Ch. 2 Globalization of Markets and Internationalization of the Firm Flashcards
dimensions
growing global interconnectedness of buyers, producers, suppliers, and governments. Globalization has fostered the emergence of regional economic integration blocs, growth of global investment and financial flows, the convergence of buyer lifestyles and needs, and the globalization of production.
drivers
falling trade and investment barriers; market liberalization and adoption of free market economics in formerly closed economies; industrialization and economic development (emerging markets); integration of world financial markets; and technological advances.
■ Globalization makes internationalization…?
makes internationalization an imperative, technology provides the means
Consequences- societal- globalization interferes with
societal- globalization interferes with national sovereignty, is associated with offshoring, tends to decrease poverty, may widen the gap between the rich and the poor, may harm the natural environment, and may promote the loss of national cultural values.
Consequences- firm- firms are compelled to…
Firms are compelled to globally reconfigure key value-adding activities such that value-chain activities reduce the costs of R&D and production, or gain closer access to customers.
Twin mega trends have altered the international business landscape by enabling both marketing and…
marketing and procurement activities on a global scale: the globalization of markets or economies and technological advances.
Globalization of Markets
is a broad term referring to the interconnectedness of national economies and the growing interdependence of buyers, producers, suppliers, and governments in different countries, i.e. the gradual integration and growing interdependence of national economies.
Market globalization is manifested by the .
production/marketing of branded products/services worldwide
Economic integration is accelerated by
declining trade barriers and the Internet.
Globalization enables firms to view the world as one large
marketplace for goods, services, capital, labor, and knowledge.
Technological advances in …have facilitated rapid and early internationalization of countless firms.
information, manufacturing, transportation, and the Internet
Market Globalization and Technological Advances- Antecedents and Consequences:
◘ Growing world trade and foreign direct investment
◘ Spread of technology
◘ Global sourcing and sales of products/services
◘ Broad product/service consumer options
◘ Competion and innovation foster product/service price reductions
◘ Job creation – contributing to higher living standards
◘ Global convergence of some products- illustrated by universal demand, e.g. music, entertainment, consumer electronics, food
◘ Transformation of national economies
◘ Dissemination of economic, political, and legal values, e.g. liberalized economies, free trade, and intellectual property rights
Exhibit 2.1 summarizes the Phases of Globalization. Since the 1800s, the evolution of market globalization has witnessed four distinct phases, each triggered by global events and technological discoveries
1830-late 1800s rail ocean/manu & border trade
1900 to 1930 steel elect/MNE’s euro NA agg ind
1948 to 1970s GAAT WWII/reduce barriers rise of MNES global capital markets global trade names
1980s present Revolution info commm trans tech
RAPID GROWTH in corss border trade of products, SME rising prosperity
You should also be familiar with the framework your e-text uses to describe globalization … specifically you should know and be able to distinguish between:the drivers or causes of globalization;
· the dimensions or manifestations of globalization;
· societal consequences of globalization; and
· firm-level consequences of globalization- factors compelling firms to proactively internationalize.
Other concepts to know include:
· The integration and growing interdependence of markets globally
· The rise of regional economic integration blocks (EU, Nafta, etc.)
