Skip to content
Class Notes

Global Business Today , 10th Edition Class Notes

Master your coursework with Global Business Today , 10th Edition Class Notes, featuring well-structured notes that simplify learning and retention.

Preview 16 of 364 pages

See the first 16 pages exactly as they appear in the document.

  1. Page 1
    Read page 1 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 1 Globalization Chapter Outline OPENING CASE: Uber: Going Global from Day One INTRODUCTION WHAT IS GLOBALIZATION? The Globalization of Markets The Globalization of Production Management Focus: Boeing's Global Production System THE EMERGENCE OF GLOBAL INSTITUTIONS DRIVERS OF GLOBALIZATION Declining Trade and Investment Barriers The Role of Technological Change THE CHANGING DEMOGRAPHICS OF THE GLOBAL ECONOMY The Changing World Output and World Trade Picture Country Focus: India’s Software Sector The Changing Foreign Direct Investment Picture T he Changing Nature of the Multinational Enterprise Management Focu s: The Dalian Wanda Group The Changing World Order The Global Economy of the Twenty - First Century THE GLOBALIZATION DEBATE Antiglobalization Protests Globalization, Jobs, and Incomes Country Focu s: Protesting Globalization in France Globalization, Labor Policies, and the Environment Globalization and National Sovereignty Globalization and the World’s Poor MANAGING IN THE GLOBAL MARKETPLACE

  2. Page 2
  3. Page 3
    Read page 3 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 2 KEY TERMS SUMMARY CRITICAL THINKING AND DISCUSSION QUESTIONS globalEDGE RESEARCH TASK CLOSING CASE: Medical Tourism and the Globalization of Health Care Learning Objectives 1. 1 Understand what is meant by the term globalization . 1.2 Recognize the main drivers of globalization. 1.3 Describe the changing nature of the global economy. 1.4 Explain the main arguments in the debate over the impact of globalization. 1.5 Understand how the process of globalization is creating opportunities and challenges for management practice . Chapter Summary This opening chapter introduces the reader to the concepts of globalization and international trade, and provides an introduction to the major issues that underlie these topics. The components of globalization are discussed, along with the drivers of globalization and the role of the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization (WTO) in lowering trade barriers. The influence of technological change in facilitating globalization is also discussed, along with the role of multinatio nal firms in international business. The chapter also describes the changing demographics of the global economy, with a special emphasis on the increasingly important role of developing countries in world trade. This discussion is complemented by a description of the changing world order, whi ch was brought on by the collapse of communism in Eastern Europe and republics of the former Soviet Union. The chapter ends with a candid overview of the pros and cons of the trend towards globalization.

  4. Page 4
    Read page 4 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 3 Chapter Activity Conduct this activity during the first week of class, as an icebreaker. After students introduce themselves, ask them what their aspirant professional job will be after graduation. Organize the responses into groups on the whiteboard: accountants, supply chain managers, ERP managers, business owner or entrepreneur, marketing and sales reps, etc. Then, ask what additional skills they will need to do those jobs with international customers, suppliers, and co - workers. The idea is to help students understand they are unlikely to be successful unless they understand globalization and develop cultural competencies. Skills they might name include comfort with rapid change, can understand national cultural differences, can w ork in diverse cultures, can adapt to diverse management, leadership and participation styles, can understand differences in intercultural communication, can build relationships, be a lifelong learner, and others. Ube r: Going Global from Day One opening case Summary The opening case follows the development and business model of San Francisco - based Uber. Uber offers an alternative business model to the traditional taxi service offered in metropolitan areas worldwide. Instead of relying on traditional city - based laws to regulate the number of taxis registered in a given city, Uber bases its business model on a smartphone app which allows potential riders to find, track, and pay for transportation services. The price for a ride between locations is determined by an algori thm Uber uses to set prices that match es demand for transportation with the supply of automobiles available. A discussion of the case can involve the following questions . Discussion Questions QUESTION 1: Reflect on the purpose and practical application of taxi market regulation by city authorities. What does this type of regulation accomplish? What are the drawbacks? How has this allowed Uber to successfully enter markets? ANSWER 1: The stated purpose of the regulations in place are five - fold: 1) to limit taxi supply and increase demand for other forms of public transportation; 2) to decrease traffic congestion; 3) to ensure rider safety via licensed taxis; 4) to guarantee "fair" pri ces; and 5) to ensure reasonable profitability for taxi owners. The main drawback to these purposes is that there are typically shortages in many cities as the number of taxi licenses issued in the past decades has not met increased population levels. To m eet the demand for individualized transportation services, Uber

  5. Page 5
    Read page 5 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 4 enters a market and relies on the support generated among its consumers to pressure local governments not to discontinue their offering. QUESTION 2: How have local authorities and competitive actors responded to Uber's market entry strategies? ANSWER 2: Many times local regulations permit Uber and its drivers to conduct business in a metropolitan area. However, there are numerous incidents in which the service has been banned to protect the existing transportation system. Vancouver (Canada), Brussels (Be lgium), and Delhi (India) are noted as cases in which this has been done. Also, there are cases where taxi drivers have gone on strike due to Uber's presence (London) and where local rivals provide formidable challenges with a strong market positi on prior to Uber's entry (Beijing). Teaching Tip: Students can explore Uber's operations and fare options at the company's website at { http://www.uber.com/ }. Lecture Note: To extend the discussion, consider Uber's pullout strategy in China as Didi Kuaidi (also known as Didi Chuxing) buys its operations. To learn more, go to { http://www.bloomberg.com/news/articles/2016 - 08 - 01/uber - s - china - deal - moves - ride - sharing - giant - a - step - closer - to - ipo }. Chapter Outline with Lecture Notes, Video Notes, and Teaching Tips Introduction A) Globalization refers to the trend towards a more integrated global economic system where barriers to cross - border trade and investment are declining, perceived distance is shrinking thanks to advances in transportation and telecommunications, and material cultures are more similar across borders . The effects of globalization can be seen everywhere, from the cars people drive and the food they eat, to the jobs they have and the clothes they wear. In 2013, some $19 trillion of goods, and $5 trillion of serv ices were sold across borders. More than $5 trillion in foreign exchange transactions are made every day . Lecture Note: To extend this discussion, consider { http://www.bloomberg.com/news/articles/2014 - 01 - 16/at - davos - the - state - of - globalization - in - 2014 } and { http://www.bloomberg.com/news/articles/2014 - 01 - 16/davos - defenders - of - globalization - fight - to - show - 2014 - is - not - 1914 }. Teaching Tip: The trend towards globalization has not gone unnoticed at many premier universities around the world. An organization called the Network of International Business Schools { http://www.nibsnet.org/ } provides a forum for schools with international business programs to discuss their curriculums. Consider visiting this web site, and providing your students some examples of how colleges and universities are integrating the realities of globalization int o

  6. Page 6
    Read page 6 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 5 their business curriculums. Lecture Note: The U.S. Census Bureau offers an extensive website that maintains, among other things, monthly statistics on trade between the United States and its trading partners. The website is { http://www.census.gov/foreign - trade/top/ }. B) The rapidly emerging global economy raises a multitude of issues for businesses , including all sorts of new opportunities for business to expand their revenues, drive down their costs, and boost their profits. It also gives rise to challenges and threats , such as how best to expand into a foreign market, whether and how to customize product offerings, marketing policies, human resources practices, business strategies in order to deal with national differences in culture , and how best to deal with the thr eat posed by efficient foreign competitors entering the home marketplace. C) Globalization is also unleashing new anxieties for people who, until recently, had felt fairly secure in their jobs. Thanks to advances in technology, lower transportation costs, and an increase in skilled workers in low cost nations such as India , and China, services that had been performed locally can be exported. Lecture Note: Having a global mindset is becoming an important variable in the hiring selection process at some companies. To learn more, go to { http://www.bloomberg.com/news/articles/2014 - 10 - 01/international - experience - will - help - you - get - a - job - at - goldman - sachs }. D) The accounting services industry is just one of many that have been transformed as a result of globalization. T oday, many accountants in India who are trai ned in the U.S. accounting code perform w ork for U.S. accounting firms. These accountants access individual tax returns stored on computers in the United States, perform routine cal culations, and save their work. A U.S. counterpart then inspects their work, and bills the U.S. client for services. What Is Globalization ? A) Globalization refers to the shift towards a more integrated and interdependent world economy. Video Note: To explore globalization from the perspective of Apple's products in India, consider Apple eyes India's Smartphone Market in the International Business Library at http://bit.ly/MHEIBVideo . Click “Ctrl+F” on your keyboard to search for the video title . Additionally, our McGraw - Hill Education International Business Video Library at http://bit.ly/MHEIBVideo provides on ongoing stream of updated video suggestions correlated by key concept and major topic. Every new clip posted is supported by teaching notes, discussion questions. Please feel free to leave comments in the library that you feel might be helpful to your colleagues. THE GLOBALIZATION OF MARKETS B) The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace in which the tastes and preferences of consumers in

  7. Page 7
    Read page 7 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 6 different nations are beginning to converge upon some global norm. The global acceptance of Coca - Cola, Citi grou p credit cards, IKEA furniture , and McDonald's hamburgers are all examples. These firms not only benefit from the globalization of markets, they also, by offering the same basic products worldwide, facilitate the trend. Yet there are still significant differences between markets that frequently require that marketing strategies, product features, and operating practices be customized for a country . In fact, most global markets are for industrial goods and materials that serve a universal need around the world like microprocessors, rather than for consumer products. In many industries, there is no such thing as a “German market” or an “American market,” there is only a global market. Video Note: To explore the role of globalization and global markets , consider Globalization and Assessing Global Markets in the International Business Library at http://bit.ly/MHEIBVideo . Click “Ctrl+F” on your keyboard to search for the video title . THE GLOBALIZATION OF PRODUCTION C) 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 land, labor, capital, and energy), thereby allowing them to compete more effectively against their rivals. Building Boeing’s 777 for example, involves eight Japanese suppliers, and a supplier from Singapore. Boeing outsources 65 percent of its 787 aircraft to foreign companies. Did You Know Video Clip: The video clip asks: “ Did you know that your iPhone was assembled in China? It’s not what you might think. ” Discussion Questions : Question 1: Why do labor costs made up such a small percentage of the cost to produce an iPhone? Answer 1: Because most of the costs to make one iPhone are in COGS (cost of goods sold), which are about $290 of the $650 price. About $200 is in materials, and the rest is spent on transportation, warranty, costs, and manufacturing including labor. Labor costs are between $13 and $25 per phone. Question 2: Why is it more difficult for Ap ple to find engineers in the U . S . than in China? Answer 2: Demand for engineering skills in the U . S . remains greater than in China. Although m any new engineering graduates come from developing and emerging countries , the U . S . is in second place , producing 238,000 engineers a year. Russia is in first place, producing 454,000 engineers, and Iran is in third place with 233, 700 . This is from reports of the World Economic Forum Human Capital Report and excludes China and India for lack of data. Question 3: Where are the iPhone’s components produced and purchased?

  8. Page 8
    Read page 8 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 7 Answer 3: In many countries, but a surprising number are made by U . S . companies such as Texas Instruments, Fairchild, Corning, Cirrus Logic. But most of these companies have significant manufacturing around the world. The fingerprint sensor was imagined in Florida, but manufactured in Asia by Taiwanese giant TMSC. The M7 motion co - processor was the brainchild of NXP, a Dutch company that has fabrication facilities in Taiwan, Thailand, Malaysia, Singapore and the Philippines. U . S . companies in the Apple supply chain are beefing up their U . S . production facilities and many of the components that go int o the iPhone are actually made s tateside and shipped to China for assembly. Learn more about how the iPhone is made: https://financesonline.com/how - iphone - is - made/ management FOCUS : Boeing’s Global Production System Summary The feature ex plores U.S. aircraft manufacturer Boeing’s approach to the production of its Dreamliner 787 airplane. Boeing’s strategy was unlike any of its previous strategies. Instead of producing much of the aircraft itself, Boeing, noting that 80 percent of its custo mers were foreign airlines, decided to outsource some 65 percent of the value of the Dreamliner to suppliers located around the world. This strategy introduced a number of challenges for Boeing, and production of the 787 was delayed by four years. Discussion Questions : Please see Critical Thinking and Discussion Question 7 (page 20) for discussion of this feature. Teaching Tip: To learn more about Boeing go to { http://www.boeing.com/ }. The Emergence of Global Institutions A) Over the last half century, a number of global institutions have been created to help manage, regulat e, and police the global market place, as well as to promote the establishment of multinational treaties to govern the global business system. The World Trade Organization (WTO) , like its predecessor the General Agreement on Tariffs and Trade (GATT), is responsible for policing the world trading system and making sure that nations adhere to the rules established in WTO treaties. As of 2016, the 162 nations that account for about 98 percent of world trade were all members of the WTO. The International Monetary Fund (IMF) maintains order in the international monetary system while the World Bank promotes economic development. The United Nations (UN) maintains international peace and security, develops

  9. Page 9
    Read page 9 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 8 friendly relations among nations, cooperates in solving international problems , promotes respect for human rights, and is a center for harmonizing the actions of nations. Drivers o f Globalization A) Two macro factors seem to underlie the trend toward greater globalization. First, the decline in barriers to the free flow of goods, services, and capital that has occurred since the end of World War II ; and second, technological change. D ramatic technological change in recent decades ha s brought about advances in communication, information processing, and transportation. DECLINING TRADE AND INVESTMENT BARRIERS B) International trade occurs when a firm exports goods or services to consumers in another country. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country. After WWII, the industrialized countries of the West started a process of removing barriers to the free flow of goods, services, and capital between nations. Under GATT, nations negotiated even further decreases in tariffs and made significant progress on a number of non - tariff issues (e.g. intellectual property, trade in services). With the establishment of the WTO, a mechanism now exists for dispute resolution and the enforcement of trade laws. Teaching Tip: A comprehensive overview of GATT is available at { http://www.ciesin.org/TG/PI/TRADE/gatt.html }. Teaching Tip: The World Trade Organization maintains an excellent web site at { http://www.wto.org/ }. This site provides information about recent trade disputes, "hot" areas of international trade, and the status of current talks. Teaching Tip: To extend this discussion and to explore the relevance for the Trans - P acific Partnership within the context of the current global economy go to { http://www.bloomberg.com/news/articles/2015 - 10 - 08/a - mega - trade - deal }. In addition, the complexities of implementing the trade agreement within and between countries can be found at { http://www.reuters.com/article/us - trade - tpp - idUSKCN0VD08S }. C) This removal of barriers to trade has taken place in conjunction with increased international trade , world output, and foreign direct investment. World Trade Organization data shows that the volume of world merchandise trade has grown consistently faster than the rate of the world economy since 1950 . In 2014, the volume of world merchandise trade was 5.3 times larger than it was in 1990. International trade in services has also grown significantly since the 1980s, and now accounts for about 20 percent of the value of all world trade. D) The growth of foreign direct investment is a direct result of nations liberalizing their regulations to allow foreign firms to invest in facilities and acquire local companies. With their investments, these foreign firms often also bring expertise and global connections that allow local operati ons to have a much broader reach than would have been possible for a purely domestic company. In 2013, FDI flows were about $1.5 trillion, below the peak of $2 trillion in 2007, but showing a strong upward trend.

  10. Page 10
    Read page 10 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 9 THE ROLE OF TECHNOLOGICAL CHANGE E) While the lowering of trade barriers made globalization of markets and production a theoretical possibility, technological change made it a tangible reality. Microprocessors and Telecommunications F) Since the end of World War II, there have been major advances in communications and information processing. G) Moore’s Law predicts the power of microprocessor technology doubles and its cost of production falls in half every 18 months. As this happens, the cost of global communication plummets, lowering the cost of coordinating and controlling a global organization. The Internet H) The Internet, which has experienced explosive growth worldwide, promise s to continue to develop as the information backbone of tomorrow's global economy. The Internet effectively allows its 3.3 billion users in 2015 to find each other. For business, it can be a goldmine. In the United States, online retail sales in 2015 were about $340 billion and global e - commerce sales surpassed $1 trillion in 2012. Transportation Technology I ) In addition to these developments, several major innovations in transportation technology have occurred since World War II. In economic terms, the most important are probably development of commercial jet aircraft and super freighters and the introductio n of containerization, which greatly simplifies transshipment from one mode of transport to another. Implications for the Globalization of Production J ) Due to technological innovations, the real costs of information processing and communication have fallen dramatically in the past two decades. These developments make it possible for a firm to create and then manage a globally dispersed production system, further facilitating the globalization of production. A worldwide communications network has become essential for many international businesses. Implications for the Globalization of Markets K ) As a consequence of these trends, a manager in today's firm operates in an environment that offers more opportunities, but is also more complex and competitive than that faced a generation ago. While there has been some convergence of consumer tastes and preferences between markets (a global culture) , firms must still address differences between countries. The Changing Demographics o f t he Global Economy A) As late as the 1960s, four facts described the demographics of the economy. The first was the U.S. dominance in the world economy and the world trade picture. The second was U.S. dominance in world foreign direct investment. The third fact was the dominance of large, multinational U.S. firms on the international business scene. The fourth was that roughly half of the globe - the centrally planned economies of the Communist world - was off limits to Western international business.

  11. Page 11
    Read page 11 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 10 THE CHANGING WORLD OUTPUT AND THE CHANGING WORLD TRADE PICTURE B) In the early 1960s, the U.S. was still by far the world's dominant industrial power. In 196 0 , for example, the U.S. accounted for 38.3 percent of world manufacturing output. By 2014, the United States accounted for only 22.4 percent. This decline in the U.S. position was not an absolute decline, rather, it was a relative decline, reflecting the faster economic growth of several other economies, most notably th ose in Asi a. Video Note: To explore globalization from the perspective of India's growing standing in the world economy, consider India’s Business Ties with the UK in the International Business Library at http://bit.ly/MHEIBVideo . Click “Ctrl+F” on your keyboard to search for the video title and access to teaching notes and discussion questions for this video . C ) If we look into the future, most forecasts now predict a rapid rise in the share of world output accounted for by developing nations such as China, Russia, India, Indonesia, Thailand, Mexico, Brazil, and South Korea, and a commensurate decline in the share enjoyed by rich industrialized countries such as Great Britain, Germany, Japan, and the United States . For international companies, these trends suggest that future economic opportunities may be greater in developing nations, and that new competitors a re like to emerge from these countries. country FOCUS : India’s Software Sector Summary This feature explores the growth of India’s software industry. Starting from nothing just twenty - five years ago, Infosys Technologies now generates revenues of $8.25 billion, and exports of almost $100 billion. India’s growth in the software sector is based on its abundant supply of engineers, low labor costs, India’s fluency in English, and time differences between India and the U.S. As Indian firms have done more business with large U.S. firms, U.S. firms have begun investing in their own Indian operatio ns. Discussion Questions 1. What factors have contributed to the growth of India’s software industry? Discussion Points: Four key factors have contributed to the growth of India’s software industry. First is the huge number of engineers in India. Some 400,000 engineers graduate from Indian universities every year. A second factor is India’s low wage structure. Indian en gineers make about 12 percent of what an American colleague might make. Third, coordination between Western firms and Indian firms is facilitated by the large number of English - speaking Indians. Finally, because of the differences in time zones, Indian f irms operate while American firms are closed.

  12. Page 12
    Read page 12 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 11 2. How has India’s software industry changed in recent years? What are the implications of these changes for American companies like IBM and Microsoft? Discussion Points: There has been a gradual shift in the Indian software industry in recent years. Initially, Indian firms focused on the low end of the industry to supply basic software development and testing services to Western firms. Today however, many companies have moved into higher end services to compete for large software development projects, business outsourcing contracts, and information technology consulting services. This new competitive threat is forcing American firms like IBM and EDS to rethink their glo bal strategies. Some Western companies are now investing in India with the goal of capturing some of the cost advantages Indian companies like Infosys Technologies enjoy. Lecture Note: India’s smartphone industry is growing rapidly and Google is just one company that is looking to capitalize on this growth. To learn more, go to { http://www.businessweek.com/articles/2014 - 10 - 21/googles - big - plans - for - low - cost - android - one - phones - in - india }. THE CHANGING FOREIGN DIRECT INVESTMENT PICTURE E) As shown in Figure 1. 2 in the textbook, the share of total foreign direct investment stock since the 1980s for developed economies such as the United States and the United Kingdom has declined. Meanwhile, the same statistic indicates a considerable increase in developing economies. F) As shown in Figure 1.3, this trend is mirrored in FDI . However, fluctuations appear in the total amount of foreign direct investment inflows due to economic factors. This is most noticeable for the 2001 - 2005 and 2009 - 2014 periods. The first drastic reduction (2001 - 2005) did not show recovery until 2006. Mean while, the decrease from 2007 has yet to fully recover. THE CHANGING NATURE OF THE MULTINATIONAL ENTERPRISE G) A multinational enterprise is any business that has productive activities in two or more countries. Non - U.S. Multinationals H) In the 1960s, large U.S. multinationals dominated the global business environment, accounting for about two - thirds of all foreign direct investment. By 2012, a different picture had emerged (as indicated in Figure 1.4). T he globalization of the world economy has resulted in a relative decline in the dominance of U.S. firms in the global marketplace. While most of the world’s largest multinationals were from developed countries, firms from developing economies had also begun to play a major role in the global economy. Looking to the future, we can reasonably expect the growth of new multinational enterprises (any business that has productive activities in two or more countries) from the world's developing nations.

  13. Page 13
    Read page 13 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 12 management FOCUS : The Dalian Wanda Group Summary This feature examines the expansion of the Dalian Wanda Group from its beginning in 1988. Originating in China, the company is well - known within the country as an important real estate developer. In 2012, Dalian Wanda expanded by purchasing the cinema chai n AMC Entertainment Holdings in the United States. This expansion continued in 2015 with the acquisition of an Australian cinema operator, as well. In all, the company operates over 500 cinemas. With properties in Los Angeles, Chicago, Spain, and London, D alian Wanda's goal is to have assets of $200 billion, revenues of $100 billion, and net profits of $10 billion by 2020. Discussion Questions 1. How has Dalian Wanda Group established itself in its home market of China? In other words, what is the company best known for? Discussion Points: The company has had much success with five - star hotels as it is the largest owner of this hotel category. In addition, with activities in the film, sports, tourism, and children's entertainment industries, Dalian Wanda Group is well - positioned within China to expand internationally based on the experiences developed thus far. 2. Why has Dalian Wanda Group expanded internationally at such a fast rate? How do the acquisitions made fit into the company's strategy overall? Discussion Points : Dalian Wanda Group has identified that it aims to have assets of $200 billion, revenues of $100 billion, and net profits of $10 billion by 2020. One approach to accomplish this is to expand internationally based on the skills the company has developed thus far. Since its cor e competencies include real estate development focusing on the film industry, in particular, Dalian Wanda Group saw the opportunity to negotiate better distribution terms with movie studios after its purchase of cinema s in the United States and Australia. As a result of these and other expansions, the actions discussed assist the company to reach its goals for assets, revenues, and net profits. Teaching Tip: To learn more about Wanda Group go to { http://www.wanda - group.com/ } . Lecture Note: Wanda Group is continuing its expansion and reach into the U.S. market. To learn more and extend the discussion of this feature, go to { http://www.bloomberg.com/news/articles/2016 - 01 - 12/china - s - richest - man - to - buy - godzilla - producer - for - 3 - 5 - billion }. The Rise of Mini - Multinationals I) Another trend in international business has been the growth of medium - sized and small multinationals. These businesses are referred to as mini - multinationals.

  14. Page 14
    Read page 14 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 13 THE CHANGING WORLD ORDER J) The collapse of communism in Eastern Europe present ed a host of export and investment opportunities for Western businesses. However, because there is still unrest and totalitarian tendencies in many states, companies must be cautious. K) The economic development of China presents huge opportunities and risks, in spite of its continued Communist control. In addition, firms must be aware of the threat posed by China’s emerging multinationals. L) For North American firms, the growth and market reforms in Mexico and Latin America also present tremendous new opportunities both as markets and sources of materials and production . However, given the history of economic mismanagement in Latin America, the favorable trends may not continue. THE GLOBAL ECONOMY OF THE 21 ST CENTURY M) The path to full economic liberalization and open markets is not without obstruction. Economic crises in Latin America, South East Asia, and Russia all caused difficulties in 1997 and 1998. While firms must be prepared to take advantage of an ever more integrated global economy, they must also prepare for political and economic disruptions that may throw their plans into disarray. The 2008 - 2009 financial crisis that began in the United States, for example, quickly spread to much of the rest of the world . The Globalization Debate A) Is the shift toward a more integrated and interdependent global economy a good thing? While many economists, politicians and business leaders seem to think so, globalizat ion is not without its critics. Globalization stimulates economic growth, raises the incomes of consumers, and helps to create jobs in all countries that choose to par ticipate in the global economy. Yet, there is a rising tide of opposition to globalization. ANTI - GLOBALIZATION PROTESTS B) Since 1999, when protesters against globalization targeted the WTO meeting in Seattle, anti - globalization protesters have turned up at almost every major meeting of a global institution. Protesters fear that globalization is forever changing the world i n a negative way. However, despite their protests, most citizens seem to welcome the higher living standards that progress brings. GLOBALIZATION, JOBS, AND INCOMES C) In developed countries, labor leaders lament the loss of good paying jobs to low wage countries. However, supporters of globalization argue that free trade will result in countries specializing in the production of those goods and services that they ca n produce most efficiently, while importing goods and services that they cannot produce as efficiently. Free trade advocates suggest that despite some job dislocation, the whole economy is better off with free trade. They make a similar argument to support the outsourcing of services like call centers to low - wage countries. However, given that the wage gap between developed and developing countries is closing, the migration of unskilled jobs to low - cost nations may only be a temporary phenomenon.

  15. Page 15
    Read page 15 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 14 Teaching Tip: For resources related to exporting, the export assistance center at { http://www.export.gov/ } can provide insight into this process. Video Note: V ideo clip s related to importing and exporting are available at { http://www.census.gov/foreign - trade/aes/exporttraining/videos/index.html }. A variety of topics are available to consider. country FOCUS : Protesting Globalization in France Summary This feature describes the anti - globalization protests going on in France. The protests, led by activist Jose Bove, started when the U.S. retaliated against EU bans on beef imports by imposing a 100% tariff on some EU products. Bove and his associates targ eted McDonald’s, and also California winemaker Mondavi as symbols of their opposition to American investments. Still, despite the protests, foreign investment in France is at record highs, and ironically, so are French investments abroad. Discussion Questions 1. Consider the trade war that initiated the protests led by Bove. The EU instituted restrictions on the import of hormone treated beef because it was feared that the product might lead to health problems. The WTO stated that the restrictions were prohibit ed under WTO agreements and ordered the EU to lift the restrictions or face retaliatory measures. In your opinion, did the WTO act appropriately? Should a government be permitted to make decisions as to what products are or are not available to consumers? Should the WTO? What do you think would have happened if the WTO had ruled in favor of the EU? Discussion Points: Many students will probably argue that the European Union’s restrictions against hormone treated beef were nothing more than thinly veiled protectionism. Accordingly, students will probably feel that the World Trade Organization was justified in its rulin g. Some students however, may suggest that the European Union was looking out for its citizens when it instituted the bans, and that therefore the World Trade Organization was overstepping its bounds. 2. Why was McDonald’s chosen as the target for anti - globalization protests? How can companies like McDonald’s protect themselves from the actions of protesters like Bove? Discussion Points: Students will probably recognize that as an icon of the United States, McDonald’s is a symbol of America and as such was a natural target for protesters. The fact that its menu is based on beef was probably a bonus . Many students will note that companies that are actively involved in local communities are less likely to attract negative feeling s than those that are not. Students might recommend that companies like McDonald’s work to in tegrate themselves with the host country through chari table programs, social activities, and so on.

  16. Page 16
    Read page 16 as text

    Global Business Today Tenth Edition Chapter 1 © 201 8 by McGraw - Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 15 Teaching Tip: To learn more about ongoing WTO disputes, go the WTO’s homepage: { http://www.wto.org/ }. Video Note: Protesting against globalization is not uncommon. The video found at { http://www.pbs.org/newshour/bb/environment - jan - june07 - globalization_03 - 23/ } and titled Environmental Activist Questions the Goals of Globalization explores the discussion around the negative effects of globalization. GLOBALIZATION, LABOR POLICIES, AND THE ENVIRONMENT D) A second source of concern is that free trade encourages firms from advanced nations to move manufacturing facilities offshore to less developed countries that lack adequate regulations to protect labor and the environment from abuse by the unscrupulous . Supporters of free trade and greater globalization express serious doubts about this scenario. They point out that tougher environmental regulation and stricter labor standards go hand in hand with economic progress. In general, as countries get richer, they enact tougher environmental and labor regulations. E) Lower labor costs are only one of the reasons why a firm may seek to expand in developing countries. These countries may also have lower standards on environmental controls and workplace safety. Nevertheless, since investment typically leads to higher l iving standards, there is often pressure to increase safety regulations to international levels. This is indicated in Figure 1.5 which indicates that pollution levels decrease after per capital income levels reach $8,000. No country wants to be known for i ts poor record on health and human safety. Thus supporters of globalization argue that foreign investment often helps a country to raise its standards. GLOBALIZATION AND NATIONAL SOVEREIGNTY F) Another concern voiced by critics of globalization is that in today's increasingly interdependent global economy, economic power is shifting away from national governments and toward supranational organizations such as the World Trade Organization (WTO), the Euro pean Union (EU), and the United Nations. As perceived by critics, the problem is that unelected bureaucrats are now sometimes able to impose policies on the democratically elected governments of nation - states, thereby undermining the sovereignty of those states. G) With the development of the WTO and other multilateral organizations such as the EU and NAFTA, countries and localities necessarily cede some authority over their actions. Supporters of these organizations claim that if the organizations fail to serve the collective interests of member states, the states will withdraw their support and the organizations will collapse. GLOBALIZATION AND THE WORLD’S POOR H) Critics of globalization argue that over the last century , the gap between rich and poor has gotten wider, and the benefits of globalization have not been shared equally. However , supporters of free trade suggest that the actions of governments have limited economic improvement in many countries. In addition, debt may also be limiting growth in some countries. Today, there are

348 more pages in the full document

Unlock it once and it stays in your library, ready to chat with or turn into flashcards.

Unlock the full document

More Business Management study materials

See all

Study this document with CramX

Once it is in your library, every tool can work from it.