Chapter 1: Globalization and International Linkages

Learning Objectives and Chapter Summary

1.
ASSESS the implications of globalization for countries, industries, firms, and communities.

Globalization—the process of increased integration among countries—continues at an accelerated pace. More and more companies—including those from developing countries—are going global, creating opportunities and challenges for the global economy and international management. Globalization has become controversial in some quarters due to perceptions that the distributions of benefits are uneven and due to the questions raised by offshoring. There have emerged sharp critics of globalization among academics, NGOs, and the developing world, yet the pace of globalization and integration continues unabated.

2.
REVIEW the major trends in global and regional integration.

Economic integration is most pronounced in the triad of North America, Europe, and the Pacific Rim. The North American Free Trade Agreement (NAFTA) is turning the region into one giant market. In South America, there is an increasing amount of intercountry trade, sparked by Mercosur. Additionally, trade agreements such as the Central American Free Trade Agreement (CAFTA) are linking countries of the Western Hemisphere together. In Europe, the expansion of the original countries of the European Union (EU) is creating a larger and more diverse union, with dramatic transformation of Central and Eastern European countries such as the Czech Republic, Poland, and Hungary. Asia is another major regional power, as reflected in the rapid growth shown not only by Japan, but also the economies of China, India, and other emerging markets. Countries in Africa and the Middle East continue to face complex problems but still hold economic promise for the future. Emerging markets in all regions present both opportunities and challenges for international managers.

3.
EXAMINE the changing balance of global economic power and trade and investment flows among countries.

Different growth rates and shifting demographics are dramatically altering the distribution of economic power around the world. Notably, China’s rapid growth will make it the largest economic power in the world by midcentury, if not before. India will be the most populous country in the world, and other emerging markets will also become important players. International trade and investment have been increasing dramatically over the years. Major multinational corporations (MNCs) have holdings throughout the world, from North America to Europe to the Pacific Rim to Africa. Some of these holdings are a result of direct investment; others are partnership arrangements with local firms. Small firms also are finding that they must seek out international markets to survive in the future. MNCs from emerging markets are growing rapidly and expanding their global reach. The internationalization of nearly all business has arrived.

4.
ANALYZE the major economic systems and recent developments among countries that reflect those systems.

Different economic systems characterize different countries and regions. These systems, which include market, command, and mixed economies, are represented in different nations and have changed as economic conditions have evolved.

The World of International Management: An Interconnected World

1.
Summary:

The opening vignette discusses and highlights how social networks, such as Facebook YouTube, and Twitter, are revolutionizing the way people and companies interact and communicate with each other. Social networks offer companies an inexpensive, yet highly effective means of reaching their target audiences across the globe. In fact, social networks are rewriting the rules for marketing. Consumers today can quickly and easily get information about products and services from trusted friends via social media and bypass more traditional methods of gathering information. Companies must identify ways to