CH 1- Globalisation Flashcards
(19 cards)
What is globalization?
Globalization refers to the shift towards a more integrated and interdependent world economy, where barriers to trade, investment, and cultural exchange are decreasing, leading to interconnected national economies.
What are the two main components of globalization?
- Globalization of markets, which refers to the merging of historically distinct and separate national markets into one global marketplace.
- Globalization of production, which refers to the sourcing of goods and services from different locations worldwide to take advantage of national differences in cost and quality.
What is the difference between globalization of markets and globalization of production?
Globalization of markets focuses on selling products worldwide, making consumer preferences more homogeneous, whereas globalization of production focuses on sourcing inputs like labor and raw materials from different countries to maximize efficiency.
What are the key drivers of globalization?
- Declining trade and investment barriers (e.g., reduced tariffs, free trade agreements).
- Technological advancements (e.g., improved communication, transportation, and digital platforms).
How have trade and investment barriers declined over time?
Since WWII, global institutions like the WTO, IMF, and World Bank have encouraged free trade, reducing tariffs and restrictions, allowing more international business transactions.
What role does technology play in globalization?
Advances in communication (e.g., the internet, mobile technology), transportation (e.g., containerization, air freight), and automation have enabled businesses to operate more efficiently across borders.
How has the internet influenced globalization?
The internet has enabled instant communication, e-commerce, and global marketing, reducing costs and making international business more accessible for firms of all sizes.
How has the global economic landscape changed in recent decades?
Economic power has shifted from developed countries (e.g., U.S., Europe) towards emerging markets (e.g., China, India), leading to increased competition and new business opportunities.
What is the impact of Foreign Direct Investment (FDI) on globalization?
FDI allows companies to establish operations in foreign markets, leading to increased economic integration and interdependence among nations.
How have multinational enterprises (MNEs) evolved due to globalization?
MNEs have expanded their global presence, with both large corporations (e.g., Apple, Toyota) and smaller firms leveraging international markets and production networks.
What is the role of emerging economies in globalization?
Countries like China, India, and Brazil have become key players in manufacturing, services, and technology, challenging traditional economic powers.
What are the main arguments in favor of globalization?
- Economic growth: Trade liberalization increases wealth and development.
- Lower prices for consumers: Global competition drives efficiency.
- Access to new markets: Companies can expand and innovate.
- Job creation: Global industries offer employment opportunities.
What are the main arguments against globalization?
- Job losses: Outsourcing may lead to domestic unemployment.
- Income inequality: Wealth may be concentrated among the elite.
- Cultural erosion: Global brands may weaken local traditions.
- Environmental concerns: Increased production can harm ecosystems.
How do trade disputes (e.g., U.S.–China) impact globalization?
Trade wars, tariffs, and economic sanctions create uncertainty, disrupt supply chains, and force companies to rethink global strategies.
What is “economic nationalism,” and how does it affect globalization?
Economic nationalism prioritizes domestic industries over international trade, often through tariffs, subsidies, and trade restrictions (e.g., Donald Trump’s “America First” policies).
How can businesses manage risks associated with globalization?
Companies should diversify supply chains, hedge against currency risks, monitor political changes, and be adaptable to shifts in global trade policies.
Why is understanding national cultures important for international business?
Cultural differences affect consumer behavior, workplace norms, and negotiation styles, requiring companies to tailor their strategies for different markets.
How do geopolitical events impact international business strategies?
Events like Brexit, trade wars, and global pandemics influence market entry decisions, production locations, and pricing strategies.
