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CHAPTER 4
BUSINESS IN A GLOBALIZED WORLD
INTRODUCTION
The world economy is becoming increasingly integrated, and many businesses have
extended their reach beyond national borders. Yet the process of globalization is
controversial, and the involvement of corporations in other nations is not always
welcome. Doing business in diverse political and economic systems and in societies with
stark differences in wealth and income poses difficult challenges. When a transnational
corporation buys resources, manufactures products, or sells goods and services in
multiple countries, it is inevitably drawn into a web of global social and ethical issues.
Understanding what these issues are and how to manage them through collaborative
action with governments and civil society organizations is a vital skill for today’s
managers.
PREVIEW CASE
Newmont Mining Corp. in Peru
Teaching Tip: Preview Case
The preview case describes a dispute involving a multinational
corporation, Newmont Mining Company, in Peru. The company
wanted to develop an enormous surface mine to extract gold and
copper. But local residents protested, expressing concerns that the
mine would dry up and pollute the community’s water supplies. The
company then suspended the project and indicated it would direct its
impacts. Students can learn more about this controversy at:
www.newmont.com/south-america/ops-minas-conga-peru
www.minesandcommunities.org
www.peruviantimes.com/tag/minas-conga/
http://online.wsj.com/article/SB1000087239639044435840457760742
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CHAPTER OUTLINE
I. THE PROCESS OF GLOBALIZATION
A. Major Transnational Corporations
B. International Financial and Trade Institutions
II. THE BENEFITS AND COSTS OF GLOBALIZATION
A. Benefits of Globalization
B. Costs of Globalization
III. DOING BUSINESS IN A DIVERSE WORLD
A. Comparative Political and Economic Systems
B. Global Inequality and the Bottom of the Pyramid
IV. COLLABORATIVE PARTNERSHIPS FOR GLOBAL PROBLEM
SOLVING
A. A Three-Sector World
GETTING STARTED
KEY LEARNING OBJECTIVES
LO 4-1: Defining globalization and classifying the major ways in which companies
enter the global marketplace.
Teaching Tip: Bottom of the Pyramid
A six-minute video that uses graphics with voice-over narration that
explains the concepts of bottom of the pyramid and microfinance,
produced by Fusion, is available at:
https://www.youtube.com/watch?v=CPnx6gLcfK4
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LO 4-2: Identifying the international financial and trade institutions that have
shaped the globalization process in recent decades.
LO 4-3: Analyzing the benefits and costs of the globalization of business.
LO 4-4: Identifying the major types of political and economic systems in which
companies operate across the world.
LO 4-5: Understanding global inequalities of wealth and income and analyzing the
special challenges of serving those at the “bottom of the pyramid.”
LO 4-6: Assessing how businesses can work collaboratively with governments and
the civil sector to address global social issues?
KEY TERMS
bottom of the pyramid
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INTERNET RESOURCES
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Thomas L. Friedman
https://en.wordpress.com/tag/globalization Blogs on globalization and related topics
DISCUSSION CASE
INTEL AND CONFLICT MINERALS
1. Define conflict minerals and, in particular, conflict coltan. What groups benefited from
the trade in conflict minerals? What groups were hurt by it?
tantalum, which is used in portable consumer electronics. According to the United Nations
and several NGOs, militias had looted coltan from eastern Congo and used the profits to help
falsely accused of using conflict ore.
2. Consider the three sectors discussed in this chapter (business, government, and civil
society). What were the interests of each, and in what ways did their interests
converge?
Citizenship Coalition, and its suppliers, such as H.C. Starck and Flextronics, were interested
in preventing damage to their reputations from association with human rights violations.
Witness, had an interest in preventing human rights abuses in connection with trade in
conflict coltan.
Teaching Tip: Conflict Minerals
A video located in the PBS website focusing on “How to Avoid
Conflict Minerals” can be used to enhance classroom discussion:
http://video.pbs.org/video/1622330246
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3. Why was Intel unable to eliminate conflict minerals from its supply chain unilaterally,
that is, without the help of others?
processing companies, and traders all along the supply chain to create a system under which
it could assure that minerals it used were not used to fund civil conflict in the DRC or
4. In what ways did Intel collaborate with other sectors (governments and civil society) in
its efforts to eliminate conflict minerals from its products? What strengths and
only conflict minerals sourced from the DRC. In doing so, the company collaborated with
both government and civil society organizations, as well as with other business firms. It
NGOs brought community legitimacy and local knowledge.
5. What further steps could be taken by governments, NGOs, and companies to
strengthen the process to exclude conflict minerals from the global supply chain?
Government actions mentioned in the case include offering guidance and requiring
Teaching Tip
Students may be asked to investigate and evaluate the Conflict-Free
Smelter Assessment Program: http://www.conflictfreesmelter.org/
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Teaching Tip
A two-minute video in which Intel engineer Carolyn Duran explains
Intel’s efforts to eliminate conflict minerals from its global supply
chain may be found here:
www.intel.com/content/www/us/en/corporate-responsibility/pursuit-of-
conflict-free-minerals.html.
This video may be followed with the discussion prompt: “What were
the benefits, if any, to Intel of making a public commitment to
producing the world’s first conflict–free processor?”