GBT 2e IM ch01.docx

1、GBT 2e IM ch01PART 1GlobalisationCHAPTER 1GLOBALISATIONChapter OutlineOPENING CASE: Globalisation at General Electric and TataINTERNATIONAL BUSINESS GRADUATESLEARNING OBJECTIVESINTRODUCTIONWHAT IS GLOBALISATION?The Globalisation of MarketsManagement Focus: Global size and status does not guarantee l

2、ocal successThe Globalisation of ProductionTHE EMERGENCE OF GLOBAL INSTITUTIONSDRIVERS OF GLOBALISATIONDeclining Trade and Investment BarriersThe Role of Technological ChangeCountry Focus: The Ecuadorian rose industryTHE CHANGING SHAPE OF THE GLOBAL ECONOMYThe Changing World Output and World Trade P

3、ictureCountry Focus: Indias software sectorThe Changing Foreign Direct Investment PictureThe Changing Nature of the Multinational EnterpriseManagement Focus: Chinas Hisense An emerging multinationalThe Changing World OrderThe Global Economy of the 21st CenturyTHE GLOBALISATION DEBATEAnti-globalisati

4、on ProtestsGlobalisation, Jobs and IncomesGlobalisation, Labour Policies and the EnvironmentGlobalisation and National SovereigntyGlobalisation and the Worlds PoorMANAGING IN THE GLOBAL MARKETPLACEKEY TERMSSUMMARYINTERNATIONAL BUSINESS GRADUATES: LEARNING AND ASSESSMENT TASKSCLOSING CASEInternationa

5、l Business Graduate AttributesThis chapters content, learning resources and case studies provide the opportunity to develop a number of International Business Graduate Attributes, including the following: IBGA1 Discipline Knowledge and Skills IBGA2 Critical Analysis IBGA5 Communication IBGA7 Global

6、Perspective IBGA9 CitizenshipLearning ObjectivesAfter studying this chapter, students should be able to:1. explain the process and drivers of globalisation and the opportunities and challenges it creates for business.2. illustrate how the global economy has changed over the past 50 years.3. debate t

7、he impact of globalisation on issues such as job security, income levels, the environment and economic development in developing countries.4. compare how the management of international business differs from the management of domestic business.Chapter SummaryThis opening chapter introduces the reade

8、r to the concepts of globalisation and international trade and investment, and provides an introduction to the major issues that underlie these topics. The components of globalisation are discussed, along with the drivers of globalisation and the role of the General Agreement on Tariffs and Trade (G

9、ATT) and its successor, the World Trade Organisation (WTO), in lowering barriers to international trade and investment. The influence of technological change in facilitating globalisation is also discussed, along with the role of multinational firms in international business.The chapter also describ

10、es the changing shape of the global economy, with a special emphasis on the increasingly important role of developing countries in global business. This discussion is complemented by a description of the changing world order leading into the 21st century. The chapter ends with a candid overview of t

11、he pros and cons of the trend towards globalisation addressing issues as sovereign wealth funds, global financial crisis, terrorism, the environment, offshoring and the loss of jobs.Opening Case: Globalisation at General Electric and TataSummaryThe opening case explores General Electrics and Tatas q

12、uest to become major global players in the businesses in which they participate. Despite the difference in size and in the development level of their country of origin, General Electric and Tata are large conglomerates producing a range of a vast range of goods and services in markets around the wor

13、ld. Over 50 per cent of GEs and Tatas revenues today come from international sales, and it is expected that a greater share of their business will be international. During the 1980s and 1990s, when General Electric was led by Jack Welch, the company was an American company doing business in foreign

14、markets. Today, under the leadership of Jeffery Immelt, General Electric is moving toward becoming a global corporation. Spurred by reforms to the Indian economy in the 1990s, Tata expanded internationally in order to gain markets and knowledge which would enable it to remain competitive internation

15、ally as well as domestically. Like GE, Tata aims to be more than just a domestic company doing business in foreign markets. A discussion of the opening case can revolve around the following questions as listed for IBGA Task 9. i. What measures can be used to assess how international a business has b

16、ecome, a characteristic UNCTAD describes as transnationality? Do GE and Tata qualify as being international?Discussion Points: UNCTAD in its annual World Investment Report publishes a list of the largest transnational non-financial companies (TNC) in the world. UNCTADs measure of transnatonality is

17、a composite index and is the average of three ratios: foreign assets to total assets; foreign sales to total sales; and foreign employment to total employment. For GE, all these ratios are just above 50 per cent. There is no single aggregate measure for entire Tata group, but for Tata Steel Ltd, one

18、 of the larger companies in the group, the ratios are 65 per cent, 85 per cent and 65 per cent respectively. Based on these figures, international operations are instrumental to the growth of these companies.Teaching Tip: Students can update these transnationality ratios from the UNCTAD website. ii.

19、 How did the reforms of the Indian economy of the 1990s affect Tata?Discussion Points: The reduction of barriers to the flow of foreign trade and investment increased competitive pressure on Tata. It was now threatened by international competitors in its home market where once it was insulated from

20、such competition. This competition was a driving force for improvement. Tata also gained additional freedom to expand its own domestic operations as the restrictions on the private ownership of key industries were relaxed and capital was allowed to move offshore more freely to finance foreign merger

21、s and acquisitions. These mergers and acquisition enabled Tata to gain the necessary markets, resources and expertise in a timely way to enable it to compete internationally.iii. Why did GE consider it necessary to relocate some of its key management and operations?Discussion Points: Under Jack Welc

22、h, General Electric was an American company doing business abroad. Jeffery Immelt wanted General Electric to be a truly global corporation. To achieve that goal, Immelt reorganised the company shifting the head offices of its various businesses away from the United States where they had been tightly

23、 controlled, to the locations where they were close to their customers, and gave country managers more power. General Electric also opened R&D centres in Germany, China, and India. The company hopes that this will help it better understand local needs. In addition, the company is hiring more local m

24、anagers and using fewer American expatriates. General Electric believes that local managers with their better understanding of local language and culture will be more successful at selling to local companies and governments.iv. A goal of GE was to become truly global. What is the difference between

25、being international and being truly global?Discussion Points: Being international may involve no more than replicating existing domestic products and operations in foreign locations with most key management decisions being made at home by home nationals. As with GE, being truly global would see more

26、 autonomy for local managers in foreign markets and less reliance on expatriate managers. More foreign nationals would occupy key management positions in the organisation. It would also mean more locally-based R&D in foreign locations that could lead to products and services that are more suitable t

27、o local conditions. Local R&D and experience would also be a source of new ideas and innovations that could be adopted globally throughout the entire company, including the country of origin. Other things being equal, business decisions about marketing, production and staffing would be based more on

28、 commercial assessments globally than concerns for nationalities or national borders. v. Compare the strategic thinking behind GEs and Tatas international expansion. Would it be correct to classify one as more market-seeking and the other as more resource-seeking?Discussion Points: Given that both G

29、E and Tata receive more than 50 per cent of their sales internationally, seeking international markets is important to both companies. For GE their domestic market, the US market, although large has little further growth potential. For Tata, at the existing stage of Indias economic development, mark

30、ets are not large although the potential for growth is substantial. Both companies need to be seeking new markets if they are to expand and prosper. GE is a long established international company with significant financial, physical and intellectual resources at its disposal although it continues to

31、 seek to enhance those resources through its global operations. Tata on the other hand has less international experience and has deliberately sought to acquire the resources necessary for it to prosper in the global economy. At this stage of the companys global expansion, accessing the appropriate r

32、esources is probably more crucial to the success of Tata than it is currently to the ongoing success internationally of GE. Teaching Tip: Students can explore General Electrics and Tatas global operations at their respective company websites.Teaching Tip: Students may also want to explore General Electric CEO Jeffery Immelts own take on globalisation at and Chairman Tatas view of a possible successor and global expansion