1.1 Intro to IS

Question 1

Globalization

Answer 1

Process with global interconnectedness, interdependent, a spatial extension of human activities across cultures/economies/political systems

Question 2

3 waves of globalizaton

Answer 2

400-1000AC: transcontinental spread of religions “world religions”
1500 - 1700: European colonization of the Americas
19th century: British and French empires colonization of Asia/Africa, defined current (under)developed countries

Question 3

Waves of globalization are revolutions that

Answer 3

Combine communication and transportation (ex. Telegraph, telephone, steamship, internet)

Question 4

Different definitions of globalization

Answer 4

Business: trade, capital, technology (knowledge)
General: people, culture, environment
Transition of superpowers: ex. China catching up to U.S., 2nd longest economy, largest exporter

Question 5

Globalization of markets

Answer 5

The merging of historically distinct and separate national markets into one large

Question 6

Things to keep in mind with market globalization

Answer 6

Continuous falling barriers to cross border trade and investment (good)
Standardization/differing tastes
Competitors may not change across nations (Apple vs. Samsung)
Benefits small-medium enterprises (SME) (make up 33% of export vale in U.S.)
Global market ≠ national market
Global products serve a universal need (ex.oil)
Digital economy allows companies to be available worldwide

Question 7

Why do we globalize production

Answer 7

Outsource to take advantage of difference in cost and quality of factors of production

Question 8

Disadvantage of outsourcing

Answer 8

Can increase value chain complexity (ex. Boeing)

Question 9

What was early outsourcing primarily used for

Answer 9

Manufacturing

Question 10

Impediments that prevent optimal dispersion of activities

Answer 10

Formal and informal barriers to trade
Barriers to foreign direct investment
Transportation costs
Political and economic risk
Challenge of coordinating globally dispersed supply chain

Question 11

Institutions that manage and regulate the global marketplace

Answer 11

GATT: General agreement on tariffs and trade
WTO: world trade organization
IMF: international monetary fund
World Bank
United Nations
G20: group of 20
ISO: international standardization organization

Question 12

International trade

Answer 12

When a firm exports goods to customers in another country

Question 13

Foreign direct investment

Answer 13

When a firm invests resources in business activities in another country

Question 14

Multinational enterprise

Answer 14

A company producing in 2+ countries

Question 15

Globalization trends as GATT and WTO lowered banners to trade

Answer 15

International trade
Foreign direct investment
Multinational enterprises
Change in world order: ex-communist countries are given opportunity to export and invest, leads to more risky business
Obstacles to trading freely are decreasing due to more liberal economic policies, globalization’s cannot be avoided, sore countries pull back due to fear of risk

Question 16

Drivers of globalisation

Answer 16

Communication
Internet
Transportation technology
Globalization of production
Globalization of markets

Question 17

Role of technological change in globalization

Answer 17

Lowering trade barriers made globalization of markets and production theoretically possible
Technological change has made possible

Question 18

How was communication a driver of globalisation

Answer 18

The development of the microprocessor was one of the big communication innovations since WW2
Moore’s law predicts that the power of microprocessors doubles and costs of production fall every 18 months

Question 19

How was the internet a driver of globalisation

Answer 19

It acts as an equaliser, more than half the world’s population uses it, global e-commerce sales over 2.5 trillion dollars

Question 20

How was transportation technology a driver of globalisation

Answer 20

Commercial jets, super freighters and containerisation have shrunken the globe

Question 21

How was the globalisation of production a driver of globalisation

Answer 21

It has become more economical to produce in separate geographical locations, outsourcing to LEDCs (low economically developed countries)

Question 22

How was the globalisation of markets a driver of globalisation

Answer 22

Cultural distances have been reduced and has bought some convergence of consumer tastes and preferences

Question 23

The globalization debate

Answer 23

Many protests against it in the 1990s for fear of detrimental effects on living standards, wage rates, and the environment (ex. Outsourcing to cheaper places)

Question 24

Arguments against globalization/labour policies/environment

Answer 24

Labour and environmental regulations increase manufacturing costs
Lack of regulation can lead to abuse
Firms move production to nations that do not have regulations
Shift of power away form national governments toward supranational organizations

Question 25

Arguments for globalization/labour policies/environment

Answer 25

Tougher environmental regulations and stricter labour standards go hand in hand with economic progress
Free trade leads to less labour exploitation and less pollution
The power of supranational organizations is limited to what nations collectively agree to grant
These organizations exist to serve the collective interests of the member states

Question 26

The ISO 26000 is a guidance on being socially responsible with the following principles:

Answer 26

Accountability
Transparency
Ethical behavior
Respect for stakeholder interests
Repeat for rule of law
Respect for international norms and behavior
Respect for human rights