University of Cumberlands Managing in a Global Environment Paper

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grpuvriti

Business Finance

University of cumberlands

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Attached is a copy of the week's research terms. Topics will be selected on a first come first serve basis. To claim a topic, go to this week’s discussion forum (below) and check what topics remain available. Select an available topic and start a new discussion thread by placing ONLY the topic in the Subject Line (do not put your name or anything else here). Leave the body of the thread blank and save the post. In weeks where there are insufficient topics for everyone; once all topics have been selected you may then start selecting from the entire list again. But there should never be three posts on the same topic – if so the last one posted will receive no credit.

After your topic selection, research your selected topic in the university’s electronic library from only academic (refereed) journals. You will need at least three journal references and the textbook. Start your research with the textbook so it always grounds your topic. When your research is complete post it in the discussion forum below.

  1. Structure your paper as follows:
    1. Cover page
    2. Overview describing the importance of the research topic to current business and professional practice in your own words.
    3. Purpose of Research should reflect the potential benefit of the topic to the current business and professional practice and the larger body of research.
    4. Review of the Literature summarized in your own words. Note that this should not be a “copy and paste” of literature content, nor should this section be substantially filled with direct quotes from the article. A literature review is a summary of the major points and findings of each of the selected articles (with appropriate citations). Direct quotations should be used sparingly. Normally, this will be the largest section of your paper (this is not a requirement; just a general observation).
    5. Practical Application of the literature. Describe how your findings from the relevant research literature can shape, inform, and improve current business and professional practice related to your chosen topic.
    6. Conclusion in your own words
    7. References formatted according to APA style requirements

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Global Business Today 11e by Charles W.L. Hill and G. Tomas M. Hult ©VIPRESIONA/Shutterstock ©McGraw-Hill All rights rights reserved. reserved. Authorized Authorizedonly only for for instructor instructor use use in in the the classroom. classroom. No No reproduction reproduction or or further further distribution consent of of McGraw-Hill Education. ©McGraw-Hill Education. Education. All distributionpermitted permittedwithout withoutthe theprior priorwritten written consent McGraw-Hill Education. Part 1: Introduction and Overview Chapter 1: Globalization ©McGraw-Hill Education Source: ©Kevork Djansezian/Getty Images News/Getty Images Learning Objectives 1-1 Understand what is meant by the term globalization. 1-2 Recognize the main drivers of globalization. 1-3 Describe the changing nature of the global economy. 1-4 Explain the main arguments in the debate over the impact of globalization. 1-5 Understand how the process of globalization is creating opportunities and challenges for management practice. ©McGraw-Hill Education Opening Case: GM and Its Chevrolet Supercar, The Corvette ZR1 Eight distinctive automotive brands under GM umbrella GM operates on 5 continents and has a strong presence in China Chevrolet-branded vehicles sold in all markets worldwide • Corvette introduced in 1953 with ZR1 model reintroduced in 2019 • Testament to global branding and staying power ©McGraw-Hill Education Introduction The world economy today • Fewer self-contained national economies • More integrated global economic system with lower barriers to trade and investment • Transformation is called globalization • The volume of goods, services, and investments crossing national borders has expanded faster than world output for more than half a century • Globalization offers business opportunities ©McGraw-Hill Education What Is Globalization? 1 Globalization: shift toward a more integrated and interdependent world economy Two key facets of globalization • Globalization of markets • Globalization of production ©McGraw-Hill Education What Is Globalization? 2 The Globalization of Markets • The merging of historically distinct and separate national markets into one huge global marketplace • In many markets, the tastes and preferences of consumers in different nations are converging on some global norm, creating a global market • Examples: Coca-Cola, McDonald’s, IKEA, Starbucks, Apple • The most global of markets are for industrial goods and materials that serve universal needs around the world • Aluminum, oil, wheat, microprocessors ©McGraw-Hill Education What Is Globalization? 3 The Globalization of Production • Sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor, energy, land, and capital) • Lower overall cost structure • Improvement of the quality or functionality of a product to compete more effectively ©McGraw-Hill Education Did You Know? Did you know why your iPhone was assembled in China? It’s not what you might think. Click to play video ©McGraw-Hill Education What Is Globalization? 4 The Globalization of Production continued • Early outsourcing was primarily for manufacturing • Today, modern communications technology allows companies to outsource services • Impediments to globalization • Formal and informal trade barriers • Barriers to foreign direct investment • Transportation costs • Economic and political risk • Managerial challenge for coordinating a globally dispersed supply chain ©McGraw-Hill Education The Emergence of Global Institutions 1 Global Institutions • Manage, regulate, and police the global market place • Promote the establishment of multinational treaties to govern the global business system ©McGraw-Hill Education The Emergence of Global Institutions 2 World Trade Organization (WTO) • Polices world trading system and ensures nations adhere to the rules established in WTO treaties • Succeeded the General Agreement on Tariffs and Trade (GATT) • 164 nations accounted for 98 percent of world trade (2017) ©McGraw-Hill Education Can the International Court of Justice Be Effective? The International Court of Justice (www.icj-cij.org) is the principal judicial organ of the United Nations (UN). Of the six principal organs of the UN, it is the only one not located in New York (United States); instead, the seat of the Court is at the Peace Palace in The Hague (Netherlands). The court’s role is to settle, in accordance with international law, legal disputes submitted to it by countries and to give advisory opinions on legal questions referred to it by authorized United Nations organs and specialized agencies. But how effective can the UN International Court of Justice really be in the global marketplace with its many legal systems? Source: www.icj-cij.org/en/court. ©McGraw-Hill Education The Emergence of Global Institutions 3 International Monetary Fund (IMF) • Maintains order in the international monetary system • Lender of last resort • Requires nation-states to adopt specific economic policies in return for loans World Bank • Promotes economic development using low-interest loans • Seen as less controversial than IMF ©McGraw-Hill Education The Emergence of Global Institutions 4 United Nations (UN) • Maintains international peace and security • Develops friendly relations among nations • Promotes cooperation in solving international problems • Promotes respect for human rights • A center for harmonizing the actions of nations • Includes 193 member countries ©McGraw-Hill Education The Emergence of Global Institutions 5 Group of Twenty (G20) • Comprised of finance ministers and central bank governors of the 19 largest world economies plus the EU • Represents 90 percent of global GDP • Became a forum for a coordinated policy response to the financial crisis of 2008 and 2009 ©McGraw-Hill Education Drivers of Globalization 1 Two macro factors driving the move toward greater globalization 1. Decline in barriers to free flow of goods, services, and capital 2. Technological change ©McGraw-Hill Education Drivers of Globalization 2 Declining Trade and Investment Barriers • International trade occurs when a firm exports goods or services to consumers in another country • Foreign direct investment occurs when a firm invests resources in business activities outside its home country • During 1920s and 1930s, many nations put up barriers to international trade to protect domestic industries • After WWII, advanced Western countries reduced barriers • GATT, Uruguay Round, and WTO ©McGraw-Hill Education Table 1.1 Average Tariff Rates on Manufactured Products as Percentage of Value Country 1913 1950 1990 2020 21 percent 18 percent 5.9 percent 1.6 percent Germany 20 26 5.9 1.6 Italy 18 25 5.9 1.6 Japan 30 -- 5.3 1.4 Netherlands 5 11 5.9 1.6 Sweden 20 9 4.4 1.6 United Kingdom -- 23 5.9 1.6 United States 44 14 4.8 1.6 France Sources: The 1913 to 1990 data are from “Who Wants to Be a Giant?” The Economist: A Survey of the Multinationals, June 24, 1995, pp. 3–4. The 2020 data are estimated based on data from the World Development Indicators, World Bank. ©McGraw-Hill Education Drivers of Globalization 3 Declining Trade and Investment Barriers continued • Knowledge Society and Trade Agreements • World trade is predicted to increase more rapidly than world production for the foreseeable future • Produce more today and more of it traded across national borders • Consumers are more knowledgeable, which drives demand • Countries have been reducing restrictions to foreign investment and trade • Implications of fast-paced volume of world trade • More companies dispersing parts production • Economies of nation-states becoming more intertwined • World becoming significantly wealthier ©McGraw-Hill Education Figure 1.1 Value of World Trade, World Production, Number of Regional Trade Agreements and World Population 1960 to 2020 Access the text alternative for these images. ©McGraw-Hill Education Sources: World Bank, 2019; World Trade Organization, 2019; United Nations, 2019. Figure 1.2 Comparisons of World Trade and World Population; World Trade and Number of Regional Trade Agreements; World Population and World Production; and World Population and World Trade Access the text alternative for these images. ©McGraw-Hill Education Sources: World Bank, 2019; World Trade Organization, 2019; United Nations, 2019. Drivers of Globalization 4 Role of Technological Change • Communications • Since World War II, microprocessor created explosive growth of high-power, lost-cost computing • Microprocessors also advanced telecommunications • Moore’s Law: as costs of microprocessors fall, their power increases ©McGraw-Hill Education Drivers of Globalization 5 Role of Technological Change continued • Internet of Things • In 2017, 3.8 billion users (51 percent of global population) • Makes it easier for buyers and sellers to find each other • Transportation Technology • Commercial jets, superfreighters • Containerization ©McGraw-Hill Education Drivers of Globalization 6 Role of Technological Change continued • Implications for the Globalization of Production • Lower transportation costs makes geographically dispersed production system more economical • Allows firms to better respond to customer demands • Implications for the Globalization of Markets • Low cost communication networks create electronic global marketplace • Low cost transportation makes shipping products around the world economical • Reduced cultural distance • Converging consumer tastes and preferences ©McGraw-Hill Education The Changing Demographics of the Global Economy 1 Early 1960s • U.S. dominated the world economy, world trade • U.S. dominated world FDI • U.S. MNEs dominated international business • About half the world was off limits to Western international business Today, much has changed ©McGraw-Hill Education The Changing Demographics of the Global Economy 2 The Changing World Output and World Trade Picture • Early 1960s • U.S. was dominant in industrial power, accounting for about 38 percent of world manufacturing output • By 2018 • U.S. accounts for only 15.8 percent • Germany, France, the U.K., and Canada had similar decline • Rapid economic growth now in countries like China, India, Russia, and Brazil • Further relative decline by the U.S., Germany, and Japan; U.K. is likely ©McGraw-Hill Education Table 1.2 Changing Demographics of World Output and World Exports Share of World Output 1960 (%) Share of World Output Today (%) Share of World Exports Today (%) United States 38.3 15.8 8.2 Germany 8.7 3.4 7.1 France 4.6 2.3 2.8 Italy 3.0 1.9 2.4 United Kingdom 5.3 2.4 2.3 Canada 3.0 1.4 2.2 Japan 3.3 4.3 3.6 China NA 17.1 11.1 Country ©McGraw-Hill Education Sources: Output data from World Bank database, 2019. Trade data from WTO Statistical Database, 2019. The Changing Demographics of the Global Economy 3 The Changing Foreign Direct Investment Picture • World output generated by developing countries steadily increasing since 1960s • Stock of foreign direct investment (total cumulative value of foreign investments) generated by rich industrial countries declining • Cross-border flows of foreign direct investment rising • Largest developing country recipients of FDI are China, Mexico, and Brazil ©McGraw-Hill Education Figure 1.3 Share of FDI Stock Outward as a Percentage of GDP Access the text alternative for these images. ©McGraw-Hill Education Sources: OECD data 2017, FDI stocks. Figure 1.4 FDI Inflows (in millions of dollars) Access the text alternative for these images. ©McGraw-Hill Education Source: United Nations Conference on Trade and Development, World Investment Report 2018. (Data for 2019–2020 are forecast.) The Changing Demographics of the Global Economy 4 The Changing Nature of the Multinational Enterprise • A multinational enterprise (MNE) is any business that has productive activities in two or more countries • Since the 1960s, a rise of non-U.S. multinationals and growth of mini-multinationals • Non-U.S. Multinationals • Large number of U.S. multinationals reflects U.S. economic dominance • Today, world economy shifting away from North America and Western Europe ©McGraw-Hill Education Figure 1.5 National Share of Largest Multinational Corporations Access the text alternative for these images. ©McGraw-Hill Education Source: Forbes Global 2000 in 2003 and 2017. The Changing Demographics of the Global Economy 5 The Changing Nature of the Multinational Enterprise continued • The Rise of Mini-Multinationals • More small- and medium-size businesses (mini-multinationals) involved in international trade and investment • Internet lowers barriers that smaller firms face in building international sales ©McGraw-Hill Education Which Is More Important—Similarities or Differences? International strategy has seen significant changes in recent years. Multinational enterprises now have to evaluate their core uniqueness and how they can drive their uniqueness to be leveraged in the global marketplace better. For some, such thinking may represent a major shift—to focus on similarities across nations and customers instead of differences. This could be an important shift because companies and their people are trained to look for differences and form strategies based on satisfying the needs of customers with slight or significant differences across the globe. In the future, we may be looking for similarities first and then focusing on the similarities that outweigh the differences in tastes, wants, and needs. Do you agree that focusing on similarities across countries is a better way to developing strategy than focusing on differences? Source: globalEDGE.msu.edu/content/gbr/gbr7-2.pdf. ©McGraw-Hill Education The Changing Demographics of the Global Economy 6 The Changing World Order • Collapse of communism in Eastern Europe • Greater export and investment opportunities, but political unrest is increasing risk • Economic development in China • Huge opportunities despite continued government control, but also new competition from Chinese firms • Free market reforms and democracy in Latin America • New markets and new sources of materials and production, but economic and political risk remains high ©McGraw-Hill Education The Changing Demographics of the Global Economy 7 Global Economy of the Twenty-First Century • A more integrated global economy • New opportunities for firms • But, political and economic disruptions can upset plans • The risk of a global financial crisis ©McGraw-Hill Education The Globalization Debate 1 Is the shift toward a more integrated and interdependent global economy a good thing? • Experts believe globalization promotes greater prosperity in the global economy, more jobs, and lower prices for goods and services • Others feel that globalization is not beneficial ©McGraw-Hill Education The Globalization Debate 2 Antiglobalization Protests • Began with WTO protest in December 1999 in Seattle • Protest turned violent • Protestors fear globalization has detrimental effects on living standards, wages, and the environment • Theory and evidence suggests these fears are exaggerated ©McGraw-Hill Education The Globalization Debate 3 Globalization, Jobs, and Income • Falling trade barriers destroy manufacturing jobs in wealthy economies (U.S. and western Europe) • Service activities increasingly outsourced to nations with lower labor costs • Supporters say benefits outweigh the costs • Outsourcing allows a company to reduce its cost structure and reduce prices ©McGraw-Hill Education The Globalization Debate 4 Globalization, Jobs, and Income continued • Share of labor in national income has declined • Attributed to a fall in unskilled labor • Gap between poorest and richest segments of society has widened • In most countries, real income levels increased for all • Many advanced economies report shortage of highly skilled workers and an excess of unskilled workers ©McGraw-Hill Education The Globalization Debate 5 Globalization, Labor Policies, and the Environment • Critics argue that the lack of labor and environmental regulations in less developed countries attract investment • Adhering to environmental regulations increases costs of manufacturing • Supporters argue that tougher regulations lead to economic progress • Tougher regulations come with economic progress • Studies show a hump-shaped relationship between income levels and pollution levels ©McGraw-Hill Education Figure 1.6 Income Levels and Environmental Pollution Access the text alternative for these images. ©McGraw-Hill Education Source: C. W. L. Hill and G. T. M. Hult, Global Business Today (New York: McGraw-Hill Education, 2018). The Globalization Debate 6 Globalization and National Sovereignty • Critics worry economic power is shifting away from national governments and toward supranational organizations such as the WTO, the European Union, and the UN • Supporters say the power of these organizations is limited to what nation-states collectively agree to grant • Must be able to persuade members states to follow certain actions • Without the support of members, the organizations have no power ©McGraw-Hill Education The Globalization Debate 7 Globalization and the World’s Poor • Critics argue the gap between rich and poor is wider and the benefits of globalization not shared equally • Many poor nations are under totalitarian regimes, suffer from endemic corruption, have few property rights, are involved in war, have rapidly expanding populations, are burdened by high debt • No money to invest in public infrastructure • Debt relief movements • Rich nations gave to World Bank and IMF • Reduce import barriers from poor nations ©McGraw-Hill Education Managing in the Global Marketplace International business is any firm that is engaged in international trade or investment Managing international business differs from managing domestic business • Practices vary country by country • Issues are more complex • Need to understand rules governing international trade and investment • Need to convert currency ©McGraw-Hill Education Summary In this chapter, we have • Understood what is meant by the term globalization. • Recognized the main drivers of globalization. • Described the changing nature of the global economy. • Explained the main arguments in the debate over the impact of globalization. • Understood how the process of globalization is creating opportunities and challenges for management practice. ©McGraw-Hill Education Research Terms - Chapter 1 • • • • • • • • • • • • • • • • • • • • • • • • • Globalization Globalization of markets Globalization of production Factors of production General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) International Monetary Fund (IMF) World Bank United Nations (UN) Group of Twenty (G20) International trade Foreign Direct Investment (FDI) Role of Technological Change – Communications Role of Technological Change – The Internet Role of Technological Change – Transportation Technology Globalization of production Globalization of markets World trade picture Non-US multinationals Mini multinationals The Changing World Order Globalization; jobs and incomes Globalization; labor policies and the environment Globalization; and national sovereignty Globalization; and the world’s poor
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Managing In a Global Environment Paper Outline
The first paper of paper provides an overview of the World Bank. It focuses on the history of the
World Bank and describes the importance of the research topic to current business and
professional practice.
The second part of the paper provides the purpose of the research. It mainly reflects on the
potential benefits of the World Bank to the current business and professional practice.
The third part reviews the literature. It provides a literature review of the various activities that
the World Bank undertakes.
The fourth part is the practical application of the World Bank. It describes how the findings from
the relevant research literature can shape, inform, and improve current business and professional
practices related to the World Bank.
The final part is the conclusion which provides an executive summary of the entire paper.


1

Managing In a Global Environment

Student’s Name

Institutional Affiliation

Course Name

Instructor’s Name

Due Date

2

Managing in a Global Environment
Overview
The World Bank was initially introduced in the year 1944 after the Bretton woods agreement.
The agreement was mainly secured under the United Nations auspices in the Second World War
later days (Mason et al., 2010). The Bretton woods agreement mainly includ...


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