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Globalization: Integration and Interdependence in the World Economy

Explore the shift towards a more integrated and interdependent world economy, with a focus on the globalization of markets and production. Discover how globalization impacts marketing and operating strategies, the role of global institutions, and the macro and micro factors driving the trend. Join the global debate on the pros and cons of globalization.

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Globalization: Integration and Interdependence in the World Economy

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Presentation Transcript

  1. 1 Chapter INTRODUCTION & OVERVIEW

  2. The shift towards a more integrated and interdependent world economy Two components: The globalization of markets The globalization of production What is globalization?

  3. The merging of distinctly separate national markets into a global marketplace Tastes and preferences converge onto a global norm Firms offer standardized products worldwide creating a world market Globalization of markets

  4. Significant differences still exist between national markets on many relevant dimensions These differences require that marketing and operating strategies and product features be customized to best match conditions in a country. Globalization of markets

  5. Countries are different Range of problems are wider and more complex Government intervention in trade and investment creates problems International investment is impacted by different currencies Globalization of markets

  6. Refers to sourcing of goods and services from locations around the world to take advantage of Differences in cost or quality of the factors of production Labor Land Capital Globalization of production

  7. Globalization has created the need for institutions to help manage, regulate and police the global marketplace GATT WTO IMF World bank United Nations Emergence of global institutions

  8. Macro factors that underlie trend towards greater globalization Decline in trade barriers Technological change Global drivers

  9. Globalization of markets and production has been facilitated by Reduction in trade barriers Removal of restrictions to foreign direct investment Declining barriers to trade

  10. The role of technological change • Microprocessors and telecommunications • The internet and world wide web • Transportation technology

  11. Lower prices for goods and services Economic growth stimulation Increase in consumer income Creates jobs Countries specialize in production of goods and services that are produced most efficiently Globalization debate-Pro

  12. Destroys manufacturing jobs in wealthy, advanced countries Wage rates of unskilled workers in advanced countries declines Companies move to countries with fewer labor and environment regulations Loss of sovereignty Globalization debate-Con

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