business system.
• Created by voluntary agreement between individual nation-
states.
© McGraw Hill 14
The Emergence of Global Institutions 2
© McGraw Hill 15
The Emergence of Global Institutions 3
World Bank
• Promotes development using low-interest loans.
• Seen as less controversial than IMF.
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The Emergence of Global Institutions 4
© McGraw Hill 17
The Emergence of Global Institutions 5
© McGraw Hill 18
Drivers of Globalization 1
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Drivers of Globalization 2
© McGraw Hill 20
Table 1.1 Average Tariff Rates on Manufactured
Products as Percentage of Value
Sources: The 1913 to 1990 data are from “Who Wants to Be a Giant?” The Economist: A Survey of the
Multinationals, June 24, 1995, pp. 3 to 4. The 2018 data are from the World Tariff Profiles 2019, published by the
World Trade Organization.
© McGraw Hill 21
Drivers of Globalization 3
© McGraw Hill Sources: World Bank, 2020; World Trade Organization, 2020; United Nations, 2020. 23
Drivers of Globalization 4
© McGraw Hill 24
Drivers of Globalization 5
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Drivers of Globalization 6
Transportation Technology.
• Commercial jets, superfreighters.
• Innovation of containerization has significantly lowered shipping
costs.
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Drivers of Globalization 7
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The Changing Demographics of the Global
Economy 2
Today:
• U.S. accounts for only 24 percent.
• Germany, France, the U.K., and Canada had similar decline.
• Rapid economic growth now in countries like China, India, Russia, and
Brazil.
• Chinese economy could surpass U.S. within a decade.
• Further relative decline by the U.S. and others is likely.
© McGraw Hill 29
Table 1.2 Changing Demographics of World
Output and World Exports
© McGraw Hill Sources: Output data from World Bank database, 2019. Trade data from WTO Statistical Database, 2019. 30
The Changing Demographics of the Global
Economy 3
© McGraw Hill 31
Figure 1.2 FDI Outward Stock as a
Percentage of GDP
© McGraw Hill Sources: OECD data 2020, World Development Indicators 2020, UNCTAD database, 2020.. 32
Figure 1.3 FDI Inflows (in millions of
dollars) 1990 to 2019
© McGraw Hill Source: United Nations Conference on Trade and Development, World Investment Report 2020. 33
The Changing Demographics of the Global
Economy 4
© McGraw Hill 34
Figure 1.4 National Share of the Largest
2,000 Multinational Corporations in 2019
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The Changing Demographics of the Global
Economy 6
© McGraw Hill 37
The Changing Demographics of the Global
Economy 7
© McGraw Hill 38
The Globalization Debate 1
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The Globalization Debate 2
Antiglobalization Protests
Began with WTO protest in December 1999 in Seattle.
• Protest turned violent.
• Other protests have occurred worldwide.
© McGraw Hill 40
The Globalization Debate 3
© McGraw Hill 41
The Globalization Debate 4
© McGraw Hill 42
The Globalization Debate 5
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Figure 1.5 Income Levels and
Environmental Pollution
© McGraw Hill Source: C. W. L. Hill and G. T. M. Hult, Global Business Today (New York: McGraw-Hill Education, 2018). 44
The Globalization Debate 6
© McGraw Hill 45
The Globalization Debate 7
© McGraw Hill 46
Figure 1.6 Percentage of the World's Population
Living in Poverty During 1981 to 2015
© McGraw Hill Source: World Bank Data Base on Poverty and Equity, World Development Indicators, 2019. 47
Managing in the Global Marketplace
International Business
Any firm that is engaged in
international trade or investment.
Managing international business
differs from managing domestic
business.
• Practices vary by country.
• Issues are more complex.
• Need to understand rules governing
international trade and investment.
• Need to convert currency.
© McGraw Hill 49
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© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.