1.1: What is Globalization? Flashcards
What is the definition of globalization as used in the textbook?
Globalization, as used in this book, refers to the shift toward a more integrated and interdependent world economy.
What are the different facets of globalization mentioned in the text?
The different facets of globalization mentioned in the text are:
The globalization of markets
The globalization of production
The globalization of consumers
What factors have contributed to the concept of a worldwide consumer?
The concept of a worldwide consumer has been influenced by developments in communications technology and a homogenization of economies.
What does the term “globalization of markets” refer to?
The globalization of markets refers to the merging of historically distinct and separate national markets into one large global marketplace.
What has facilitated the globalization of markets?
Falling barriers to cross-border trade have made it easier to sell internationally.
Additionally, the convergence of consumer tastes and preferences on a global norm has contributed to this trend.
Are national markets completely giving way to global markets?
No, national markets are not completely giving way to global markets. Significant differences still exist between national markets, including consumer tastes and preferences, distribution channels, value systems, business practices, and legal regulations.
What types of products dominate global markets?
Currently, global markets are dominated by industrial goods and materials that serve universal needs worldwide.
These include commodities like aluminum, oil, and wheat, industrial products like microprocessors and computer software, and financial assets.
How do firms behave in global markets when they encounter competition?
In global markets, firms often confront each other as competitors in multiple nations.
When one firm enters a new market, its rivals are likely to follow to prevent a competitive advantage. This results in greater uniformity and less diversity in the market.
What does the term “globalization of production” refer to?
The globalization of production refers to the practice of sourcing goods and services from different locations worldwide to take advantage of differences in the cost and quality of factors of production (e.g., labor, energy, land, and capital).
What are the primary objectives that companies aim to achieve through the globalization of production?
Companies engage in the globalization of production to lower their overall cost structure and/or improve the quality or functionality of their products, enabling them to compete more effectively.
Is the globalization of production limited to large corporations?
No, the globalization of production extends to smaller firms as well. For instance, Hydrogenics, a Canadian company specializing in hydrogen fuel cells, has manufacturing facilities in Germany, Belgium, and Canada.
What is the impact of the globalization of production on the concept of national products?
In many industries, the concept of national products (e.g., Canadian, Japanese, German, or Korean) is becoming irrelevant, as manufactured goods are increasingly described as global products.
What are some impediments to achieving the optimal dispersion of productive activities across the globe?
Impediments to the globalization of production include:
**formal and informal trade barriers between countries, **
obstacles to foreign direct investment,
**transportation costs, **
and issues related to economic and political risk.
What is the role of modern firms in driving the globalization of production?
Modern firms play a significant role in fostering increased globalization by responding efficiently to changing conditions in their operating environment. They are important actors in the process of globalization.
