ISYS40141 - Global Business ManagementLecture 1 - The global economy and internationalbusiness
The global economy and internationalbusiness• The nature of the global economy – „globalisation‟• Economic trends / indica...
The nature of the global economy
The nature of the global economy• Globalisation – What does it mean? – Who benefits? – Environmental and social issues – „...
Globalisation – what does it mean?               Everyone around the world will               have a different view and   ...
Economic trends and indicators
Economic trends and indicators• Measures of different aspects of the world economy (value and rate  of change) – GDP – Pop...
Trends are important but…                                               The earthquake and tsunami           Tensions in N...
1. GDP – Gross Domestic Product• The market value of all final goods and services produced in a  country in a given period...
Gross Domestic Product – per capita04 July 2012                          10
GDP per capita (Rmb)                              0                                                          10000        ...
2. Population• Why might measuring population be important?• What about changes in population? – Increasing or decreasing?...
Population – trends #1 The % increase in total population in India has been greater than for China every year since 1973 –...
Population – trends #2 % of the total population which is under age 14, for Brazil, Germany and Egypt – what does this tel...
Population – trends #3 % of the total population which lives in urban locations for USA, Pakistan and China – What does th...
3. Unemployment• What is „unemployment‟? – “The percent of the labour force that is without jobs” (CIA World   Factbook) –...
Unemployment - trends % of the male labour force which is unemployed. Spain is cyclical, but why is South Africa counter-c...
Unemployment – trends #2 % of unemployed females who are long-term unemployed. Why is Mexico so low and stable, why are UK...
4. Gini coefficient                      Is a                      measure of                      the                    ...
Gini coefficient• When to make use of it? – To get a sense of the type of market that country may support   • High Gini in...
The scale and nature of international business
Scale and nature of international business• What does “international business” mean?• Different definitions of this type o...
International business• Business activities that involve the transfer of  resources, goods, services, knowledge, skills, o...
Case study - Tata• “Anchored in India”• 57% of total revenues were from outside India• Each operating company in the Tata ...
Summary & seminar topic
Summary• „Globalisation‟ is not a well defined term – it will mean different  things to different people and different nat...
Seminar topic – Country data and trends• Go to http://data.worldbank.org/data-catalog?display=graph• Download the World De...
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  • One-child policy introduced in China in 1978, with effect from 1979 – but population growth had slowed before then anyway?
  • The population of Beijing has increased by more than 6 million in the past decade (2001-2011)
  • Mandela released 1990 – president from 1994 – could SA rise in unemployment be linked to struggles as they move out of apartheid regime? Is Spain cyclical in line with general European/USA recessions? (i.e. early 80s, early 90s and 2007 on)?
  • Poland joined the EU in 2004
  • Global business management - Topic 1: Global economy and international business

    1. 1. ISYS40141 - Global Business ManagementLecture 1 - The global economy and internationalbusiness
    2. 2. The global economy and internationalbusiness• The nature of the global economy – „globalisation‟• Economic trends / indicators• Scale & nature of international business04 July 2012 2
    3. 3. The nature of the global economy
    4. 4. The nature of the global economy• Globalisation – What does it mean? – Who benefits? – Environmental and social issues – „sustainability‟ – to be covered in later lectures• A single definition is too simplistic04 July 2012 4
    5. 5. Globalisation – what does it mean? Everyone around the world will have a different view and different experiences of the opportunities and threats that global business presents04 July 2012 5
    6. 6. Economic trends and indicators
    7. 7. Economic trends and indicators• Measures of different aspects of the world economy (value and rate of change) – GDP – Population – Unemployment – Gini coefficient• Global trends• Regional and national / country trends – What do the different values mean for business & economies?04 July 2012 7
    8. 8. Trends are important but… The earthquake and tsunami Tensions in North Africa and in Japan cause supply the Middle East create problems for Japanese based changes in oil prices and companies (to Apple and uncertainty about supply. It Toyota for example), and also constrains the movement shrinks demand for goods and of labour in those areas. services sold in Japan. The currency crises in Greece, Portugal and Ireland mean that public sector spending will be lower.04 July 2012 8
    9. 9. 1. GDP – Gross Domestic Product• The market value of all final goods and services produced in a country in a given period.• GDP simply stated for a country is of limited value – because countries with larger populations typically have larger GDP values.• GDP per person / per capita is the most useful comparison.• GDP can also be expressed as „nominal‟ or „PPP‟ (purchasing power parity) – PPP takes into account relative cost of living and inflation, as well as exchange rates (typically to US dollar)04 July 2012 9
    10. 10. Gross Domestic Product – per capita04 July 2012 10
    11. 11. GDP per capita (Rmb) 0 10000 15000 20000 25000 30000 5000 1952 1955 195804 July 2012 1961 1964 1967 1970 1973 1976 1979 China 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 GDP per capita (real USD, 2005 prices) 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 0 5,000 Changes in GDP – per capita 1950 1954 1958 1962 1966 1970 1974 1978 USA 1982 1986 1990 199411 1998 2002 2006 2010
    12. 12. 2. Population• Why might measuring population be important?• What about changes in population? – Increasing or decreasing? – Average age increasing or decreasing? – Bulges in age groups or gaps? – Longevity? – Location? Urban versus rural? – Gender mix: Are males and females changing at the same rate?• Link GDP to Population – Average GDP per capita04 July 2012 12
    13. 13. Population – trends #1 The % increase in total population in India has been greater than for China every year since 1973 – what does this tell us?04 July 2012 13
    14. 14. Population – trends #2 % of the total population which is under age 14, for Brazil, Germany and Egypt – what does this tell us?04 July 2012 14
    15. 15. Population – trends #3 % of the total population which lives in urban locations for USA, Pakistan and China – What does this tell us?04 July 2012 15
    16. 16. 3. Unemployment• What is „unemployment‟? – “The percent of the labour force that is without jobs” (CIA World Factbook) – “People without jobs and they have actively looked for work in the last four weeks” (International Labour Organisation) – “All persons above a specified age, who are without work, are currently available for work, and are seeking work” (OECD) – “Unemployed people are jobless, have been actively seeking work in the past four weeks, and are available to start work in the next two weeks; or if they have found a job, and are waiting to start it in the next two weeks” (UK National Statistics)04 July 2012 16
    17. 17. Unemployment - trends % of the male labour force which is unemployed. Spain is cyclical, but why is South Africa counter-cyclical and Japan more steady?04 July 2012 17
    18. 18. Unemployment – trends #2 % of unemployed females who are long-term unemployed. Why is Mexico so low and stable, why are UK and Poland converging?04 July 2012 18
    19. 19. 4. Gini coefficient Is a measure of the inequality of distribution; 0 being total equality, 100 being total inequality04 July 2012 19
    20. 20. Gini coefficient• When to make use of it? – To get a sense of the type of market that country may support • High Gini index (high inequality) – Market for luxury goods? What about your brand image? • Low Gini index (low inequality) – Market for commodity / affordable goods? What about profitability? – To see how a particular country is trending – more or less income equality?• Weaknesses – It is relative – you cannot compare country to country in detail – It is a measure of INCOME, not WEALTH04 July 2012 20
    21. 21. The scale and nature of international business
    22. 22. Scale and nature of international business• What does “international business” mean?• Different definitions of this type of business – Multinational – International – Global – Transnational• The role of Governments in international business – Tariffs, free trade, investment, enterprise support,• The role of Organisations in international business – Trade organisations, EU, ASEAN, NAFTA, World Bank, WTO Covered in more detail in later lectures04 July 2012 22
    23. 23. International business• Business activities that involve the transfer of resources, goods, services, knowledge, skills, or information across national borders.• There can be international trade – where a company exports goods or services to buyers in another company• There can be international investment – where a company invests resources in business activities outside its home country• World Trade Organisation (WTO) estimate for worldwide total merchandise exports 2009 is $12,177,642,000,00004 July 2012 23
    24. 24. Case study - Tata• “Anchored in India”• 57% of total revenues were from outside India• Each operating company in the Tata group develops its international business based on the dynamics of that industry sector. – Some focus on India domestic market, some in „neighbouring markets‟ and some globally.• Exports from India remain the cornerstone• But; – Greenfield developments in South Africa, Bangladesh, Iran – Joint Ventures in South Africa, Morocco, China – Acquisitions in UK (Tetley, Jaguar Land Rover, Corus Steel), South Korea (Daewoo), Singapore (NatSteel), USA (Tyco, General Chemical)• Priority markets are; USA, UK, China, Netherlands, Germany, South Africa, Brazil, Vietnam, Thailand, Sri Lanka, Gulf Cooperation Council members04 July 2012 24
    25. 25. Summary & seminar topic
    26. 26. Summary• „Globalisation‟ is not a well defined term – it will mean different things to different people and different nations in different circumstances.• High level trends of GDP per person, population, unemployment and Gini coefficient (amongst others) can provide an initial sense of the state of a country or of a group of countries.• Reviewing that data as a trend over time is most important – but don‟t forget that incidents can occur that will immediately upset the trend!• Global business is very large (over $12tn for 2009) and there are many stakeholders involved in many different ways.04 July 2012 26
    27. 27. Seminar topic – Country data and trends• Go to http://data.worldbank.org/data-catalog?display=graph• Download the World Development Indicators / Global Development Finance spreadsheet - it‟s a large MS Excel file called „WDI and GDF (Excel) – ZIP‟• For your own country, or a country of your choice, and for the United Kingdom, compare the following for the years 1999 to 2009; – GDP per capita, PPP (constant 2005 international $) – Total unemployment (% of total labour force) – Population ages 65 and above (% of total)• What do the 10 year trends for these data sets look like? Can you think why the two countries may be different or the same? What does the data tell you if you were an international business?• There‟s a short „How to‟ guide on NOW for using the WDI GDF spreadsheet if you get stuck.04 July 2012 27

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