Wild Ib10e PPT 01 Accessible

International Business: The Challenges
of Globalization
Tenth Edition
Chapter 1
Globalization Today
Copyright © 2023, 2019, 2016 Pearson Education, Inc. All Rights Reserved
Learning Objectives
1.1 Identify the types of companies active in international
business.
1.2 Explain globalization and the significance of global
markets and production.
1.3 Detail the forces that drive globalization.
1.4 Summarize the main arguments in the debate about
globalization.
1.5 Identify the skills this course will help you develop for
your career.
Apple’s Global Impact
• Supports millions of apps
• Globalization allows Apple to:
– Produce and sell worldwide
with little or no modification
– Reduce production and
marketing costs
– Support a global brand
strategy
• Challenges of globalization David Grossman/Alamy Stock Photo
– Rising nationalism
– Trade wars
Introduction (1 of 2)
International Business
• Commercial transaction that crosses the borders of two or
more nations
Imports
• Goods and services purchased abroad and brought into a
country
Exports
• Goods and services sold abroad and sent out of a country
Introduction (2 of 2)
• International business reflects the cultural, political,
economic, and legal systems of countries.
• Geopolitical tension and cooperation creates challenges
and opportunities.
– U.S.-China tensions
– Supply chain vulnerabilities
– COVID-19 disruptions
• The 21st century digital economy requires new technical
and social skills.
Photo and Discussion Question (1 of 6)
Jenson/Shutterstock
• Photo Caption: The first Industrial Revolution was driven
by steam power, the second by electricity, and the third
by digital technologies. This fourth Industrial Revolution is
driven by artificial intelligence, biotechnology, quantum
computing, and more. It is blending our digital, physical,
and biological worlds and creating vehicles that drive
themselves, robot arms used in smart factories, and other
innovations.
• How might the fourth Industrial Revolution alter the
production, marketing, and other management activities
of companies?
Key Players in International Business (1 of 2)
• Large companies from the wealthiest nations

• Firms from emerging markets
• Small and medium-sized companies
Multinational corporation (MNC)

• A business that has direct investments abroad in multiple
countries.
Foreign direct investment (FDI)

• The purchase of physical assets or a significant amount of
ownership in another country to gain a measure of
management control.
Figure 1.1 Comparing the World’s Largest
Companies with Selected Countries
Source: Based on data obtained from “Fortune Global 500: The 500 Largest Corporations in the World,” (
fortune.com/global500/ ), August/September 2021; World Bank data set ( data.worldbank.org ).
Key Players in International Business (2 of 2)
Born global firm

• A company with a global perspective that engages in
international business from inception and quickly
achieves a competitive advantage.
– Born global firms have innovative and knowledge-
based organizational capabilities.
– Examples: Airbnb, Uber, Spotify, TikTok
What is Globalization? (1 of 6)
Globalization
• The trend toward greater economic, cultural, political, and
technological interdependence among national
institutions and economies.
– Characterized by denationalization
– Different from internationalization
Figure 1.2: Home Country of the World’s
Largest Corporations
Source: Based on data obtained from “Fortune Global 500: The 500 Largest Corporations in the
World” ( http://www.fortune.com/global500 ), August/September 2020
Gross domestic product (GDP)
• The value of all goods and services produced by a domestic
economy during a one-year period.
Gross national product (GNP)

• The value of all goods and services produced by a country’s
domestic and international activities during a one-year period.
GDP or GNP per capita

• A nation’s GDP or GNP divided by its population.
• First age of globalization (mid-1800s to the 1920s)
– Labor was highly mobile
– Trade and capital flowed relatively freely
– Large cargo ships connected markets for raw inputs
and for finished exports
– Transatlantic cable offered faster communications
– Countries traded about 10% of their total annual
output
– Era ended with the start of the First World War
Figure 1.3: World Trade as a Percentage
of GDP
Source: Based on data obtained from World Development Indicators Database (Washington, D.C.:
The World Bank), ( www.worldbank.org ), various years.
• Second age of globalization (1989 to present)
– Fall of the Berlin Wall and rejection of communism by
former Soviet states
– Advances in technology: communication satellites, fiber
optics, microchips, and the internet
– Growth of regional economic blocs: EU, NAFTA (now the
USMCA)
– China joined the WTO and became the world’s factory
floor
– Global supply chains
– U.S.-China trade dispute hampered trade flows
– COVID-19 disruptions
Globalization Score of Countries
Globalization of Markets
• The convergence in buyer preferences in markets around
the world.
• Benefits of Globalization of Markets
– Reduces marketing costs
– Creates new market opportunities
– Levels uneven income streams
– Local buyers’ needs
– Global sustainability
Chonlachai/Shutterstock
• Two friends created a website called
airbedandbreakfast.com, inflated three airbeds on their
floor, and rented them to guests. Airbnb disrupted the
hospitality industry with help from technology and
globalization. It now has listings in 191 countries and
81,000 cities. And celebrity influencers post photos and
stories of their luxury Airbnb stays on Instagram. Today
the company is expanding into the emerging markets of
India and China.
• What other technology companies can you think of that
disrupted their industries?
Globalization of Production
• The dispersal of production activities worldwide to
minimize costs or maximize quality.
• Benefits of Globalization of Production
– Access lower-cost workers
– Access technical expertise
– Access production inputs
Drivers of Globalization: Falling Barriers
to Trade and Investment (1 of 2)
General Agreement on Tariffs and Trade (GATT)
• A treaty designed to promote free trade by reducing tariffs and
nontariff barriers to international trade.
– Tariffs are essentially taxes levied on traded goods.
– Nontariff barriers are limits on the quantity of an imported
product.
World Trade Organization (WTO)

• The international organization that enforces the rules of
international trade.
Drivers of Globalization: Falling Barriers
to Trade and Investment (2 of 2)
• Regional Trade Agreements
– United States-Mexico-Canada Agreement (USMCA)
– European Union (EU)
– Asia Pacific Economic Cooperation (APEC)
• Other International Organizations
– The World Bank
▪ An agency created to provide financing for national
economic development efforts.
– The International Monetary Fund
▪ An agency created to regulate fixed exchange rates
and to enforce the rules of the international monetary
system.
Sunshine Seeds/Shutterstock
• Regional trade agreements cover more than half of all
international trade and work alongside the WTO to lower
trade barriers worldwide. South Africa is a member of the
World Trade Organization and participates in at least
seven regional, international, and bilateral trade
agreements. Trade agreements help provide good-paying
jobs for many South Africans like these individuals who
assemble industrial valves at a factory in Johannesburg.
In what trade agreements does your country participate?
Sunshine Seeds/Shutterstock
Drivers of Globalization: E-Commerce
• E-commerce
– The use of computer networks to purchase, sell, or
exchange products; to service customers; and to
collaborate with partners.
• The Internet
– The Internet of Things (IoT)
▪ All devices and equipment that are readable,
recognizable, locatable, addressable, and/or
controllable via the internet.
• Company Intranets and Extranets
Figure 1.4: World Internet Users
Source: Based on data obtained from Internet World Stats ( www.internetworldstats.com ).
Drivers of Globalization: Digital
Transformation
Digitization
• The process of changing information from analog to digital
form for use by computers and other information technologies.
Digitalization
• The use of digital data and technology to develop new
business operations, strategies, or business models.
Digital transformation
• Fundamental change in which digital technologies penetrate
all areas of operations, strategy, and culture to produce
customer-focused competitive advantage.
Drivers of Globalization: Communication
and Transportation
• Communication
– Videoconferencing
• Transportation
– Innovations in shipping
– GPS and RFID technology
– Eco-friendly policies
Andriy Popov/123RF
Quick Study 1.3
1. How have falling barriers to trade and investment
encouraged globalization?
2. What role has e-commerce, the internet, and digitization
played in propelling globalization?
3. How have advancements in communication and
transportation technologies affected globalization?
The Globalization Debate: Jobs and
Wages (1 of 2)
Globalization Harms Jobs and Wages

• Eliminates manufacturing jobs in developed nations
• Causes worker dislocation that lowers wages
• Exploits workers in lower-wage nations
Figure 1.5: Comparing Salaries of
Information Technology Workers
Source: Based on data obtained from the International Average Salary Income Database (
www.worldsalaries.org ).
The Globalization Debate: Jobs and
Wages (2 of 2)
Globalization Improves Jobs and Wages

• Increases wealth and efficiency in all nations
• Generates labor market flexibility in developed nations
• Advances the economies of developing nations and
raises living standards
The Globalization Debate: Income
Inequality
Inequality Within Nations

• Wage gap between white-collar and blue-collar
occupations in rich nations
Inequality Between Nations

• Widening the gap in average incomes between rich and
poor nations
Fabian Plock/Shutterstock
The Globalization Debate: Culture
For Globalization
• Allows us to profit from our differing circumstances and
skills
Against Globalization
• Homogenizes our world and destroys our rich diversity of
cultures
The Globalization Debate: National
Sovereignty
Menace to Democracy?
• Empowers supranational institutions at the expense of
national governments
Guardian of Democracy?
• Globalization spreads democracy worldwide
The Globalization Debate: The
Environment
For Globalization
• Most international firms today support reasonable
environmental laws
Against Globalization
• “Race to the Bottom”
Quick Study 1.4
1. How would you summarize the debate about
globalization’s impact on jobs and wages?
2. What does the evidence tell us about globalization’s
effect on income inequality within and between nations?
3. What are the main arguments surrounding the debate
about globalization’s impact on cultures?
4. What do supporters and opponents of globalization
argue regarding national sovereignty and the
environment?
Workplace Skills
Employability skills this course will help you develop:
• Application of knowledge
• Reflective (critical) thinking
– Analytical thinking
• Communication skills
• Ethical understanding and social responsibility
Rawpixel.com/Shutterstock
Figure 1.6 The Global Business
Environment
Quick Study 1.5
1. Why are certain workplace skills becoming increasingly
important?
2. What are some employability skills this course will help
you develop for your career?
3. How would you describe the Global Business
Environment model used in this text?
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International Business: The Challenges

• Large companies from the wealthiest nations

Multinational corporation (MNC)

Foreign direct investment (FDI)

Born global firm

Gross national product (GNP)

GDP or GNP per capita

World Trade Organization (WTO)

Source: Based on data obtained from Internet World Stats ( www.internetworldstats.com ).

Globalization Harms Jobs and Wages

Globalization Improves Jobs and Wages

Inequality Within Nations

Inequality Between Nations

This work is protected by United States copyright laws and is

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