Global Market
What is Globalization?
Integration and free movement of people, goods, services, and capital across national borders,
Influences supply and demand
Drivers of Globalization?
3 Major Technological Advances
Communication (satellite, cell phone, Internet)
Information processing (microprocessor, AI)
Transportation (super freighters, jet aircraft, containers)
Foreign Direct Investment (FDI)
Buying of permanent property and businesses in foreign nations
1. The law
2. Organizational policies and procedures
3. The moral stance employees take when faced with decisions not governed by formal rules
What is ethics?
Business ethics are the accepted principles of right or wrong governing the conduct of business people.
Examples of US firms with extensive overseas operations
Apple, MBA, Microsoft, Amazon, Walmart
What is the WTO (World Trade Organization)?
Police force for world trading system
Seven Instruments of trade policy
Tariffs
Subsidies
Import quotas
Voluntary export restraints
Local content requirements
Administrative policies
Antidumping policies
What is ethics?
The standards of moral behavior
Behaviors accepted by society as right vs. wrong
What is the The Friedman Doctrine?
Milton Friedman’s basic position is that the only social responsibility of
business is to increase profits, as long as the company stays within the law
and the rules of the game without deception or fraud.
Potential customers in the world?
7.9 Billion
Why International trade?
Mutually Beneficial Exchange, Free trade
What is a tariff?
Tax levied on imports, raising the cost of imported products relative to domestic products
What are the basic rights of consumers?
The Right to Safety
The Right to be Informed
The Right to Choose
The Right to be Heard
What is promotion?
Creating awareness
Creating an image
Reaching the target market
Value and purpose
“Connecting” with your market and building loyalty
Why Globalization?
Increase revenue
Access different markets
Reduce costs
Access different materials
What are the two advantages?
Comparative advantage
A country should sell the products it produces most efficiently and
buy from other countries the products it cannot produce as
efficiently
Absolute advantage
A country has a monopoly on producing a specific product or is
able to produce it more efficiently than all other countries
What is Franchising?
A contractual agreement whereby someone with a good idea for a
business sells others the rights to use the name and sell a
product/service in a given area
What is the Sarbanes-Oxley Act of 2002?
Establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms
What are 3 points of behaving ethically?
1.Hire and promoting people with a well-grounded sense of personal ethics.
2. Build an organizational culture that places a high value on ethical behavior.
3. Make sure that leaders not only articulate but also act in an ethical manner.
Drivers of Globalization?
1.Declining trade and investment barriers
2. Technological change
Four areas of disagreement
Jobs and income
Labor policies and ecological environment
National sovereignty and culture
The world’s poor
What is Licensing?
When a firm (licensor) provides the right to manufacture its product
or use its trademark to a foreign company (licensee) for a fee
(royalty)
What is Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010?
Passed in response to the financial crisis of 2008, the most significant changes to financial regulation in the United States since the Great Depression.
Three more points of behaving ethically?
4.Put decision-making processes in place that require people to consider the ethical dimension of
business decisions.
5. Use ethics officers.
6. Put strong corporate governance processes in place.