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Globalization

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  • 1. Globalization Eka Darmadi Lim – 3094802 Levina Rolanda Tjia – 3094804 May Eka Saputri – 3094814 Cornelis Pieter de Waard - 3112718
  • 2. INTRODUCTION • Globalization is reshaping our lives and leading us into uncharted territory • New technologies  drive down the cost of global communication and travel • In barriers to trade and investment  force the industries to grow more competitive • Competitive intensifies  seek out customers on a global scale
  • 3. INTERNATIONAL BUSINESS • Commercial transaction that crosses the borders of two or more nations • Import: goods and services purchased abroad and brought into a country • Export: goods and services sold abroad and sent out of a country
  • 4. TECHNOLOGY MAKES IT POSSIBLE • Technology perhaps the most remarkable facilitator of societal and commercial changes today • When businesses or consumers use technology to conduct transactions, they engage in e-business (e- commerce) • E-business: use of computer network to purchase, sell, or exchange products; service customers; and collaborate with partners
  • 5. GLOBALIZATION • Globalization of markets refers to convergence in buyer preferences in markets around the world The benefits: – Reduce marketing costs – Creates new market opportunities – Levels uneven income streams – Yet local needs are important
  • 6. GLOBALIZATION • Globalization of production refers to the dispersal of production activities to locations that help a company achieve its cost-minimization or quality-maximization objectives for a good or service The benefits: – Access lower-cost workers – Access technical expertise – Access production inputs
  • 7. FORCES DRIVING GLOBALIZATION • Two main forces underlie the globalization of markets and productions: 1.Falling the barriers to trade and investment 2.Technological innovation
  • 8. Falling barriers to trade investment • General Agreement on Tariffs and Trade: Treaty designed to promote free trade by reducing both tariffs and nontariff barriers to international trade
  • 9. • World Trade Organization: International organization that enforces the rules of international trade – Regional trade investment : Smaller groups of nations are integrating their economies as never before by fostering trade and boosting cross-border investment. (Example: NAFTA,APEC) – Trade and national outputs: With WTO agreements and regional pacts have boosted world trade and cross-border investment significantly.
  • 10. • GDP(Gross domestic product): Value off all goods and services produced by a domestic economy over a one-year period • GNP(Gross National product):Value of all goods and services produced by a country’s domestic and international activities over a one-year period • GDP or GNP per capita: Nation’s GDP or GNP dividend by its population
  • 11. Technological innovation • E-mail and videoconferencing : Operating across borders and time zone complicates the job of coordinating and controlling business activities. • Internet and world wide web : Companies use the internet quickly and cheaply contact managers in distant locations. • Company intranets and extranets – Intranets: web sites and information networks give employees access to company data using personal computers.
  • 12. • Extranets: give distributors and suppliers access to a company’s database to place orders or restock inventories electronically and automatically. • Advancement in transportation technologies : Innovation in the shipping industry is helping globalize markets and production by making shipping more efficient and dependable
  • 13. Measuring Globalization • 4 Variables – Economic integration . Trade, foreign direct investment, portfolio capital flows, and investment income – Personal contact . International travel and tourism telephone traffic, remittances. And personal transfers(including compensation to employees) – Technological connectivity . Internet users , internet hosts, and secure servers – Political engagement . Memberships in international organizations, personnel and financial contribution ton U.N . Security council missions, international treaties tratified, and governmental transfers.
  • 14. Today’s globalization in context • Global economy had finally been reborn • Today’s globalization are lowering the cost of telecommunications and binding our world more tightly together are the drivers of this second age of globalization-communication satellites, fiber optics, microchips, and the internet .
  • 15. Introduction to debate • World bank is an agency created to provide financing for national economic development efforts • International monetary funds (IMF) is an agency created to regulate fixed exchange rates and enforce the rules of the international monetary systems.
  • 16. Globalization’s impact on job and wages • Against globalization – Eliminates jobs in developed nations – Lowers wages in developed nations – Exploit workers in developing nations
  • 17. • For globalization – Increases wealth and efficiency in all nations – Generates labor marketing flexibility in developed nations – Advanced economies of developing nations – Summary of the jobs and wages debate
  • 18. Globalization’s impact on labor the environment, and markets • Labor standards Trade unions claim globalization reduces labor’s bargaining power and lowers global standards when international firms are permitted to continually move to nations with lower labor standards. • Environmental protection . Globalization causes a “race to the bottom” • Future markets . International firms exploit local labor markets and the environmental to produce goods that are then exported back to the home country
  • 19. Globalization and Income inequality • Inequality within nations . Focus on three main branches of the debate, inequality within nations , inequality between nations, and global inequity – Inequality within nations . Is increasing income quality among people within nations – Global quality . Inequality debate is whether globalization is increasing inequality, widening income inequality between all the people of the world, no matter they live – Inequality between nations . Globalization is widening the gap in average incomes between rich and poor nations
  • 20. Globalization and National Sovereignty • National sovereignty generally involves the idea that a nation state: – Is autonomous – Can freely select its government – Cannot intervene in the affairs of other nations – Can control movements across its borders – Can enter into binding international agreements
  • 21. Globalization : Menace to Democracy ? • Against globalization is that it empowers supranational institutions at the expense of national governments
  • 22. Globalization : Guardian of Democracy? • Supporters argue that an amazing consequence of globalization has been the spread of democracy worldwide
  • 23. Globalization’s influences on cultures • National culture is a strong shaper of people’s value, attitudes, customs, beliefs, and communication. • Globalization eradicates cultural differences between groups of people or reinforces cultural uniqueness is a hotly debated topic.
  • 24. KEY PLAYERS IN INTERNATIONAL BUSINESS • Multinational Corporations (MNC) is a business that has direct investments (in the form of marketing or manufacturing subsidiaries) abroad in multiple countries • Small companies are increasingly active in international trade and investment • The born global firm: a company that adopts a global perspective and engages in international business from or near its inception • Key characteristics of born global firms are an innovative culture and knowledge-based organizational capabilities
  • 25. WHY INTERNATIONAL BUSINESS IS SPECIAL • Because it occurs within a dynamic, integrated system that weaves together four distinct elements: – The forces of globalization – The international business environment – Many national business environments – International firm management • Globalization is a potent force transforming our societies and commercial activities in countless ways
  • 26. WHY INTERNATIONAL BUSINESS IS SPECIAL • The international business environment influences how firms conduct their operations in both subtle and not-so-subtle ways • Each national business environment is composed of unique cultural, political, legal, and economic characteristics that define business activity within that nation’s borders • International firm management is vastly different from managing a purely domestic business
  • 27. THE ROAD AHEAD FOR INTERNATIONAL BUSINESS • Globalization is transforming our world and how elements of the global business environment are becoming increasingly intertwined