Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Global Business Today Eleventh Edition Chapter 1
1-15
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?
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?
GLOBALIZATION, JOBS, AND INCOME
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 can 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
Global Business Today Eleventh Edition Chapter 1
1-16
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 living standards, there
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
European 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.
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 various efforts underway to encourage debt relief programs.
CONNECT
Click and Drag
The Globalization Debate
Summary
This activity focuses on the debate on globalization. While globalization has long been viewed as
a beneficial trend, more recently, certain segments of the population have voiced their strong
Global Business Today Eleventh Edition Chapter 1
1-17
opposition to the trend. Anecdotes, evidence, and arguments can be collected to support each
side of the debate.
Activity
CONNECT
Video Case
Is the Future of Globalization in Doubt?
Summary
This activity focuses on the globalization debate. While it is generally accepted that countries
benefit from globalization, those benefits are not always equally distributed. Some are now
After decades of general support for globalization, some are now challenging that perspective.
Ask students to discuss this trend and what it means for international companies.
Managing in the Global Marketplace
A) An international business is any firm that engages in international trade or investment.
B) As their organizations increasingly engage in cross-border trade and investment, managers
need to recognize that the task of managing an international business differs from that of
managing a purely domestic business in many ways. Countries differ in their cultures, political
systems, economic systems, legal systems, and levels of economic development.
C) These differences require that business people vary their practices country by country,
recognizing what changes are required to operate effectively. It is necessary to strike a balance
between adaptation and maintaining global consistency, however.
Global Business Today Eleventh Edition Chapter 1
1-18
D) As a result of making local adaptations, the complexity of international business is clearly
greater than that of a purely domestic firm. Firms need to decide which countries to enter, what
mode of entry to use, and which countries to avoid. Rules and regulations also differ, as do
currencies and languages.
E) Managing an international business is different from managing a purely domestic business for
at least four reasons: 1) countries differ, 2) the range of problems and manager faces is greater
and more complex, 3) an international business must find ways to work within the limits
imposed by governmental intervention and the global trading system, and 4) international
transactions require converting funds and are susceptible to exchange rate changes.
CONNECT
Video Case
iPhone Assembly in China
Summary
This activity explores iPhone’s activities in China. Like other companies, Apple is faced with
Global Business Today Eleventh Edition Chapter 1
1-19
End-of-Chapter Resources
Critical Thinking and Discussion Questions
1. Describe the shifts in the world economy over the last 30 years. What are the implications of
these shifts for international businesses based in the United Kingdom? North America? Hong
Kong?
Answer: The world economy has shifted dramatically over the past 30 years. As late as the
1960s, four trends described the demographics of the global economy. The first was U.S.
dominance in the world economy and world trade. The second was U.S. dominance in the world
foreign direct investment picture. Related to this, the third fact was the dominance of large,
2. "The study of international business is fine if you are going to work in a large multinational
enterprise, but it has no relevance for individuals who are going to work in smaller firms."
Evaluate this statement.
Global Business Today Eleventh Edition Chapter 1
1-20
Answer: People who believe in this view, and the firms that they work for, may find that they do
3. How have changes in technology contributed to the globalization of markets and production?
Would the globalization of production and markets have been possible without these
technological changes?
Answer: Changes in technology have significantly contributed to the globalization of markets
and of production. Improvements in transportation technology have paved the way for
companies like Coca-Cola, Levi Strauss, Sony and McDonalds to make their products available
worldwide. Similarly, improvements in communications technology have had a major impact.
4. "Ultimately, the study of international business is no different from the study of domestic
business. Thus, there is no point in having a separate course on international business." Evaluate
this statement.
Answer: This statement reflects a poor understanding of the unique challenges involved in
Global Business Today Eleventh Edition Chapter 1
1-21
5. How does the Internet affect international business activity and the globalization of the world
economy?
Answer: The Internet has changed the way companies do business. This technology makes it
easier for individuals and companies in different countries to conduct business with one another
6. If current trends continue, China may be the world's largest economy by 2030. Discuss the
possible implications of such a development for
a. the world trading system
b. the world monetary system
c. the business strategy of today's European and U.S.-based global corporations
d. global commodity prices
Answer: The world trading system would clearly be affected by such a development. Currently,
7. Reread the Management Focus “Boeing’s Global Production System” and answer the
following questions:
a. What are the benefits to Boeing of outsourcing manufacturing of components of the
Boeing 787 to firms based in other countries?
b. What are the potential costs and risks to Boeing outsourcing?
c. In addition to foreign subcontractors and Boeing, who else benefits from Boeing's
decision to outsource component part manufacturing assembly to other nations? Who are
the potential losers?
d. If Boeing's management decided to keep all production in America, what do you think
the effect would be on the company, its employees, and the communities that depend on
it?
Global Business Today Eleventh Edition Chapter 1
1-22
e. On balance, do you think that the kind of outsourcing undertaken by Boeing is a good
thing or a bad thing for the American economy? Explain your reasoning.
globalEDGE™ Research Task
Use the globalEDGE™ site (globaledge.msu.edu) to complete the exercises in the text.
Exercise 1
Search phrase: trade forecasts or HSBC Global Connections
Global Business Today Eleventh Edition Chapter 1
1-23
Additional Info:
Exercise 2
Search phrase: FDI Confidence Index
Resource Name: A.T. Kearney: Foreign Direct Investment Confidence Index
Additional Info:
Globalization of BMW, Rolls-Royce, and the MINI
closing case
Summary
This case explores the globalization of BMW, Rolls-Royce, and the MINI. BMW is recognized
around the world as a leader in the luxury car market. By combining outstanding performance,
breathtaking design, and ground-breaking innovations in each of its vehicles, BMW has been
able to attract buyers from around the globe. Rolls-Royce is the iconic luxury motor car. With its
commitment to absolute perfection, Rolls-Royce holds the global position as the pinnacle luxury
automaker in the world. With its quirky design, MINI appeals to younger buyers seeking the
individuality the car offers.
Case Discussion Questions
1. How do you think BMW integrates its various unique brands into a global effort that works for
them (BMW, Rolls-Royce, and the MINI) across the world’s many global markets?
2. What is your reaction to the global brand of BMW when you hear the name, think of the
brand, and see the BMW vehicles on the road?
1-24
3. The Rolls-Royce chase of perfection drives the supreme quality, exquisite hand craftsmanship,
and attention to the finest detail to maintain its global position as the pinnacle luxury automobile
manufacturer in the world. How do you think the Rolls-Royce brand helps, or hurts, the other
BMW brands globally (BMW, the MINI)?
4. The MINI is a unique car offering in the BMW portfolio. It has long-standing attention to
clever solutions with distinctive designs that unlock urban driving and cater to customers’
individual needs—at least that is what the target focus is for the MINI. Do you agree that this is
the focus, and do you think it is working as advertised globally?
CONNECT
Geography
Summary
This activity is designed to test the student’s knowledge of geography. Questions related to
chapter material are asked, requiring students to understand the topics and the locations of the
countries involved.
Global Business Today Eleventh Edition Chapter 1
1-25
Global Business Today Eleventh Edition Chapter 1
1-26
Continuous Case Concept
This feature allows you to integrate the material presented in each chapter of the text using a
single industry, the auto industry. For each chapter, ideas will be presented on how to link the
chapter contents to the current situation in the auto industry. This discussion can take place at the
beginning of a new unit, at the end, or it could be threaded through the chapter material. In some
cases, you may want to use the feature more than once. By using the continuous case concept,
students will have the opportunity to understand how the elements presented throughout the text
apply to an evolving, real situation.
• Sketch out a diagram of the auto industry showing the major players such as Ford,
Chrysler, Toyota, Nissan, BMW, Mercedes, Tata, and Hyundai. Look at recent changes
in corporate structure. For example, Italian automaker Fiat recently took control of
Chrysler.
• Finally, reflect on the factors that made the industry a global one, and consider what is
likely to happen to the industry in the next three years, five years, and ten years. Students
may note for example, that although the U.S. market is getting stronger, emerging
markets have become more important. Similarly, students may predict that automakers
will continue to look for ways to streamline production. Ford, for example, believes that
auto buyers are becoming more similar in their buying habits and so has recently
implemented a new strategy, One Ford, which will allow it to sell just a few models in
every market. The company hopes that by streamlining all phases of product
development, production, and marketing it will be able to capture a larger share of the
market and bigger profits.
Video Note: To explore an article that relates to short- and long-term industry and consumer
factors automotive companies must consider in this discussion, consider Volkswagen Comes
Global Business Today Eleventh Edition Chapter 1
1-27
Additional Readings and Sources of Information
Trade War Update: China May Have Shot Self in Foot
https://www.forbes.com/sites/kenrapoza/2018/08/15/trade-war-update-china-soy-tariffs-brazil-
trump/#134149032bc7
Brexit Won't Stop Globalization
http://www.bloomberg.com/news/articles/2016-07-14/brexit-won-t-stop-globalization
China Inc. Goes on a Buying Spree for Global Health Assets
http://www.bloomberg.com/news/articles/2016-07-05/china-inc-goes-on-a-buying-spree-for-
global-health-care-assets
Chinese Startup Wants to Predict Your Health With a Digital DNA Avatar
http://www.bloomberg.com/news/articles/2016-06-29/disease-predicting-avatars-fuel-billion-
dollar-chinese-startup
Trump Targets Foreign Auto Companies for Not Building Enough in U.S.
https://www.wsj.com/articles/auto-makers-meet-with-donald-trump-on-emissions-nafta-
1526063070
