IB Business & ManagementUnit 1.9

Globalization:Lesson 1: The Causes & Impacts

Pages: 151-163

1. Focus Questions 1. What is globalization?

• 2. What are the causes and impacts of globalization?3. What are some indicators of globalization?

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Think about it… In business, the competition will bite you if

you keep running. If you stand still, they will swallow you.~ William Knudsen (1879-1948), former

president of GM.

2. Overview

What is globalization?• The integration of the world’s economies in relation to their economics,

sociology, and politics.• It is an attempt to produce and sell the same products or services in

different countries. Why are companies interested in globalization? Is globalization the right move for some companies? What are some indicators of globalization?

• See Box 1.9a on page 152. …

Taken from: http://www.tcnj.edu/~franco6/images/large_globalization_e.bmp

3. Globalization

Globalization can also be defined as the growing interdependence of the world’s economies.• Whereby national economies join together into a single global

economy. With globalization, the political and economical decisions of one

country are likely to affect those in other parts of the world, too.• MNC will design and market their products to the world.

Products are easily recognizable. Same production processes. For example… - - - - - - - - - - - - >

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image: http://news.bbc.co.uk/olmedia/1615000/images/_1619221_chinamac330.jpg

5. The Effects of Globalization on Business Activity

• There are many who criticize globalization.

• How many have watched, “Super Size Me”?

• Some argue that globalization is a form of cultural imperialism.• Do you

agree or disagree?

• For a business, globalization provides both opportunities and threats.

IB Business & ManagementUnit 1.9

Globalization: Lesson 2 : Multinational Corporations

Pages: 156-159

1. Focus Questions 1. What are the reasons for the

growth of MNCs?• 2. What role and impact do MNCs

have in the global business environment?

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2a. Multinational Corporations

What is a MNC?• A business that operates in two or more countries.• It is also called a transnational corporation.

Can you give examples of some MNC?• Coke• Dell• Samsung• LG• Hyundai• Wendy’s

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image: http://mancelovici.files.wordpress.com/2007/06/olympic-games-sponsors.gif

2b. Multinational Corporations

So, why become a multinational?• For several

reasons, such as…

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3. Potential Problems

Despite the benefits of expanding overseas, there are certain problems that a MNC will encounter.

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4. MNCs Effect on Host Countries

Despite the benefits of expanding overseas, there are certain problems that a MNC will encounter.• See page 158-

159 of your text.

…

IB Business & ManagementUnit 1.9

Globalization: Lesson 3: Regional Trading Blocs

Pages: 159-163

1. Focus Questions 1. What are trading blocs and what

are their major implications for businesses? …

2a. Regional Trading Blocs

RTBs try to… • eliminate trade barriers• Establish free international trade….see page 159.

2b. Regional Trading Blocs RTB will also…

• Impose physical barriers to international trade. Tariffs: will increase the price of exports, thus

reduce competition. Quotas: limits placed on the volume or value of

foreign goods and services.• This will limit supply and will have two major

effects: 1. It reduces the amount available for sale. 2. It raises prices due to limited supply. …

2c. Major RTB Around the World

2d. Recap Regional Trading Blocs (RTB) and Closer Economic

Partnership Agreements (CEPA) aim to:• Reduce or eliminate tariffs between its members.• Promote trade and investment facilitation.

In the end, there will always be winners and losers when joining these RTBs.• The winners:

Trade creation; when a country switches from buying products at a high cost to buying them from a lower cost country.

• The losers: Trade diversion; when a country switches from buying

products from a low-cost country to buying them from a higher-cost country.

The End.