WGU D080 - Unit 2

WGU D080 - Unit 2 Globalization 1.) International integration arising from the exchange of world views, products, ideas, and other aspects of culture. 2.) Removes barriers and promotes collaboration and interdependence of countries. The opportunities brought to businesses by globalization. 1.) Allows corporations to outsource manufacturing and service jobs. 2.) Jobs are moved from high-cost to low-cost locations. 3.) Allows companies to pay workers lower salaries and provide fewer or no benefits. Political Globalization 1.) Reduced importance of nation-states. 2.) Organizations such as the European Union, the WTO, G8, and the International Criminal Court replace or extend national functions to facilitate international agreements. 3.) NGOs influence public policy across nations. (Humanitarian Aid & Developmental Efforts) Cultural Globalization 1.) The transmission of ideas, meanings, and values around the world in such a way that extends and intensifies social relations. 2.) Aided by the internet, popular media, and international travel. Economic Globalization 1.) Widespread, international movement of goods, capital, services, technology, and information. 2.) Primarily comprises the globalization of production, finance, markets, technology, organizational regimes, institutions, corporations, and labor. 3.) Grown quickly due to the efficiency of transportation, telecommunication, the importance of information (vs physical capital), and developments in science and technology. Economic Pro-globalization Arguments 1.) Results in more trade, investment, and information technology. 2.) Aids in faster economic development. 3.) Increases social well-being. Cultural Pro-globalization Arguments 1.) Creates shared norms and knowledge. (Ex: English spreading across the globe.) 2.) Increases awareness of the international community. Political Pro-globalization Arguments 1.) Increases cooperation among countries. 2.) Resulted in the formation of international and/or regional organizations. 3.) NGOs Political Anti-globalization Arguments 1.) Countries may adopt isolationist policies that prevent people from entering or leaving their country. (Ex: North Korea) 2.) Reduces the importance of nation-states 3.) Results in a loss of power for local governments Economic Anti-globalization Arguments 1.) Benefits the rich at the expense of the poor 2.) Manufacturing jobs are lost in developed countries 3.) Environmental Damage 4.) Unethical labor practices Cultural Anti-globalization Arguments 1.) Results in the loss of uniqueness of smaller, once-isolated countries Anti-globalization Arguments from a country's perspective 1.) Cultures are becoming homogenized, especially through the spread of Western culture throughout the world Pro-globalization Arguments from a country's perspective 1.) Globalization results in the widespread sharing of ideas 2.) Exposes people to different cultures and ideas, making them more tolerant The 5 Stages of Entering a Global Market 1.) Market Entry 2.) Product Specialization 3.) Value Chain Disaggregation 4.) Value Chain Reengineering 5.) Creation of New Markets 1st Stage of Entering a Global Market: Market Entry 1.) Companies enter new countries using business models similar to those used in the home markets. 2.) Companies must establish a production presence. 2nd Stage of Entering a Global Market: Product Specialization 1.) Companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets. 2.) Different locations begin to specialize in different products or components, and trade in finished goods 3rd Stage of Entering a Global Market: Value Chain Disaggregation 1.) The company breaks down the entire production line and finds the most efficient production locations for each component of the final product. Ex: A US laptop company produces a microchip in China, a screen in Vietnam, a keyboard in Japan, etc. (Production occurs wherever it is the cheapest) 4th Stage of Entering a Global Market: Value Chain Reengineering 1.) Focuses on how to set up the production line in a new factory located in a foreign country Ex: The original factory in the US was set up based on the machine-oriented mindset. Most manufacturing tasks were performed by robots. The company decided to move the production line to India, where skilled labor and robots are very expensive. The company must change the production line set up to adapt to the new environment. 5th Stage of Entering a Global Market: Creation of New Markets 1.) Focuses on market expansion, which allows companies to substantially lower their sticker price in both old and new markets helping to expand demand. The 4 Drivers of Globalization 1.) Market: Opportunity for scale & convergence of needs 2.) Cost: Economies of scale & scope; exploiting cost of factors of production 3.) Competition: New markets & increased levels of trade 4.) Government: Favorable policies & support for industry Market Drivers 1.) Opportunity to enter a larger market and find a market that demands the same products as domestic consumers. 2.) Allows for economy of scale (Bulk Production) Cost Drivers 1.) Includes economies of scale and scope Competition Drivers 1.) High levels of trade, competitive diversity, and interdependence increase the potential for industry globalization. Government Globalization Drivers 1.) The presence or absence of favorable trade policies, technical standards, policies and regulations, and government-operated or subsidized competitors or customers 2.) Affects all other elements of a global strategy. The World is Flat View 1.) The playing field between countries is becoming more level due to technology such as the internet, email, and teleconferencing. This allows people, products, and ideas to become more connected. The CAGE Analysis 1.) The world is multi-domestic 2.) Trade barriers exist due to differences among countries Culture 1.) Differences between two countries reduce economic exchange and trade volume (Factor of CAGE Analysis) Administration 1.) Countries with similar policies trade more frequently (Factor of CAGE Analysis) 2.) Example: NAFTA Geography 1.) As distance increases, trade decreases due to the increased cost of transportation over greater distances. (Factor of CAGE Analysis) 2.) Example: Shipping Costs 3.) Possible Keyword: Border Economic 1.) Distance refers to differences in demographics and socioeconomic conditions, such as different standards of living, factors of cost production, etc. (Factor of CAGE Analysis) 2.) Possible Keywords: Gross Domestic Product, Living Standard, Labor Cost, and Natural Resource Cost. Anarchy 1.) Citizens control the country 2.) No government is needed (Types of Political Systems) Monarchy 1.) A king or queen rules the country (Types of Political Systems) Absolute Monarchy 1.) The king or queen still has absolute power to control every aspect of the country and make policies 2.) Example: Oman (Types of Political Systems) Constitutional Monarchy 1.) The king or queen is only a symbol of the country 2.) There is still a Prime Minister that has the absolute administration power over the country 3.) Example: The United Kingdom (Types of Political Systems)