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“The globalization of business is bound to affect you. Not only will you buy products manufactured overseas, but [it is] highly likely that [you will] meet and work with individuals from various countries and cultures as customers, suppliers, colleagues, employees, or employers” (Exploring Business, 2014, p. 3).
Globalization would mean to extend beyond national borders and demarcations in terms of scope and application. Globalization can also mean the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets. The advantages and disadvantages of globalization continue to be debated and scrutinized. Proponents of globalization say that it helps developing nations “catch up” to industrialized nations much faster through increased employment and technological advances. . . . Seemingly, many critics of globalization say that it weakens national sovereignty and allows rich nations to ship domestic jobs overseas. . . .
Exports are domestically produced goods and services sold in other countries. Imports are foreign goods and services purchased by domestic customers.
Comparative advantage theory essentially states that a country should sell to other countries those products that it produces most effectively and efficiently and buy from other countries those products that it cannot produce as efficiently and effectively.
Absolute advantage is said to exist when a country has a monopoly on producing a specific product or is able to produce it more efficiently and effectively than all other countries.
Foreign direct investment (FDI) is the buying of permanent property and businesses in foreign nations. For example, Toyota, Honda, Mercedes, and BMW have spent millions of dollars building auto manufacturing facilities in the USA.
The balance of trade is the difference between a nation’s exports and imports-“which may not be so balanced.” For example, China currently accounts for the highest USA trade deficit with any nation. It is no surprise then that most American consumers are familiar with the seemingly ubiquitous phrase: “Made in China” or “Hecho en China.”
The exchange rate would be the value of one nation’s currency relative to other countries.
In summary, globalization would mean to extend beyond national borders and demarcations in terms of scope and application. Globalization can also mean the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets.
Learning Activity Discussion Information and Questions:
Trade and commerce across a number of borders is nothing new. However, the volume and broadness is tending to increase. Whether you are a: student, manager, administrator, entrepreneur, technician, artisan or some other type of worker or professional it is recommended that you think globally for the near and long term. Increased globalization offers many opportunities for students, consumers, entrepreneurs, businesses, and governments. Yet many of these “opportunities are fraught with challenges and complexities. And please remember that the potential opportunities of globalization do not only belong to large multinational corporations. Small and medium-sized businesses are often better situated and prepared to move into global markets rather quickly.
So please select one or more of the following questions and provide us with some answers and/or a few potentially useful pointers on doing business beyond local and national borders.
What are MNCs;
what is a multidomestic strategy;
what is a global strategy;
what is licensing and international franchising?
What are exports and imports;
what are trading blocs, alliances, and associations such as the: AU, GAFTA, NAFTA, ASEAN, EU, APEC, et cetera?
What is the World Bank;
what is the IMF, what is the WTO?
What is dumping?
What are tariffs, embargos, and boycotts?
What is a trade deficit?
What is trade protectionism?
Are exchange rates useful information?
What is the euro?
Who “owns” those 7-Eleven stores . . . ?
Which sport is the most popular worldwide?
What is the significance of the Japanese business card (meishi) exchange?
Are bribes always illegal?
What is corruption?
What is outsourcing?
Are there any challenges and barriers to international trade such as: tariffs, regulations, legalities, politics, religion, culture, infrastructure, baksheesh and the like?