Globalization and International Linkages

By: Sarah Bravenec and Katie Norman

Article – Emerging Giants

• Some emerging countries: Brazil, China, India, Russia, Egypt, and South America

• What are some advantages and disadvantages companies have by using these countries to make their companies more international?

International Management

• International management?– the process of applying management concepts and

techniques in a multinational environment and adapting management practices to different economic, political, and cultural environment

• Reshape business models

• What is a MNC? Give an example of a MNC company.

Globalization and Internationalization

• Internationalization (process of a business crossing from national to cultural borders) VS. globalization (vision of creating one world unit, a single market entity

• Offshoring and outsouring– Who benefits from these two processes of

globalization?

Global and Regional Integration• World Trade Organization (WTO)• North American Free Trade Agreement (NAFTA)• CAFTA – DR – U.S. central American free trade agreement –

Dominican republic • Free Trade Agreement of the Americas (FTAA)• European Union – 27 member states

• Regional Trade agreements have slowed down negotiations between countries in the WTO

The Shifting Balance of Economic Power in the Global Economy

• In a report, Goldman Sachs argued that the global potential of Brazil, Russia, India, and China is such that they may becoming among the 4 most dominant economies by the year 2050

• Why do you think that these countries have the potential to become the most dominant economies?

Economic Systems of the World and Regional Connections

• Global economies • Market economy – when private enterprises own

property and monitor the production, distribution of goods, and services while the state simply supports competition and efficient practices

• Command economy – the government, has explicit control over the price and supply of a good or service

• Mixed economy – a combination of a market and command economy

North America

• Free-market-based economy • Canada is the US’s largest trading partner • Mexico has built a very strong maquiladora

(factories) industry

• What industries does North America have major dominant positions in?

South America

• Accumulated heavy foreign debt, and severe inflation• Argentina has one of the strongest economies overall – abundant natural resources– literate population– export-oriented agricultural sector– diversified industrial base

• Positive dev. in SA is the growth of intercountry trade, spurred on by the progress toward free-market policies

Europe

• EU– Ultimate objective of the EU is to eliminate all trade

barriers among member countries (like b/w states in the US)

– Single currency and a regional central bank • Central and Eastern Europe– Russia: dismantling of Russian price controls, and

privatization of ownership– Poland – economy has done relatively well, first of

communist-bloc countries to adopt more privatized ownership

Asia • Japan

– Japanese cultural values – Ministry of International Trade and Industry (MITI)– Use of keiretsus (a large group of vertically integrated companies to

end users)• China

– Major risk, tense trade feelings, because of the two systems of communism and capitalism

• Emerging markets – South Korea: chaebols – Hong Kong – headquarters for some of the most successful

multinational operations in Asia– Singapore: ideal model of urban life, leader and financial center of

Southeast Asia– Taiwan – progressed from labor intensive economy to one that is

dominated by more technology

Other Emerging Countries

• Less Developed Countries (LDC)– What characterizes an LDC?

• India– Recent trend of of locating software and other higher-value-

added services • Middle East and Central Asia

– Many are considered LDC’s, but because of oil they are considered economically rich

• Africa – Considerable natural resources, but remains poor and

underdeveloped– developing nations in Africa lack the institutions, infrastructure,

and economic capacity to take full advantage of globalization