90.
Explain the notion of the World Wide Web emerging as an equalizer.
In 1990, fewer than 1 million users were connected to the Internet. By 1995,
the figure had risen to 50 million. By 2010 the Internet had 1.97 billion
users. Viewed globally, the web is emerging as an equalizer. It rolls back
some of the constraints of location, scale, and time zones. The web makes
it much easier for buyers and sellers to find each other, wherever they may
be located and whatever their size. It allows businesses, both small and
large, to expand their global presence at a lower cost than ever before. It
enables enterprises to coordinate and control a globally dispersed
production system in a way that was not possible 20 years ago.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
91.
Innovations in transportation have had a major impact on global trade.
Consider one of these innovations: containerization. Why is this innovation
so significant?
Containerization has revolutionized the transportation business,
significantly lowering the costs of shipping goods over long distances. Since
1980, the world’s containership fleet has more than quadrupled, reflecting
in part the growing volume of international trade and in part the switch to
this mode of transportation. As a result of the efficiency gains associated
with containerization, transportation costs have plummeted, making it much
more economical to ship goods around the globe, thereby helping to drive
the globalization of markets and production.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
92.
Discuss the demographics of world trade since the 1960s. How has the role
of the U.S. changed? How is world trade expected to change in the future?
In the early1960s, the U.S. was the world’s dominant industrial power
accounting for over 40 percent of world output. By 2009, the United States
accounted for 24.1 percent of world output, still the world’s largest
industrial power but down significantly in relative size since the 1960s.
Other industrialized countries also saw their relative standing slip. This
change in the U.S. position was a relative decline, reflecting the faster
economic growth of several other economies, particularly in Asia. Most
forecasts now predict a rapid rise in the share of world output accounted for
by developing nations such as China, India, Russia, Indonesia, Thailand,
South Korea, Mexico, and Brazil, and a commensurate decline in the share
enjoyed by rich industrialized countries such as Great Britain, Germany,
Japan, and the United States.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
93.
How has the foreign direct investment picture changed since the 1960s?
The U.S. accounted for about 66.3 percent of worldwide foreign direct
investment flows in the 1960s, followed by British firms with about 10.5
percent of FDI flows, and Japanese firms with 2 percent. As barriers to
trade fell, non-U.S. firms increased their investments around the world in
search of optimal production locations and a direct presence in major
markets. During the 1990s, FDI to both developed and developing nations
increased dramatically. China also emerged as an important destination for
FDI.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
94.
What is a multinational enterprise (MNE)? How does a mini-multinational
differ from an MNE?
A multinational enterprise is any business that has productive activities in
two or more countries. Since the 1960s, two notable trends in the
demographics of the multinational enterprise have been (1) the rise of non–
U.S. multinationals and (2) the growth of mini-multinationals. The number
of mini-multinationals is also on the rise. Mini-multinationals are medium-
sized and small MNEs.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
95.
Why does China represent both opportunities and threats for established
international businesses?
China represents a huge and largely untapped market. Reflecting this,
between 1983 and 2010, annual foreign direct investment in China
increased from less than $2 billion to $100 billion annually. On the other
hand, China’s new firms are proving to be very capable competitors, and
they could take global market share away from Western and Japanese
enterprises. Thus, the changes in China are creating both opportunities and
threats for established international businesses.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
96.
Consider the global economy of the 21st century. What important changes
are taking place? What do these changes mean for international
companies?
The last 25 years have been a time of great change in the global economy.
Barriers to the free flow of goods, services, and capital have been falling,
national economies are becoming more integrated, and more countries are
joining the ranks of the developed world. All of these changes point toward
an economic system that is more favorable for international business.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
97.
Consider whether the shift toward a more integrated and interdependent
global economy is a good thing. Discuss the shift from the eyes of the
consumer, the worker, the company, and the environmentalist.
There are many advantages of globalization. From a broad perspective,
globalization creates economic activity (which stimulates economic growth),
creates jobs, raises income levels, and provides consumers with more
choices in regard to the products and services that are available to them.
From the perspective of an individual firm, globalization has the potential to
increase revenues (through expanded market potential), drive down costs
(through additional economies of scale), and boost profits.
However, critics argue that globalization destroys manufacturing jobs in
wealthy countries and contributes to pollution. Critics argue that falling
trade barriers allow firms in industrialized countries to move their
manufacturing activities offshore to countries where wage rates are much
lower. Critics also argue that globalization encourages firms from advanced
nations to move manufacturing facilities offshore to less developed
countries to avoid the more stringent pollution controls in place in their
home countries.
98.
Discuss what occurred in Seattle in 1999 at the meeting of the WTO and
why the events were important to the future of global trade.
In December 1999, more than 40,000 protesters blocked the streets of
Seattle in an effort to shut down a WTO meeting being held in the city. The
issue was job losses in industries under attack from foreign competitors,
falling wage rates of unskilled workers, environmental degradations, and
cultural imperialism of global media and MNEs. Protesters believed that all
of these issues were the result of globalization, and felt that the WTO, as a
promoter of globalization, was a legitimate target for blame. The protest
was a violent one and emboldened by the experience its experience,
antiglobalization protesters now turn up at almost every major meeting of a
global institution.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
99.
Falling barriers to international trade destroy manufacturing jobs in wealthy
advanced economies. Discuss this statement. Do you agree? Why or why
not?
Critics argue that falling trade barriers allow firms to move manufacturing
activities to countries where wage rates are much lower. Because of such
moves they argue that, the wage rates of poorer Americans have fallen
significantly over the past quarter of a century.
Supporters of globalization reply that critics of these trends miss the
essential point about free trade—the benefits outweigh the costs. They
argue that free trade will result in countries specializing in the production of
those goods and services that they can produce most efficiently, while
importing goods and services that they cannot produce as efficiently.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
100.
Why managing an international business is different from managing a purely
domestic business?
Managing an international business is different from managing a purely
domestic business for at least four reasons: (1) countries are different, (2)
the range of problems confronted by a manager in an international business
is wider and the problems themselves more complex than those confronted
by a manager in a domestic business, (3) an international business must
find ways to work within the limits imposed by government intervention in
the international trade and investment system, and (4) international
transactions involve converting money into different currencies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges for
business managers.
Topic: Managing in the Global Marketplace