GEB4361 Globalization Flashcards by Andis Gonzalez

Refers to the interconnectedness of national economies and the growing interdependence of buyers, producers, suppliers, and governments around the world

Globalization

How well did you know this?

Not at all

Perfectly

Globalization allows firms to view the world as one large marketplace for…

goods, services, capital, labor, and knowledge

How well did you know this?

Not at all

Perfectly

Convergence in buyer preferences in markets around the world

Globalization of markets

How well did you know this?

Not at all

Perfectly

Dispersal of production activities worldwide to minimize costs or maximize quality

Globalization of production

How well did you know this?

Not at all

Perfectly

Globalization is marked by “denationalization” which…

embraces concepts and theories from economics, political science, sociology, anthropology, and philosophy

How well did you know this?

Not at all

Perfectly

Is characterized by the rise of manufacturing, cross-border trade of commodities, largely by trading companies. (provide the phase, approximate period, and triggers)

Phase of Globalization: First phase
Approximate Period: 1830 to late 1800’s (peaked in 1880’s)
Triggers: Introduction of railroads and ocean transport

How well did you know this?

Not at all

Perfectly

Is characterized by emergence and dominance of early MNE’s in manufacturing, extractive, and agricultural industries. (provide the phase, approximate period, and triggers)

Phase of Globalization: Second phase
Approximate Period: 1900 to 1930
Triggers: Rise of electricity and steel production

How well did you know this?

Not at all

Perfectly

Is characterized by focus by industrializing Western countries to reduce trade barriers; rise of MNE’s from Japan; development of global capital markets; rise of global trade names (provide the phase, approximate period, and triggers)

Phase of Globalization: Third Phase
Approximate Period: 1948 to 1970’s
Triggers: Formation of General Agreement on Tariff and Trade (GATT); conclusion of World War II; Marshal Plan to reconstruct Europe

How well did you know this?

Not at all

Perfectly

Is characterized by rapid growth in cross border trade of products, services and capital; rise of internationally active SME’s and service firms; rising prosperity of emerging markets

Phase of Globalization: Fourth Phase
Approximate Period: 1980’s to present
Triggers: Privatization of state enterprises in transition economies; revolution in information, communication, and transportation technologies; remarkable growth of emerging markets

How well did you know this?

Not at all

Perfectly

Drivers 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

How well did you know this?

Not at all

Perfectly

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

Drivers of Market Globalization

How well did you know this?

Not at all

Perfectly

Promoted free trade by reducing tariffs and nontariff barriers. A revision of the Agreement lowered tariffs and subsidies for agricultural products, protected intellectual property rights, and created the World Trade Organization (WTO)

The General Agreement on Tariffs and Trade (or GATT)

How well did you know this?

Not at all

Perfectly

The goals of this organization include helping the free flow of trade, negotiating the further opening of markets, and settling trade disputes among member nations

World Trade Organization

How well did you know this?

Not at all

Perfectly

Makes it easier, faster, and less costly to move data, goods, and equipment around the world.

Technology

How well did you know this?

Not at all

Perfectly

Provides better coordination and control

Email and videoconferencing

How well did you know this?

Not at all

Perfectly

Has improved communications and management

Internet, intranets, and extranets

How well did you know this?

Not at all

Perfectly

Has provided more efficient, dependable shipping

Transportation advancements

How well did you know this?

Not at all

Perfectly

Integration and interdependence of national economies
Rise of regional economic integration blocs
Growth of global investment and financial flows
Convergence of buyer lifestyles and preferences
Globalization of production activities
Globalization of services

Dimensions of Market Globalization

Integration and interdependence of national economies
Rise of regional economic integration blocs
Growth of global investment and financial flows
Convergence of buyer lifestyles and preferences
Globalization of production activities
Globalization of services

Contagion: Rapid spread of financial or monetary crises from one country to another
Loss of national sovereignty
Offshoring and the flight of jobs
Effect on the poor
Effect on the natural environment
Effect on national culture

Societal Consequences of Market Globalization

Contagion: Rapid spread of financial or monetary crises from one country to another
Loss of national sovereignty
Offshoring and the flight of jobs
Effect on the poor
Effect on the natural environment
Effect on national culture

Rapid spread of financial or monetary crises from one country to another

Contagion

New business opportunities for internationalizing firms
New risks and intense rivalry from foreign competitors
More demanding buyers who source from suppliers worldwide
Greater emphasis on proactive internationalization
Internationalization of firm’s value chain

Firm-level Consequences of Market Globalization: Internationalization of the Firm’s Value Chain

New business opportunities for internationalizing firms
New risks and intense rivalry from foreign competitors
More demanding buyers who source from suppliers worldwide
Greater emphasis on proactive internationalization
Internationalization of firm’s value chain

A trade organization of some 150 member nations

World Trade Organization (WTO)

Drivers 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 - Advance in technology:

These trends transformed many developing economies from producers of low-value goods to higher-value goods, such as electronics and computers. Simultaneously, rising living standards have made such countries more attractive as target markets for sales and investment

Industrialization, economic development, and modernization:

Perhaps the most important measure of economic development

Gross National Income (GNI) per capita

Enables firms to raise capital, borrow funds, and engage in foreign currency transactions wherever they go. Banks now provide a range of services that facilitate global transactions

Integration of world financial markets

Reduces the cost of doing business internationally by allowing firms to interact cheaply with suppliers, distributors, and customers worldwide. Facilitates the internationalization of companies, including countless small firms

Advances in technology

Which of the following is NOT an example of a driver of market globalization? A. Worldwide reduction of barriers to trade and investment B. Market liberalization and adoption of free markets C. Integration of world financial markets D. Advances in technology E. All of the above are examples

E. All of the above are examples

Key advances include fuel-efficient jumbo jets, giant ocean-going freighters, and containerized shipping. The cost of international transportation has declined substantially, spurring rapid growth in global trade

Transportation

Dimensions of Market Globalization

- Integration and interdependence of national economies - Rise of regional economic integration blocs - Growth of global investment and financial flows - Convergence of buyer lifestyles and preferences - Globalization of production - Globalization of services

Which of the following is NOT an example of a dimension of market globalization? A. Decline of regional economic integration blocs B. Globalization of services and production C. Integration and interdependence of national economies D. Convergence of buyer lifestyles and preferences E. All of the above are examples

A. Decline of regional economic integration blocs

Societal Consequences of Market Globalization

- Contagion (Rapid spread of monetary or Financial crises) - Loss of national sovereignty: - Offshoring and the flight of jobs: - Effect on the poor - Effect on the natural environment - Effect on National Culture

While globalization usually creates jobs and raises wages, it also tends to disrupt local job markets. MNEs may pay low wages, and many exploit workers or employ child labor. Globalization’s benefits are not evenly distributed. This is considered which Societal Consequence of Globalization?

Effect on the poor

Globalization harms the environment by promoting industrialization and other activities that generate pollution, habitat destruction, and other environmental harm. This is considered which Societal Consequence of Globalization?

Effect on the natural environment:

The homogenization of traditional norms, values and behaviors is considered which Societal Consequence of Globalization?

Effect on National Culture

Which of the following is NOT an example of a societal consequences of globalization? A. Offshoring and the flight of jobs B. Rapid spread of monetary or financial crises C. Loss of national sovereignty D. Effect on the poor E. All of the above are example

E. All of the above are example

Is the extent of government interference in business, the strictness of the nation’s regulatory environment, and the ease with which economic activity can be carried out

Economic freedom

National prosperity is strongly associated with

- Participation in international trade and investment | - The nation’s level of economic freedom

The most significant implication of market globalization for companies is...

that a purely domestic focus is no longer viable in most cases

The sequence of value-adding activities performed by the firm in the process of developing, producing, and marketing a product or a service

Value chain

The rationale for internationalization of firm's value chain:

- Cost savings - Increase efficiency, productivity, and flexibility of value chain activities - Access to customers, inputs, labor, or technology - Benefit from foreign partner capabilities