Chapter 2: Globalization of markets and the internationalization of the firm Flashcards
- ongoing economic integration and growing interdependency of national economies
- both compels and facilitates firms to expand abroad (internationalize)
globalization of markets
the tendency of companies to deepen their international business activites systematically
internationalization of firms
- rise of manufacturing: cross border trade of commodities, largely by trading companies
- Triggers: introduction of railroads and ocean transport
- 1830 to late 1800’s, peaking in 1880
what phase of globalization is this ?
First phase
- emergence and dominance of early MNEs (mainly from Europe and North America) in manufacturing, extractive and agricultural industries
- Triggers: rise of elctricity and stell production
- 1900 to 1930
which phase of globalization is this ?
Second phase
- focus by industrializing western countries to reduce trade barriers; rise of MNEs from Japan; development of global capital markets; rise of global trade names
- Triggers: formation of general agreement on tariffs and trade; conclusion of world war 2; marshall plan to reconstruct Europe
which phase of globalization is this ?
Third phase
- rapid growth in cross border trade of products, services, and capital; rise of internationally active SMEs and services firms; rising prosperity of emerging markets
- Triggers: privatization of state enterprises in transition economies: revolution in information, communication, and transportation technologies; remarkable growth of emerging markers
- 1980s to about 2006
which phase of globalization is this ?
Fourth phase
- leveraging technology to facilitate trade and local production; rising trade in digitally enabled services but slowing growth of trade in merchandise goods
- triggers: rise of digital technologies, and other new technologies, which are boosting manufacturing productivity and the efficiency of international trade in services
- 2007 to present
which phase of globalization is this ?
Fifth phase
- driving forces or causes of globalization
- dimensions or manifestations of globalization
- Firm-level consequences of market globalization
- societal consequences of market globalization
organize framework of market globalization
- worldwide reduction of barriers to trade and investment
- market liberalization and adoption of free markets
- industrialization, economic development, and modernization
- integration of world financial markets
- advances in technology
which organized framework of market globalization is this ?
driving forces
- integration and interdependence of national economies
- growth of global investment and financial flows
- convergence of buyer lifestyles and preferences
- globalization of market globalization
- globalization of services
which organized framework of market globalization is this ?
dimensions of market globalization
extends economic activities across the globe
globalization of capital
- can be on the firms value chain
which organized framework of market globalization is this ?
Firm level consequences of market globalization: internationalization of the firms value chain
the sequence of value adding activites thte firm performs in the course of developing, producing, marketing, and servicing a product
firms value chain
the rapid spread of monetary and financial crisis
contagion
- contagion
- loss of national sovereignty
- offshoring
- reshoring
- effect on the poor
- effect on sustainability and natural environment
- effect on national culture
- which organized framework of market globalization is this ?
societal consequences of market globalization
the relocation of manufacturing and other value chain activities to cost effective locations abroad
offshoring
the return of manufacturing and services back to the home country (ford, boeing)
reshoring
