Chapter 1

Globalization

Assignment --- 5 Marks 
Each one of you is a country, different from each other. You have to provide information required in the following ten questions by the end of third class. Every answer should also contain the resource from where the information is collected. Assignment exceeding two pages will bring discredit.
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9. 8. 7. Equivalence of local currency as against one US $ 1.5 Marks What is the name of the capital city? What is the political system? What is the per capita income? What is the purchasing power parity? What are the three major imports of the country? What are the three major exports of the country? What was their exports worth in 2008-09? What was their imports worth in 2008-09? What regional integrations this country is a member of? 10. 1-3 .Assignment --. 3. 5. 4. 2. 6.

Case Study ***Wal-Mart Established in 1962 by Sam Walton Now the largest retailer of the world with a sale of $256B in 2003 1. 1-4 . buying power and human relation policies.5 million associates 4. among first companies to promote stock ownership among employees. Most modern distribution system to track sales and inventory.500 stores Until 1991 confined to US Markets only Base of competitive advantage:  Efficient merchandising.

1990 Wal-Mart felt the congestion in the market. they thought would meet the saturation point. they were active in all 50 states. 2000. which enhances their market share. 1995.Case Study ***Wal-Mart These factors increase productivity & drive down the cost which is passed on to the consumers. 1-5 . So they decided to expand globally.

 Initially the prices were 20% more than those being sold in US which reduced gain to market share. consumer taste. preferences vary and established retailers already dominated. 1-6 . lack of leverage with local suppliers who would not directly deliver to Wal-Mart. poor infrastructure.  1991. crowded roads. different infrastructure.Case Study ***Wal-Mart  Critics view:  Wal-Mart is too American a company and would not succeed in different environment. largest local retailer  Main issues: Could not replicate distribution system. Wal-Mart established its first store in ? With a JV with Cifera. thus resulting in stock issues and raised cost and prices.

 Adopted to local environment  Acquired a partnership with _ _ _ _ _ _ that dramatically improved its ______  A more careful stocking practice for taste and preference was made  Improved the share  Many of Wal-Mart suppliers started building around Mexican distribution centers.Case Study ***Wal-Mart  Already many of the Mexican stores were selling popular Wal-Mart stuff before Wal-Mart entry. it had 623 stores in Mexico with revenues more than $11B.  1998.  By mid 90s. 1-7 . Wal-Mart learned from its mistakes. it acquired interest in Cifera. By 2003.

350 stores outside US and $46B of revenues and 330. WalMart established its own stores.  Growth of Wal-Mart enables its suppliers to grow as well: Unilever. Wal-Mart grew in 9 other countries: Canada.  By 2003. Argentina and China. Brazil. P&G. logistics and management expertise. GE etc  Wal-Mart continues to learn and increase its product line What do you learn from this Case? 1-8 . Germany.000 associates. Japan.Case Study ***Wal-Mart  Expanded after Mexican Experience.  In Puerto Rico. South Korea by acquiring existing retailers and then transferring its info system. company had over 1. Britain.

Case Study ***Wal-Mart  Wal-Mart International 3.630 total units as of January 31.197 November 1991  Puerto Rico56August 1992  Canada318November 1994  Brazil345May 1995  Argentina28August 1995  China (*)243August 1996  United Kingdom358July 1999  Japan386March 2002  Costa Rica164September 2005  El Salvador77September 2005  Guatemala160September 2005  Honduras50September 2005  Nicaragua51September 2005  Chile197January 2009 (*) Includes a 35% interest in Trust-Mart. which operates 100 stores in China. 2009  Mexico1. 1-9 .

Case Study ***Wal-Mart International Customers: 49 million international / week International Associates: 680.000 Total International Sales: $90. 2009 1-10 .63 Billion in Jan.6 Billion in 2008 $6.

Question: What is Business? 3. Question: What is Management? 1-11 .What is International Business Management? 1. Question: What is International? 2.

economic. and political process that deepens and broadens the relationships and interdependencies amongst nations²their people.What Is Globalization? Question: What is globalization? Globalization refers to the trend towards a more integrated global economic system Globalization: the ongoing social. their firms. and their governments Video 1-12 . their organizations.

land. and capital) 1-13 .Major Facets of Globalization The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor energy.

regulate. and police the global market place  promote the establishment of multinational treaties to govern the global business system  Notable global institutions include  the World Trade Organization (WTO)  the International Monetary Fund (IMF)  the World Bank  the United Nations (UN) 1-14 .The Emergence of Global Institutions  Several global institutions have emerged to  help manage.

Drivers of Globalization Question: What is driving the move toward greater globalization?  There are two macro factors underlying the trend toward greater globalization 1. technological change 1-15 . declining trade and investment barriers 2.

Drivers of Globalization International trade occurs when a firm exports goods or services to consumers in another country Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country 1-16 .

1-17 . dominated the world economy and the world trade picture the U.the centrally planned economies of the communist world-.S. multinationals dominated the international business scene about half the world-. dominated world FDI U.S.The Changing Demographics of the Global Economy In the 1960s: the U.was off limits to Western international business Today. much of this has changed.S.

The Changing Demographics of the Global Economy The Changing Demographics of World GDP and Trade 1-18 .

The Changing Demographics of the Global Economy The share of world output generated by developing countries has been steadily increasing since the 1960s The stock of foreign direct investment (total cumulative value of foreign investments) generated by rich industrial countries has been on a steady decline There has been a sustained growth in cross-border flows of foreign direct investment The largest recipient of FDI has been China 1-19 .

The Changing Demographics of the Global Economy Percentage Share of Total FDI Stock.2006 1-20 . 1980 .

1988 .2007 1-21 .The Changing Demographics of the Global Economy FDI Inflows.

The Changing Demographics of the Global Economy A multinational enterprise is any business that has productive activities in two or more countries Since the 1960s. there has been a rise in non-U. multinationals there has been a rise in minimultinationals 1-22 .S.

many markets that had been closed to Western firms are open  The collapse of communism in Eastern Europe has created a host of export and investment opportunities  Economic development in China has created huge opportunities despite continued Communist control  Free market reforms and democracy in Latin America have created opportunities for new markets and new sources of materials and production 1-23 .The Changing Demographics of the Global Economy  Today.

The Changing Demographics of the Global Economy A more integrated global economy presents new opportunities for firms. but it can also result in political and economic disruptions that may throw plans into disarray 1-24 .

more jobs.The Globalization Debate Question: Is the shift toward a more integrated and interdependent global economy a good thing? Many experts believe that globalization is promoting greater prosperity in the global economy. and lower prices for goods and services Others feel that globalization is not beneficial 1-25 .

Managing in the Global Marketplace Question: What does the shift toward a global economy mean for managers within an international business? Managing an international business (any firm that engages in international trade or investment) differs from managing a domestic business in four key ways 1-26 .

Managing in the Global Marketplace 1. International companies must work within the limits imposed by governmental intervention and the global trading system 4. Managers face a greater and more complex range of problems 3. Countries differences require companies to vary their practices country by country 2. International transactions require converting funds and being susceptible to exchange rate changes 1-27 .

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