1、 Globalization1. Describe the shifts in the world economy over the last 30 years. What are the implications of these shifts for international businesses based in Great Britain? North America? Hong Kong?Answer: The world economy has shifted dramatically over the past 30 years. As late as the 1960s, f
2、our stylized facts described the demographics of the global economy. The first was U.S. dominance in the world economy and world trade. The second was U.S. dominance in the world foreign direct investment picture. Related to this, the third fact was the dominance of large, multinational U.S. firms i
3、n the international business scene. The fourth was that roughly half of the globe - the centrally planned economies of the Communist world - was off-limits to Western international businesses. All of these demographic facts have changed. Although the U.S. remains the worlds dominant economic power,
4、its share of world output and world exports have declined significantly since the 1960s. This trend does not reflect trouble in the U.S. economy, but rather reflects the growing industrialization of developing countries such as China, India, Indonesia, and South Korea. This trend is also reflected i
5、n the world foreign direct investment picture. As depicted in Figure 1.2 in the textbook, the share of world output (or the stock of foreign direct investment) generated by developing countries has been on a steady increase since the 1960s, while the share of world output generated by rich industria
6、l countries has been on a steady decline. Shifts in the world economy can also be seen through the shifting power of multinational enterprises. Since the 1960s, there have been two notable trends in the demographics of the multinational enterprise. The first has been the rise of non-U.S. multination
7、als, particularly Japanese multinationals. The second has been the emergence of a growing number of small and medium-sized multinationals, called mini-multinationals. The fall of Communism in Eastern Europe and the republics of the former Soviet Union have brought about the final shift in the world
8、economy. Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic politics and free market economies. Similar developments are being observed in Latin America. If these trends continue, the opportunities for international business may be enormous. The implicat
9、ions of these shifts are similar for North America and Britain. The United States and Britain once had the luxury of being the dominant players in the world arena, with little substantive competition from the developing nations of the world. That has changed. Today, U.S. and British manufacturers mu
10、st compete with competitors from across the world to win orders. The changing demographics of the world economy favor a city like Hong Kong. Hong Kong (which is now under Chinese rule) is well located with easy access to markets in Japan, South Korea, Indonesia, and other Asian markets. Hong Kong ha
11、s a vibrant labor force that can compete on par with the industrialized nations of the world. The decline in the influence of the U.S. and Britain on the global economy provides opportunities for companies in Hong Kong to aggressively pursue export markets. 2. The study of international business is
12、fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in smaller firms. Evaluate this statement. People who believe in this view, and the firms that they work for, may find that they do not achieve their full potential (at be
13、st) and may ultimately fail because of their myopia. As barriers to trade decrease and state of the art technological developments take place throughout the world, new opportunities and threats exist on a worldwide basis. The rise of the mini-multinationals suggests there are global opportunities ev
14、en for small firms. But staying attuned to international markets is not only important from the perspective of seeking profitable opportunities for small firms; it can also be critical for long-term competitive survival. Firms from other countries may be developing products that, if sold internation
15、ally, may wipe out small domestic competitors. Scanning international markets for the best suppliers is also important for small firms, for if a domestic competitor is able to tap into a superior supplier from a foreign country, it may be able to seriously erode a small firms competitive position be
16、fore the small firm understands the source of its competitors competitive advantage and can take appropriate counter actions. 3. How have changes in technology contributed to the globalization of markets and of production? Would the globalization of production and markets have been possible without
17、these technological changes? Changes in technology have contributed to the globalization of markets and of production in a very substantive manner. For instance, improvements in transportation technology have paved the way for companies like Coca-Cola, Levi Strauss, Sony and McDonalds to make their
18、products available worldwide. Similarly, improvements in communications technology have had a major impact. The ability to negotiate across continents has been facilitated by improved communications technology, and the rapidly decreasing cost of communications has lowered the expense of coordinating
19、 and controlling a global corporation. Finally, the impact of information technology has been far reaching. Companies can now gain worldwide exposure simply by setting up a homepage on the Internet. This technology was not available just a few short years ago. The globalization of production and mar
20、kets may have been possible without improvements in technology, but the pace of globalization would have been much slower. The falling cost of technology has made it affordable for many developing nations, which has been instrumental in helping these nations improve their share of world output and w
21、orld exports. The inclusion of these nations, such as China, India, Thailand, and South Korea, has been instrumental in the globalization of markets and production. In addition, improvements in global transportation and communication have made it relatively easy for business executives from differen
22、t countries to converse with one another. If these forms of technology, including air-travel, fax capability, e-mail, and overnight delivery of packages were not available, it would be much more difficult for businesses to conduct international trade.4. Ultimately, the study of international busines
23、s is no different from the study of domestic business. Thus, there is no point in having a separate course on international business. This statement reflects a poor understanding of the unique challenges involved in international business. Managing an international business is different from managin
24、g a purely domestic business for at least four reasons. These are: (1) countries are different; (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business; (3) an internati
25、onal business must find ways to work within the limits imposed by government intervention in the international trade and investment system; and (4) international transactions involve converting money into different currencies. As a result of these differences, there are ample reasons for studying in
26、ternational business as a specific field of study or discipline.5. How might the Internet and the associated World Wide Web impact international business activity and the globalization of the world economy? According to the text, the Internet and World Wide Web (WWW) promise to develop into the info
27、rmation background of tomorrows global economy. This improved technology will not only make it easier for individuals and companies in different countries to conduct business with one another, but will also further decrease the cost of communications. These improvements will undoubtedly hasten the a
28、lready rapid pace of globalization. Another distinct attribute of the Internet and the WWW is that they act as an equalizer between large (resource rich) and small (resource poor) firms. For instance, it does not cost any more for a small software firm to gain visibility via the WWW than it does for
29、 a large software company like Microsoft. As a result, the WWW helps small companies reach the size of audience that was previously only within the reach of large, resource rich firms. 6. If current trends continue, China may emerge as the worlds largest economy by 2020. Discuss the possible implica
30、tions of such a development for(1) The world trading system.(2)The world monetary system.(3)The business strategy of todays European and U.S. based global corporations.(4)Global commodity prices. The world trading system would clearly be affected by such a development. Currently China enjoys a somew
31、hat privileged status within the World Trade Organization as a “developing” country. Such a rise to eminence, however, would clearly force it to become a full and equal member, with all the rights and responsibilities. China would also be in a position to actively affect the terms of trade between m
32、any countries. On the monetary front, one would expect that China would have to have fully convertible and trading currency, and it could become one of the “benchmark” currencies of the world. From the perspective of Western global firms, China would represent both a huge market, and potentially the home base of some very capable competitors. Finally, commodity prices would probably fall. 7. Read the Country Focus in this chapter on the Ecuadorian rose industry, the answer the following questions: a) How has participation in the i
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