Chapter 4 Globalization
Tuesday, March 5, 2019 12:11 PM
• Globalization and technology go hand in hand because of
distance.
• Globalization- the world is the market. (the trend of the w
becoming a more interdependent system.)
• Time and distance have been under assault for 150 years,
collapsed, as reflected in three important developments tha
1. The rise of the "global village" and electronic commerc
2. The world's becoming one market instead of many na
3. The rise of both megafirms and Internet-enabled minif
• Economies of scale- a proportionate saving in costs gained
production.
• International Business- as commercial transactions that oc
borders. When a company sells products in the US, Japan
this is an example of international business.
the collapse of time and
world economy toward
have now virtually
at will be discussed.
ce.
ational ones.
films worldwide.
d by an increased level of
ccur across country
and throughout Europe,
borders. When a company sells products in the US, Japan
this is an example of international business.
• The Global Village refers to the "shrinking" of time and sp
electronic media have made it easier for the people around
communicate with one another.
• The great recession was started on a 4 mile stretch in New
• The Global Economy refers to the increasing tendency to
to interact with one another as one market instead of man
• Positive effects of globalization:
○ Growth of Jobs
○ Developing Countries
• Negative effects of globalization:
○ Gap between Rich and poor are growing
○ All high paying jobs are going over seas
• Multinational corporations- sell products around the world
○ Sony
○ Samsung
○ Microsoft
and throughout Europe,
pace as air travel and the
d the globe to
w York.
the economies of the world
ny national markets.
d
○ Samsung
○ Microsoft
○ Mitsubishi
○ Nestle
○ Ford
• Multinational Enterprise- sell services globally
○ Google
• Multinational Organizations- Non- profit organizations,
○ Green Peace
○ Doctors without borders
• Expatriates: An expatriate is an individual living in a coun
country of citizenship, often temporarily and for work reaso
be an individual who has relinquished citizenship in their
citizen of another
• Home country: base Country or Home Country. In interna
the country upon which an expatriate's compensation is b
expatriate's home country or the country in which the em
located.
ntry other than his or her
ons. An expatriate can also
home country to become a
ational compensation, this is
based. It is usually the
mployee's headquarters is
expatriate's home country or the country in which the em
located.
• Host Country: A country where a company that is based i
another country has business activities
• Ethnocentric Staffing: you hire management that is the sa
parent company (Home country, sending Americans to Ind
• Polycentric Staffing: Hire management employees from th
the host country locals.)
• Geocentric Staffing: a method of international recruitment
most suitable person for the job irrespective of their Nation
• Why go international?
○ Go closer to your supplies
○ New markets
○ Lower Labor Cost
○ Access to financial capital
○ No taxes because you are bringing jobs
• How to go international?
○ Outsourcing- to save labor cost
§ Call Centers
mployee's headquarters is
in
ame nationality as the
donesia)
he host country. (The use of
t where the MNC’s hire the
nality.
• How to go international?
○ Outsourcing- to save labor cost
§ Call Centers
○ Importing and exporting is how you get to know the i
○ How do you exploit Export markets?
§ Export to countries that are similar to you cultural
linguistically.
§ Export to countries that are similar technologically
and linguistically
§ Exports now flow to developing countries
§ Entering to set up manufacturing (Cheap Labor)
§ The product now gets imported back to the count
○ Counter trading- Barter goods for goods (brings deve
table)
○ Licensing-A business arrangement in which one comp
company permission to manufacture its product for a s
are few faster or more profitable ways to grow your bu
by licensing patents, trademarks, copyrights, designs,
property to others.
international water
lly, technologically and
y, but different culturally
try of origin.
eloping countries to the
pany gives another
specified payment. There
usiness than
and other intellectual
are few faster or more profitable ways to grow your bu
by licensing patents, trademarks, copyrights, designs,
property to others.
○ Franchising- A continuing relationship in which a fra
licensed privilege to the franchisee to do business and
organizing, training, merchandising, marketing and ma
monetary consideration. (allows you to own open parts
doesn’t allow you to own a store.)
○ Joint ventures- is a business arrangement in which t
to pool their resources for the purpose of accomplishin
in China)
§ Green field Venture- A foreign subsidiary that a co
scratch
§ Wholly-owned Subsidiaries- a foreign subsidiary th
controlled by an organization.
Thursday March 7th
• Barriers to free trade
○ Free trade- the movement of goods and services acros
usiness than
and other intellectual
anchisor provides a
d offers assistance in
anaging in return for a
s of the company, but it
two or more parties agree
ng a specific task. (started
ompany has built from
hat is totally owned and
ss international boundaries
• Barriers to free trade
○ Free trade- the movement of goods and services acros
§ Barriers to free trade
□ Tariffs- is a trade barrier in the form of a cust
mainly on imports.
□ Import Quota- a trade barrier in the form of a
product that can be imported.
□ Dumping- The practice of a foreign company's
abroad at a lower price than the price in the h
below the costs of production- in order to driv
domestic product. (Selling something for less t
loyalty))
□ Embargo- Is a complete ban or prohibition of t
another.
• World trade organization- is designed to monitor and enfo
○ Agreements based on The General Agreement on Tari
§ An international accord first signed by 23 nations
§ Helped reduce tariffs and other barriers.
ss international boundaries
toms duty, or tax, levied
limit on the numbers of a
s exporting products
home market- or even
ve down the price of the
than it costs (Brings
trade of one country with
orce trade agreements.
iffs and Trade (GATT)
in 1947.
§ An international accord first signed by 23 nations
§ Helped reduce tariffs and other barriers.
○ A round, or G A T T General
• World Bank- Low interest loans for developing countries
• IMF- International Monetary F
○ Traunch
• European Union
○ 19
○ Goals:
§ Wanted to break borders for trading (importing)
§ Borders now open
§ Currency=
§ Federal Government that was a strong governmen
• NAFTA is what the US made
• APEC- Asia Pacific Economic
• No NATO country can sell weapons to another country wi
• Most Favored Nation Status- Granting a country favorable
in 1947.
nt.
In the US you have freedom of
ithout the US approval.
trading treatment.
f Religion
• No NATO country can sell weapons to another country wi
• Most Favored Nation Status- Granting a country favorable
• Culture
○ Culture is a shared set of beliefs, values, knowledge, a
common to a group of people.
• Geert Hofstede
○ collected data from 116,000 IBM employees in 53 coun
○ Hofstede model of four cultural dimensions,
§ (1) Individualism /Collectivism
□ Individualism- a loosely knit social framework
expected to take care of themselves.
□ collectivism- a tightly knit social framework in
organizations are expected to look after each o
personal desires for the good of the group.)
§ (2) Power Distance
□ Power Distance- the degree to which people a
situations.
§ (3) Uncertainty Avoidance
□ Uncertainty Avoidance- people’s intolerance fo
In the US you have freedom of
ithout the US approval.
trading treatment.
and patterns of behavior
ntries
k in which people are
n which people and
other (we subordinate our
accept inequality in social
or uncertainty and risk
situations.
§ (3) Uncertainty Avoidance
□ Uncertainty Avoidance- people’s intolerance fo
§ (4) Masculinity/Femininity.
□ Masculinity-Defined Gender roles, assertive pe
value performance-oriented traits
□ Femininity- Passive. How much they embrace
traits
• Communication in culture:
○ Low- Context Culture- shared meanings are primarily
spoken words.
○ High- Context Culture- people rely heavily on situatio
when communicating with others.
• Other Cultural Variations
○ Language-
○ Time orientation
§ Monochronic- Sweden, Boston
□ is a preference for doing one thing at a time.
□ One thing after the other (Run on schedule)
or uncertainty and risk
eople. how much people
e relationship-oriented
y derived from written and
onal cues for meaning
§ Monochronic- Sweden, Boston
□ is a preference for doing one thing at a time.
□ One thing after the other (Run on schedule)
§ Polychronic- Mexico, LA
□ is a preference for doing more than one thing
□ Doing many things at a time.
○ Interpersonal Space-
○ Communication-
○ Religion-
○ Law and political Stability-
at a time.