GLOBMGT Notes
Globalization generally refers to the increased
interdependence of the world’s economies signified by
the circulation of information, money, people and goods
across national boundaries. It has of late given rise to
the domination of world’s market by a selected number
of transnational corporations.
Ch1 Phases of Globalization
Archaic Globalization
● First phase of globalization before 1600
● It can span from the Hellenistic age of greek
city-states trading with each other
○ Domestic - within the Hellenistic
"system"
○ Intl- conducted between the Hellenistic
world and states beyond its limits, such
as India, Parthia, the southern Arabic
states, Italy, the countries of the Illyrians,
the Thracians, the Celts, the Sarmatae
and the Scythians.
○ sea trade, which was being conducted
in the Mediterranean, the Black Sea, the
Persian Gulf and the Red Sea. Lack of
progress in ship navi impeded it.
● It can be attributed to the expansion of the
Roman Empire
● Example: Silk road which connects China to
Europe via India and Middle East during the
ancient and medieval times
○ The term refers to a network of routes
used by traders for more than 1,500
years, from when the Han dynasty of
China opened trade in 130 B.C.E
Proto Globalization
● Existed from the 1600 up to 1800
● Defined by Anthony Humpkins (?)
● Increasing trade links and cultural exchange
characterized the period immediately preceding
the advent of Modern Globalization
● Marked by such trade agreements such as the
East India Company, Rise of larger-scale
conflicts among powerful nations like the 30
years war, and the rise of new commodities
● It was characterized further by maritime
European empires like Portuguese and spanish
empires and later by the dutch and british
empires
● In the 17th century, globalization became also a
private business phenomenon with charter
companies like british east india company (1st
MNC) and followed by dutch east india company
Modern Globalization
● Attributed to the industrial revolution
● Started from 1800 up to the present
● Many authors are proposing that it should stop
only until 2000
● Implies that a country can produce a product
most efficiently (wt the least amt of resources at
a lower cost than competing nations)
● If all countries are specializing, production
should be more efficient worldwide – Prices
should be lower and economic growth
widespread and all countries should benefit (in
theory)
● Free trade drives globalization
● Industrialization allowed standardized production
of household goods using economies of scale
● 19th century, steamships reduced costs of
international transportation
● Shipping containers helped further advance the
globalization of commerce
Neo Globalization
● Neo - New Economic Online globalization
● Attributed to the year 2000 up to the present
with the advent of the information age
● E-commerce evolved esp with the pandemic
Ch2 Stages in the Evolution of Intl Business and
Global Management
Domestic
● Operates only within its own
● country.
● Uses domestic suppliers.
● Primarily follows domestic market trends &
resources.
● Competitive strategies, plans, and tactics remain
largely targeted to a domestic audience.
● Caveat: the internet has blurred the distinction
between domestic & international.
● Our Tribe, Mr. Quickie, Tropical Hut
Export/International
● Export companies have a
product/service/technology that they send
overseas but whatever they send is managed by
distributors; they have zero to very few
expatriated staff overseas.
● International companies have a dedicated
international division that travels frequently to
monitor the distribution and sometimes even the
assembly, presentation, and display of the
products they export.
Multinational
● Organizations that own or control production
and/or service facilities in one or more countries
other than the home country.
 ● Centralized HQ in the home country may strictly
coordinate operations throughout all its
subsidiaries worldwide OR choose to grant
varying degrees of autonomy to its subsidiaries.
● Products may be exported back to home
country, other countries, or even sold in the host
country.
● An MNC can have a positive economic effect on
the countries in which it operates
● Seeks improved efficiencies, lower production
costs, larger market share (other costs such as
long-distance shipping)
● the price of lower prices—is that domestic jobs
move overseas. This can increase
unemployment in the home country; downfall of
msmes
● Dole Ph, Jollibee, Ford
Multidomestic
● A company that has multidomestic operations
customizes its products to each country in which
it does business.
● The product features are tailored to the
preferences, tastes, lifestyle, and other unique
features that define the locality where it
operates.
● A multidomestic strategy focuses on creating
multiple, country-specific brands instead of one
global brand, and involves developing different
sales tactics, marketing strategies, and product
portfolios based on the local market.
● tailors the product selection, payment methods,
and marketing to the values and regulations in
each country where it operates
● Mcdonald’s, Disneyland, 7-eleven, kfc
Global
● A Global enterprise integrates all of its units and
focuses its marketing strategies on a worldwide
scale.
● The product (or service) then becomes nearly
identical wherever it is sold (or rendered).
● Coke, Microsoft, Fedex
Transnational
● A transnational enterprise operates vast facilities
and does business in more than one country.
● All of its units worldwide regularly coordinate
with each other and with HQ.
● It does not consider any particular country as its
national or home base.
● Each overseas unit has a great degree of
autonomy and is programmed to be responsive
to the needs of its host country.
● Unilever, Nestle, Gen Mills
Ch3 NAFTA/CAFTA/Mercosur
NAFTA
● The North American Free Trade Agreement
(NAFTA) was implemented in 1994 to encourage
trade between the U.S., Mexico, and Canada.
● reduced or eliminated tariffs on imports and
exports between the three participating
countries, creating a huge free-trade zone.
● aimed to establish high common standards in
workplace safety, labor rights, and
environmental protection, to prevent businesses
from relocating to other countries to exploit lower
wages or looser regulations.
● United States-Mexico-Canada Agreement
(USMCA), which was signed on Nov. 30, 2018,
and went into full force on July 1, 2020, replaced
NAFTA.
● will create a more balanced environment for
trade, will support high-paying jobs for
Americans, and will grow the North American
economy.
CAFTA
● Central America Free Trade Agreement
(CAFTA) is a NAFTA-style deal with five Central
American nations (Guatemala, El Salvador,
Honduras, Costa Rica and Nicaragua), and the
Dominican Republic.
● It has destroyed the livelihoods of Central
American small farmers and U.S. textile
workers.
● life-saving medicines are more expensive due to
monopoly protections that CAFTA gave to
pharmaceutical corporations
● CAFTA’s labor provisions have failed to halt the
assassination of dozens of Central American
union workers who were trying to end
unmitigated labor abuses like wage theft.
● the deal could lead to the displacement of the
family farmers that constitute a significant
portion of Central America’s workforce, by
forcing them to directly compete with
highly-subsidized U.S. agribusiness.
Mercosur
● Venezuela was suspended indefinitely in 2016.
● Created in 1991 when Argentina, Brazil,
Paraguay, and Uruguay signed the Treaty of
Asunción, an accord calling for the “free
movement of goods, services, and factors of
production between countries.” The four
countries agreed to eliminate customs duties,
implement a common external tariff (CET) of 35
percent on certain imports from outside the bloc,
and adopt a common trade policy toward outside
countries and blocs
 ● to increase business and investment
opportunities for regional industries and
encourage local development
● Assoc Members receive tariff reductions when
trading with the full members but do not enjoy
full voting rights or free access to members’
markets
Ch4 Eclectic Paradigm
Definition
It is a theory that provide arguments in the combination
of location-specific assets or resource endowments with
the firm’s own unique assets that may require Foreign
Direct Investment
● Also known as the ownership, location,
internalization (OLI) model or OLI framework, is
a three-tiered evaluation framework that
companies can follow when attempting to
determine if it is beneficial to pursue FDI
○ FDIs are the physical investments and
purchases made by a company in a
foreign country, typically by opening
plants and buying buildings, machines,
factories, and other equipment in the
foreign country.
● Assumes that institutions will avoid transactions
in the open market if the cost of completing the
same actions internally, or in-house, carries a
lower price.
Purpose
● The goal is to determine if a particular approach
provides greater overall value than other
available national or international choices for the
production of goods or services.
● Since businesses seek the most cost-effective
options while still maintaining quality, they may
use the eclectic paradigm to evaluate any
scenario which exhibits potential.
Holistic Approach
● The eclectic paradigm takes a holistic approach
to examining entire relationships and
interactions of the various components of a
business.
● It provides a process to determine an
organization’s strategy regarding the expansion
of its operations through FDIs
Three Key Factors
For For FDI to be beneficial, the following advantages
must be evident:
Ownership Advantages
● Include proprietary information and various
ownership rights of a company.
● These may consist of branding, copyright,
trademark or patent rights, plus the use and
management of internally-available skills.
Ownership advantages are typically considered
to be intangible. They include that which gives a
competitive advantage, such as a reputation for
reliability.
Comparative/Location Advantage
● Companies must assess whether there is a
comparative advantage to performing specific
functions within a particular nation.
● These considerations apply to the availability
and costs of resources, when functioning in one
location compared to another
Internationalization Advantage
● Signal when it is better for an organization to
produce a particular product in-house, versus
contracting with a third-party.
● If the business decides to outsource the
production, it may require negotiating
partnerships with local producers. However,
taking an outsourcing route only makes financial
sense if the contracting company can meet the
organization’s needs and quality standards at a
lower cost.
● Perhaps the foreign company can also offer a
greater degree of local market knowledge, or
even more skilled employees who can make a
better product.
Ch5 Cornelius Vanderbilt
April 14th 1865
● Abraham Lincoln died civil war
● They thought american democracy failed
The nation is entering an age of advancement.
Cornelius Vanderbilt (NY 1865)
● At 16, he buys a small ferry boat with a 100usd
loan and earns a rep as a cut-throat
businessman, competi
● The single ferry soon became a fleet,
transporting goods & passengers to every
corner of the country
● Synonymous wt/shipping, commodore
● Built largest shipping empire, at the peak before
the civil war, he realized that the first transconti
railroad will slash cross country travel time by
months. He sells his ships and invested
everything in railroads
● Investment pays off and by the end of the war,
he was the richest man in US
● He owns the only rail bridge (Albany bridge) to
NYC, gateway to the country’s largest port so he
blocked his rivals off from its use
○ Single-handedly erected a blockade
around the largest city
 ● The rivals (new york central railroad) sold all
shares before it drops, he buys everyth he can,
creating the largest single rail company in U.S
● Railroads allowed the industrial economy to
boom in ways it wasnt able to before
● The Grand central depot brought together the
Harlem, Hudson, and Central
● He wanted the erie (chi to nyc) and bought
stocks (signature move)
● Jay Gould & Jim Fisk printed over 100k stock to
dilute vanderbilt’s share
● He realized that the future isnt building new
lines, but in transporting new cargo, so he
explored kerosene for light
Ch 6 Panama Canal
1906 - Stevens (Chief Engr.)
Lock Canal is needed bc the construction of Panama
canal faced many mudslides - It will take 8 years, sea
level canal might take 18 years
● The canal connected the atlantic ocean and
pacific ocean, facing engineering feats
● Idea was to dam the river, turning a major part of
panama into a giant lake to help control
mudslides and did not have to dig the canal to
central panama bc the boats can now just sail
across the lake
● George Washington Goethels (army engr)
replaced stevens
● He separated his workers into two grps to work
faster and used psychology (military vs civilians)
● the Panama Canal provided a shortcut for
maritime trade, saving vessels from having to
navigate around the treacherous Cape Horn or
undertake the lengthy journey around South
America. It greatly reduced travel times and
costs for ships, thereby transforming global
trade route.