m A shift toward a more

integrated and independent

world economy
m A process of interaction and
integration among the people,
companies, and governments
of different nations,
m A process driven by
international trade and
investment and aided by
information technology.
m un economic context, Globalization refers to the
reduction and removal of barriers between
national borders in order to facilitate the flow of
goods, capital, services and labor. ± The United
Nations ESCWA
m ³The diminution or elimination of state-enforced
restrictions on exchanges across borders and
the increasingly integrated and complex global
system of production and exchange that has
emerged as a result´ ± Tom Palmer
m Globalization of Markets
x Merging of historically distinct and separate national
markets into one huge global marketplace.
x The taste and preference of consumers in different
nations are beginning to converge on some global norm
creating a global market
m Globalization of Production
x Sourcing of goods and services from locations around
the globe to take advantage of national difference in the
cost and quality
x For companies to lower down their overall cost structure
or improve the quality or functionality of their product
offering
m World Trade Organization
x ½esponsible for policing the world trading system and
making sure nation-states adhere to the rules laid down
in trade treaties signed by WTO member states.
m unternational Monetary Fund
x Established to maintain order in the international
monetary system.
m World Bank
x Set up to promote economic development.
m United Nations
x Established by countries committed to preserving peace
through international cooperation and collective security.
m Ôeclining Trade and unvestment Barriers
x 
s: many of the nations erected formidable barriers
to international trade and foreign direct investment
x The advanced industrial nations of the West committed
themselves after World War uu to removing barriers to the
free flow of goods, services and capital between nations.
m Technological Change
x Œas made globalization a transporting movement
x Telecommunications, unternet, Transportation
m un the  s
x US economy was dominant in the world
x US firms accounted for most of the FÔu in the world
economy
x US firms dominated the list of large multinationals and
roughly half the world
O The centrally planned economies of the Communist world
was closed to Western businesses
m By the mid  s
x US share of world output had been cut in half and
Western European and Southeast Asian economies
accounted for major shares
x US shares for FÔu had also fallen by two-thirds
x US multinational were facing competition from Japanese
and European multinationals
m One of the most dramatic development of the past

 years has been the collapse of communism in
Eastern Europe
x Created enormous long-run opportunities for international
business.
m The move toward free market economies in China
and Latin America create opportunities for
Western businesses
m undustrial
x Emergence of worldwide production markets and broader
access to a range of foreign products for consumers and
companies. Particularly movement of material and goods
between and within national boundaries.
m Financial
x Emergence of worldwide financial markets and better
access to external financing for borrowers. By the early part
of the
st century more than $.5 trillion in national
currencies were traded daily to support the expanded levels
of trade and investment.
m Economic
x ½ealization of a global common market, based on the
freedom of exchange of goods and capital. The
interconnectedness of these markets, however, meant
that an economic collapse in one area could impact
other areas. With globalization, companies can
produce goods and services in the lowest cost
location. This may cause jobs to be moved to locations
that have the lowest wages, least worker protection
and lowest health benefits. For undustrial activities this
may cause production to move to areas with the least
pollution regulations or worker safety regulations
m Political
x To mean the creation of a world government which
regulates the relationships among governments and
guarantees the rights arising from social and economic
globalization.
m Cultural
x Growth of cross-cultural contacts; advent of new
categories of consciousness and identities which
embodies cultural diffusion, the desire to increase
one's standard of living and enjoy foreign products and
ideas, adopt new technology and practices, and
participate in a "world culture´
m Technical
x Ôevelopment of a Global unformation System, Global
Telecommunications unfrastructure and greater
transborder data flow using technologies as the unternet,
communication satellites, wireless telephones, etc.
m Pro
x Lower prices for goods
and services
x Economic growth
x uncrease in consumer
income
x Creates jobs (for many)
x Countries specialize in
production of goods and
services that are
produced most efficiently
m Con
x Ôestroys manufacturing
jobs in wealthy nations
x Wage rates of unskilled
in advanced countries
decline
x Companies move to
countries with fewer
labor and environment
regulations
x Loss of sovereignty
x Œomogenized cultures
m Ôevelopment of Third World Nations
x Globalization is a very positive force that lifts countries
out of poverty. ut causes a virtuous economic cycle
associated with faster economic growth.
m Ôemocratizing effect of communications
x Exchange of information via the internet is playing a
major role in the democratization of many countries
m Benefits of globalization and financial
diversification
x Geographic diversification would eventually generate
superior risk-adjusted returns for long-term global
investors by reducing overall portfolio risk while
capturing some of the higher rates of return offered by
emerging markets.
m uncreased opportunity in the Third World
x Workers in developing countries now have more
occupational choices then ever before. Educated
workers in developing countries are able to compete
on the global job market for high paying jobs.
Production workers in developing countries are not
only able to compete, they have a strong advantage
over their counterparts in the industrialized world.
m Sweatshops
x un many poorer nations, globalization is the result of
foreign businesses utilizing workers in a country to take
advantage of the lower wage rates.
m Brain Ôrain
x Opportunities in rich countries drives talent away from
poor countries, leading to brain drains.
m uncome unequality
x ³Mind workers´ are able to compete successfully in the
world market and command high wages. Conversely,
production workers and service workers in industrialized
nations are unable to compete with workers in third
world countries and either lose their jobs through
outsourcing or are forced to accept wage cuts
m Managing an international business is different
from managing a domestic business
x Countries are different
x ½ange of problems confronted in international business is
wider and problems themselves are more complex than
those in a domestic business
x Limitations due to government policies and international
trade and investment system
x Conversion of money into different currencies.
m C.W. Œill, ³unternational Business: Competing in
the Global Marketplace,´ 2
 
, pp. -3 .
m ³What is Globalization,´
www.globalization.org
m Bhagwati, Jagdish (
). u




2
 
. Oxford, New York: Oxford
University Press.
m "Effects of Over-Consumption and uncreasing
Populations".
 September
. ½etrieved on
 June