What s happening in the stock market Dropped almost 2 on Jan 24 China s growth reports were not as high as expected Turkey s Central Bank raises interest rates aggressively The US and Japan s interest rates are very very low so consumption is increased and savings are decreased Corruption in Sochi construction contracts went to people on the Olympic Olympics Committee Globalization Shift towards a more integrated and interdependent world economy Everyday observations tastes and preferences converge ex Coca cola McDonalds Nike Two Components Globalization of markets Globalization of production Globalization of Markets Globalization of Production The merging of distinctly separate national markets into a global Falling barriers to cross border trade have made it easier to sell marketplace internationally Tastes and preferences converge on Difficulties Significant differences in markets need to be addressed country specific marketing strategies and the role of culture have to customize their strategies and operating practices You need resources want to get them the cheapest that you can Sourcing of goods and services from locations around the world to take advantage of Differences in cost or quality of the factors of production Labor land capital energy Different countries are endowed with different resources International trade helps countries expand their production possibilities frontier PPF they will take ANY opportunity to do so We need International Organizations to regulate the markets World Trade Organization The successor of the General Agreement of Tariffs and Trade GATT Primarily responsible for Policing the world trading system Promoting the lowering of barriers to trade As of 2008 there were 153 member nations that collectively accounted for 97 of world trade IM and World Bank Both the IMF and World Bank were created in 1944 by 44 nations that met at Bretton Woods New Hampshire The IMF was created to maintain order in the international monetary system World Bank was created to promote economic development through low interest loans UN Established 8 24 45 Drivers of globalization Two macro factors seem to underline trend toward greater globalization Technological change Communication and information processing Transportation Internet Usage Growth Lower barriers to flow of goods and services International Trade exporting goods vs Foreign Direct Investment investing in business Before WWII there were a number of barriers that limited international trade and FDI Nationalism protectionism tariffs Formal tariffs embargoes quotas and informal product There s a decline in FDI overall but US is still strong China standards barriers is biggest importer of FDI A multinational enterprise MNE is any business that has productive activities in two or more countries The globalization of the world economy has resulted in a decline in the dominance of US firms in the global marketplace Declines from France Germany Britain