International Business Questions and Answers Graded A+

International Business Questions and Answers Graded A+ globalization trend towards a more integrated global economic system 2 key facets of globalization globalization of markets and globalization of production globalization of markets revenue stream; merging of historically distinct markets into one global market with consumer taste and preferences converging globalization of production cost stream; sourcing of goods and services from around the world to take advantage of national differences in cost and quality of factors of production- goal is to lower cost or improve quality to gain competitive advantage World Trade Organization negotiates agreements so that goods can cross without barriers and ensures that the rules in this treaty are being followed in the global marketplace International Monetary Fund maintains order in world monetary system World Bank promotes economic development, makes loans for infrastructure United Nations develops friendly relations between nations in order to maintain international peace and security and solve international problems; promotes human rights drivers of globalization declining trade and investment barriers and technological change declining trade and investment barriers under WTO there is a way to enforce trade laws and a push to reduce barriers- w/o barriers easier to take advantage of lower cost and optimal locations, helps unify the market international trade a firm exports goods and services to consumers in another country foreign direct investment a firm invests directly in new facilities to produce and/or market in a foreign country technological change improvements in communication, information processing, and transportation: low cost transportation makes it easier to have multiple locations of business and makes it easier to respond to local tastes while converging the tastes by unifying the market; low cost communication help create a global marketplace changing demographics of global economy -in the 1960s: US dominated international trade, economy, and FDI; half of world (communist countries) was off limits to western world -now: US share of world GDP cut in half (40->20), India, China, and Brazil are becoming world players, developing countries role is increasing and developed countries share of world output is decreasing BRI(I)C(S) Brazil, Russia, India, (Indonesia), China, (South Africa)- foreign investment to these countries quickly increasing, US decreasing fast- non US firms moving activities to optimal locations and building presence in foreign markets indicators of economic progress trade and FDI multinational a firm that owns business operations in more than one country (half used to be US, now US 19/100), rise in mini multinationals