Chapter 01 – Globalization and International Linkages
The World of International Management―Revisited
Questions & Suggested Answers
1. What are some of the pros and cons of globalization and free trade?
Answer: Pros: lower prices, greater availability of goods, increased product and
2. How might the rise of social media result in closer connections (and fewer
conflicts) among nations?
Answer: Social media is changing how we connect, shaping business strategy and
operations, and even affecting diplomacy. Social media and social networks are
change in countries.
3. Which regions of the world are most likely to benefit from globalization and
integration in the years to come, and which may experience dislocations?
Answer: Answers may vary, but regions that are likely to gain include Asia, Central
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Chapter 01 – Globalization and International Linkages
Key Terms
Chaebols―Very large, family-held Korean conglomerates that have considerable political and
economic power
European Union―(EU) A political and economic community consisting of 28 member states
Foreign Direct Investment―Investment in property, plant, or equipment in another country
Free Trade Agreement of the Americas―(FTAA) A free-trade agreement among the 34
democratically governed countries of the Western Hemisphere
Globalization―The process of social, political, economic, cultural, and technological integration
among countries around the world
International management―Process of applying management concepts and techniques in a
multinational environment and adapting management practices to different economic, political,
and cultural contexts
Keiretsu―An organizational arrangement in Japan in which a large group of vertically integrated
companies bound together by cross-ownership, interlocking directorates, and social ties provide
goods and services to end users
Management―Process of completing activities efficiently and effectively with and through other
people
Maquiladora―Factory, mostly located in Mexican border towns, that imports materials and
equipment on a duty- and tariff-free basis for assembly or manufacturing and re-export
Ministry of International Trade and Industry (MITI)―A Japanese government agency that
identifies and ranks national commercial pursuits and guides the distribution of national
resources to meet these goals
MNC―A firm having operations in more than one country, international sales, and a nationality
mix among managers and owners
North America Free Trade Agreement (NAFTA)―A free-trade agreement between the United
States, Canada, and Mexico that has removed most barriers to trade and investment
Offshoring―The process by which companies undertake some activities at offshore locations
instead of in their countries of origin
Outsourcing―The subcontracting or contracting out of activities to external organizations that
had previously been performed by the firm
World Trade Organization (WTO)―The global organization of countries that oversees rules and
regulations for international trade and investment
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Chapter 01 – Globalization and International Linkages
Review and Discussion Questions
1. How has globalization affected different world regions? What are some of the
benefits and costs of globalization for different sectors of society (companies,
workers, communities)?
Answer: North America continues to constitute one of the largest trading blocs in the
world, with the United States leading international trade and investment, Canada
the West, work for Arab employers. Many African nations remain very poor and
undeveloped, and international trade is only beginning to serve as a major source of
income. Globalization and the rise of emerging markets’ MNCs have brought
prosperity to many previously underdeveloped parts of the world.
MNCs face the challenge of balancing the potential returns of investing in various
lucrative markets that are currently emerging, with the risks of political and economic
instability in these markets. Strategic decisions are currently being made beyond
national borders, taking into consideration the parameters of integrated economic
blocs. Workers are primarily impacted by their own increased mobility
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Chapter 01 – Globalization and International Linkages
2. How has NAFTA affected the economies of North America and the EU affected
Europe? What importance do these economic pacts have for international managers
in North America, Europe, and Asia?
Answer: NAFTA so far seem to be both bad news and good news. There is evidence
that it has caused a number of jobs and capital to shift from the more economically
advanced nations (particularly the U.S.) to Mexico. On the other hand, once Mexico
managers to stay current on all trade regulations, economic activity, and status.
Different economic systems characterize different countries and regions.
3. Why are Russia and Eastern Europe of interest to international managers? Identify
and describe some reasons for such interest.
Answer: Russia and Eastern Europe are of interest to international managers because
they present an opportunity to get in on the “ground floor.” Even though these
4. Many MNCs have secured a foothold in Asia, and many more are looking to develop
business relations there. Why does this region of the world hold such interest for
international management? Identify and describe some reasons for such interest.
Answer: Asia has been of interest to MNCs because of the tremendous growth in this
region in the last decade. Although the growth has been uneven, Japan, Hong Kong,
Taiwan, Singapore, South Korea, emerging Southeastern Asian countries such as
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Chapter 01 – Globalization and International Linkages
5. Why would MNCs be interested in South America, India, the Middle East and Central
Asia, Africa, and the less developed and emerging countries of the world? Would
MNCs be better off focusing their efforts on more industrialized regions? Explain.
Answer: Each of these regions has its own characteristics, which may be attractive to
certain multinational corporations. South America has a trading bloc (Mercosur), India
6. MNCs from emerging markets (India, China, Brazil) are beginning to challenge the
dominance of developed MNCs. How might MNCs from North America, Europe, and
Japan respond to these challenges?
Answer: Many obstacles are faced by multinationals when attempting to enter
emerging markets such as India, China, or Brazil. MNCs must be persistent when
Answers To The In-Chapter Quiz
1. a. De’Longhi, an Italy.-based MNC, bought the Braun company from Proctor &
Gamble in 2012.
2. d. BIC SA is a French company.
3. d. Tata Motors, a division of the India conglomerate the Tata Group, purchased
10. c. Tropicana orange juice was purchased by U.S.-based PepsiCo.
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Chapter 01 – Globalization and International Linkages
Internet Exercise: Global Competition in Fast Food
Websites: {http:// www.mcdonalds.com }, { http://www.jollibee.com.ph/},
{http://yum.com/}
Suggestions for Using the Exercise
1. This exercise provides an excellent vehicle to compare the approaches of
three international foodservice companies. Each of the brands discussed in
this search has a mission, vision, plan, or philosophy.
McDonald’s: McDonald’s is the leading global foodservice retailer with
more than 34,000 local restaurants serving approximately 69 million
people in 118 countries each day. More than 80% of McDonald’s
restaurants worldwide are owned and operated by independent local men
and women. McDonald’s customer-focused Plan to Win provides a
common framework for our global business yet allows for local
adaptation. Through the execution of initiatives surrounding the five
Drive aggressive international expansion and build strong brands
everywhere. Dramatically improve U.S. brand positions, consistency and
returns. Drive Industry leading long-term shareholder and franchisee
teamwork, spirit of family and fun, humility to listen and learn, honesty
and integrity, frugality. Mission―To serve great tasting food, bringing
the joy of eating to everyone.
2. This exercise also provides an excellent opportunity to talk about the power
of global brand names. The McDonald’s name (and golden arches) is
recognized around the world; likewise, Yum businesses (KFC, Pizza Hut,
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