Chapter 1: GlobalizationSlide 2Slide 3Slide 4Slide 5Slide 6Chapter 2: National Differences in Political EconomySlide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Chapter 3: Differences in CultureSlide 16Slide 17Slide 18Slide 19Slide 20Slide 21Chapter 4: Ethics in International BusinessSlide 23Slide 24Slide 25Chapter 5: International Trade TheorySlide 27Slide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Chapter 6: The Political Economy of International TradeChapter 6: The Political Economy of International TradeSlide 38Slide 39Chapter 7: Foreign Direct InvestmentSlide 41Slide 42Slide 43Slide 44Chapter 8: Regional Economic IntegrationSlide 46Slide 47Slide 48Slide 49Slide 501 - 1Chapter 1: GlobalizationWHAT IS GLOBALIZATION?Globalization refers to the shift towards a more integrated and interdependent world economy.• The Globalization of Markets• The Globalization of Production1 - 2Chapter 1: GlobalizationTHE EMERGENCE OF GLOBAL INSTITUTIONSGlobal institutions:• help manage, regulate, and police the global market place• promote the establishment of multinational treaties to govern the global business system1 - 3Chapter 1: GlobalizationDRIVERS OF GLOBALIZATIONTwo macro factors underlie the trend toward greater globalization: • Declining Trade and Investment Barriers• The Role of Technological Change1 - 4Chapter 1: GlobalizationTHE CHANGING DEMOGRAPHICS OF THE GLOBAL ECONOMYIn the 1960s: • The U.S. dominated the world economy and the world trade picture • U.S. multinationals dominated the international business scene • About half the world – the centrally planned economies of the communist world – was off limits to Western international business1 - 5Chapter 1: Globalization•The Changing World Output and World Trade Picture•The Changing Foreign Direct Investment Picture•The Changing Nature of the Multinational Enterprise•The Changing World Order•The Global Economy of the 21st Century1 - 6Chapter 1: GlobalizationMANAGING IN THE GLOBAL MARKETPLACEManaging an international business (any firm that engages in international trade or investment) is different from managing a domestic business because: • Countries differ• Managers face a greater and more complex range of problems• International companies must work within the limits imposed by governmental intervention and the global trading system• International transactions require converting funds and being susceptible to exchange rate changes1 - 7Chapter 2: National Differences in Political EconomyPOLITICAL SYSTEMS• A political system is the system of government in a nationPolitical systems can be assessed according to:• the degree to which they emphasize collectivism as opposed to individualism• the degree to which they are democratic or totalitarian1 - 8Chapter 2: National Differences in Political EconomyECONOMIC SYSTEMS• A free market system is likely in countries where individual goals are given primacy over collective goals• State-owned enterprises and restricted markets are common in countries where collective goals are dominant1 - 9Chapter 2: National Differences in Political EconomyLEGAL SYSTEMSThe legal system of a country is the rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained.1 - 10Chapter 2: National Differences in Political Economy•Different Legal Systems •Differences in Contract Law•Property Rights and Corruption•The Protection of Intellectual Property•Product Safety and Product Liability1 - 11Chapter 2: National Differences in Political EconomyTHE DETERMINANTS OF ECONOMIC DEVELOPMENTDiffering political, economic, and legal systems can have a profound impact on the level of a country's economic development, and hence on the attractiveness of a country as a possible market and/or production location for a firm.1 - 12Chapter 2: National Differences in Political EconomySTATES IN TRANSITION• Since the late 1980s, a wave of democratic revolutions has swept the world, and many of the previous totalitarian regimes collapsed • There has been a move away from centrally planned and mixed economies towards free markets1 - 13Chapter 2: National Differences in Political EconomySTATES IN TRANSITION•The Spread of Democracy•The New World Order and Global Terrorism•The Spread of Market-Based Systems •The Nature of Economic Transformation•Deregulation •Privatization•Legal Systems•Implications of Changing Political Economy1 - 14Chapter 2: National Differences in Political EconomyIMPLICATIONS FOR MANAGERS• Political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business• The political, economic, and legal environment of a country clearly influences the attractiveness of that country as a market and/or investment site1 - 15Chapter 3: Differences in CultureINTRODUCTIONOperating a successful international business requires cross-cultural literacy (an understanding of how cultural differences across and within nations can affect the way in which business is practiced). A relationship may exist between culture and the costs of doing business in a country or region.1 - 16Chapter 3: Differences in CultureWHAT IS CULTURE?The fundamental building blocks of culture are values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations). Society refers to a group of people who share a common set of values and norms.1 - 17Chapter 3: Differences in CultureSOCIAL STRUCTUREA society's social structure is its basic social organization. Two dimensions to consider:•the degree to which the basic unit of social organization is the individual, as opposed to the group•the degree to which a society is stratified into classes or castes1 - 18Chapter 3: Differences in CultureRELIGIOUS AND ETHICAL SYSTEMSReligion can be defined as a system of shared beliefs and rituals that are concerned with the realm of the sacred. Ethical systems refer to a set of moral principles, or values, that are used to guide and shape behavior.1 - 19Chapter 3: Differences in CultureEDUCATIONFormal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society. The knowledge