Globalization

Course Notes Table of Contents

Objectives

  1. Define the theoretical basis for the phenomenon of globalization
  2. Describe why companies are “going global”
  3. Describe some companies that have expanded into foreign markets
  4. Discuss some of the detrimental impact on the U.S. labor force and economy from outsourcing
  5. Explain some of the factors that make foreign labor appealing
  6. Define which nations will be the future global leaders both in terms of population and spending power
  7. Compare APEC, NAFTA, and EU
  8. Describe how technology has facilitated globalization
  9. Discuss the ramifications of choosing not to compete in a global marketplace
  10. Discuss why someone would buy a foreign made good over one made in their own country (relevance of product nationalism and the “union label”?)
  11. Describe the rise of China as a major global player
  12. Discuss the potential for exploitation of foreign workers and ecological systems

Earth Shrink

If we could shrink the earth’s population to a village of precisely 100 people, with all the existing human ratios remaining the same, it would look something like the following:

There would be:

  • 57 Asians
  • 21 Europeans
  • 14 from the Western Hemisphere, both north and south
  • 8 Africans

Of these:

  • 52 would be female
  • 48 would be male
  • 70 would be non-white
  • 30 would be white
  • 70 would be non-Christian
  • 89 would be heterosexual
  • 11 would be homosexual

6 people would possess 59% of the entire world’s wealth and all 6 would be from the United States

  • 80 would live in substandard housing
  • 70 would be unable to read
  • 50 would suffer from malnutrition
  • 1 would be near death; 1 would be near birth
  • 1 (yes, and only 1) would have a college education
  • 1 would own a computer
  • When one considers our world from a compressed perspective, the need for acceptance, understanding and education becomes glaringly apparent.
  • The following is also something to ponder…
  • If you woke up this morning with more health than illness…you are more blessed than the one-million who will not survive this week.
  • If you have never experienced the danger of battle, the loneliness of imprisonment, the agony of torture, or the pangs of starvation…you are “ahead” of 500 million people in the world.
  • If you can attend a church meeting without fear of harassment, arrest, torture, or death…you are more blessed than three billion people in the world.
  • If you have food in the refrigerator, clothes on your back, a roof overhead and a place to sleep…you are richer than 75% of this world.
  • If you have money in the bank, in your wallet, and spare change in a jar someplace…you are among the top 8% of the world’s wealthy.
  • If your parents are still alive and still married…you are very rare, even in the United States and Canada.
  • If you can read the above message, you are more blessed than over two *billion* people in the world that cannot read.

From owner-wms-l@frank.mtsu.edu on behalf of ehelford [ elhelford@mtsu.edu ]

For a pictorial view of global demographics seehttp://www.globalcommunity.org/flash/wombat.shtml

Geography test

Pictures of the Globe

http://en.wikipedia.org/wiki/Black_Sea; http://en.wikipedia.org/wiki/Red_Sea

Where is Lichtenstein?

Cultures the Globe

For a panoramic view of the world from the new space station, check out http://antwrp.gsfc.nasa.gov/apod/image/0011/earthlights_dmsp_big.jpg

Coldest places on Earth

You can scroll East-West and North-South. Note that Canada’s population is almost exclusively along the U.S. border. Moving east to Europe, there is a high population concentration along the Mediterranean Coast. It’s easy to spot London, Paris, Stockholm and Vienna.

Note the Nile River and the rest of the “Dark Continent.” After the Nile, the lights don’t come on again until Johannesburg. Look at the Australian Outback and the Trans-Siberian Rail Route. Moving east, the most striking observation is the difference between North and South Korea. Note the density of Japan.

Global Directions and Flags

Have you ever wondered how far it is from Peru or Paris? This site http://www.indo.com/distance calculates the distance between two cities. You can enter just about any city in the world. It provides the latitude and longitude of the two cities, plus the distance in miles.

Match the flag with the appropriate country:

Flag quiz                       

Austria, Afganistán, Angola, Bangladesh, Argentina?

Flags of the world

Pictures of Dubai; where is Dubai?  http://www.hoteltravel.com/uae/dubai/maps.htm
GlassBridge: wonders in our own country...
WaterBridge - Germany

Quiz

Test Your Cultural IQ

  1. Match each of the following car manufacturers with its country of origin:
  1. Alvis
  1. Australia
  1. Holden
  1. Malaysia
  1. Proton
  1. United Kingdom
  1. True or false: The first Willys Jeeps were used by the United States Army during World War II as reconnaissance vehicles to replace the motorcycle.
  2. Which of the following is not a Japanese-owned car manufacturer?
    • Hyundai
    • Nissan
    • Honda
  3. German cars are renowned for their quality. Which of the following German manufacturers, however, once produced underpowered compact cars?
    • BMW
    • Daimler-Benz
    • Trabant
  4. Swedish automakers are known for their attention to safety and technical innovations. True or false: The Saab car company began as an aircraft manufacturers.
  5. Italy has often been a leader in automotive design which of the following is not an Italian car company?
    • Alfa Romeo
    • Ferrari
    • Yugo
  6. Jinlin Motors, Tianjin Ziali, and Chongping Chang’an are major automobile manufacturers, yet they rarely export cars. In which nation are they located?

From American Way, 1998

For more information:

*Kiss Bow, or Shake Hands: How to Do Business in Sixty Countries
*Dun & Bradstreet’s Guide to Doing Business around the World, and
*Getting Through Customs web site at

www.getcustoms.com

****Exercise: Check out five items in your closet. Record the country in which each was manufactured. Also, note the brand of your car, VCR, and television***

Globalization

The phenomenon of national boundaries and facilities move in quest of the highest possible returns or market share, fueled by Ricardian Economics:

 see "Globalization 101" at http://www.globalexchange.org/campaigns/econ101/

  1. Reduction of tariffs, and increase in “trade agreements”
    1. North America free Trade Agreement (NAFTA)
    2. ASIA-Pacific Economic Cooperation (APEC)
    3. European Union (EU)
      Global Trade Watch: http://www.citizen.org/trade/
  2. tariff: a protectionary tax, designed to keep foreign goods out of the country

    Fictitious example:  Country X places a $2.00 surcharge on all olive oil imported from Country Y; $8.00/bottle vs. $10.00 bottle.
  3. decrease in quotas, or limits placed on imports 
    Fictitious example:  Country X will only accept 500,000 cars from Country Y this year

    Stats on U.S. investment overseas: http://www.cfo.com/printable/article.cfm/4050677?f=options
    "U.S. direct in foreign countries rose 90%, to 54B
    Over the next three years, China will become the primary destination for U.S. direct investment."

Some countries have determined that is in their best interests to eliminate barriers - giving rise to trade agreements like NAFTA, EU, and APEC which allow for free trade among member countries.

***Exercise: With a partner, list the three most important qualities that you look for in a product.***

  1. Other Global Players (China, India)G-M: GM and China
    http://www.chinadaily.com.cn/english/doc/2006-01/05/content_509576.htm

    Starbucks & India: http://money.cnn.com/2004/10/28/news/fortune500/starbucks_india/
    30,000 cafes worldwide....now 100 in ChinaMcDonald's Saudi Arabia http://www.mcdonaldsarabia.com/arabia/home.html and check out how "Mickey D" is known in different countries...and how KFC is international

    For more reading - China Inc. Also, read about fast food in China http://www.expatsinchina.com/life/food/fastfood.html
    http://www.chinadaily.com.cn/english/doc/2004-06/01/content_335488.htm

    "McDonald's is the oldest and most widely established fast-food restaurant in China
    China McDonald's has grown at a rate of 100 restaurants/year."
    "The second most popular franchise in Beijing is KFC."
  2. Subway (International!) http://world.subway.com/Countries/frmMainPage.aspx?CC=IND

The report below is from the National Intelligence Council. It describes the profound projected changes in the geopolitical landscape through the year 2020.  http://www.dni.gov/nic/NIC_globaltrend2020_s2.html

The emerging global markets are huge!

China:  1.4 B
India:  1.3 B

By 2020, what percentage of the world's population will be Asian?
http://ideas.repec.org/p/fpr/2020br/5.html

The Next Four Billion: Market Size and Business Strategy at the Base of the Pyramid

Consequences

  1. A greater number of goods available at cheaper prices worldwide

China barges through quota barriers: China barges through quota barriers

What are some goods you can now buy in this country that might not have been available 20 years ago?

What foreign goods do you now see in grocery stores?**

  1. Increase in worldwide consumption; see

***Exercise: discuss why companies may want to move to foreign countries…list some companies that have moved some or all of their operations to foreign countries for cost reasons***

Globalization in terms of labor means two things: 

Companies will look for underdeveloped markets
Companies will look for the best bargain in terms of wages
  1. Jobs moving to other countries
  1. "Garment workers earn 37 cents/hour in Guatemala, 20 cents in Vietnam, 13 cents in China and 6 cents per unit. An outfit retails for $19.95" [Fr. John Rausch, Tennessee Register]
  2. Clothing is made in some far away locations.. http://worldatlas.com/webimage/countrys/asia/mo.htm
  • Calling Bangalore: Multinationals are making it a hub for high-tech research http://www.businessweek.com/magazine/content/02_45/b3807151.htm
    "Software services (in Bangalore) have grown into an $8B annual export industry, and are expected to reach 50B by 2008.
    Each year, India graduates 220,000 software and computer science engineers.  Bangalore alone produces 25,000 - almost as much as the entire U.S. 
    The average wage is $12,000, with a Ph.D. commanding up to $30K/ year, a fifth of the U.S. price."
     
  • Global Employment Outlook
     

***Exercise: define the term “sweatshop.” Where are these located?***
 

  1. Potential exploitation of workers and ecological landscape

“…an estimated 46 million children around the world make goods for the United States market, and millions more factory workers log 70-hour weeks to sew garments or assemble toys for America.” [Fr. John Rausch, Tennessee Register].

What is making it easier for companies to find global opportunities?

  1. Technology
    1. Planes of the future made of ceramics
       “Airbus:” tickets are 20% cheaper than on 747 because of fuel efficient technology and carbon fibre components; http://news.nationalgeographic.com/news/2005/01/photogalleries/airbus/
      A 320 Superjumbo can seat 840 passengers
    2. Satellites: even people in sparsely populated areas can access financial information
    3. Automatic translation telephones: see http://www.freepatentsonline.com/5712901.html
    But, beware of Malware...

Related websites…..

Globalization

Education

Food

Matsushita Int'l Strategies

Add right column content here