Globalization

Learning objectives

Understand what is meant by the term globalization.

Be familiar with the main drivers of globalization.

Appreciate the changing nature of the global economy.

Understand the major arguments in the debate over the impact of globalization.

Appreciate how the process of globalization is creating opportunities and challenges for business managers.

This section introduces the emergence of the globally integrated business world. Globalization has reduced the traditional barriers to cross-border trade and investment (distance, time zones, language, differences in government regulations, culture, business systems).

To begin the discussion of contemporary issues in international business, macro-economic and political changes in the last 30 years are reviewed.

Information technology and other technological innovations have put global markets within the reach of even small firms in remote locations. Yet, in spite of all its benefits, globalization has an underside. Critics point out its adverse effects, including those on developing nations.

What is Globalization?
Globalization is a shift toward a more integrated and interdependent world economy.
Globalization has two components: the globalization of markets and the globalization of production.

Globalization of Markets
In many markets the emergence of a global marketplace has begun to occur. There are three causes: falling barriers to cross-border trade have made it easier to sell internationally; tastes and preferences are converging on some global norm helping to create a global market; and firms are facilitating the trend by offering standardized products worldwide creating a global market.

Globalization of Production
The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor,