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Chapter 12
Globalization
This chapter:
Explains globalization in more depth.
Discusses its impact on culture, the growth of
trade agreements, the erosion of nation-state
sovereignty, and protectionism.
Describes corruption and efforts to combat
corruption
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McDonalds Corporation
Opening Case
More than half of McDonalds restaurants are outside of the
U.S., accounting for 62% of company revenues.
As a prominent global brand McDonalds symbolizes
perceived evils of globalization.
In developing nations, the arrival of a McDonalds is regarded
as a sign of modernization.
McDonalds does transfer cultural values and practices.
However, most of McDonalds international restaurants are
franchises, run as local businesses. The entrepreneurs who
run these businesses adapt them to local custom.
What is Globalization?
Globalization occurs when networks of
economic, political, social, military,
scientific, or environmental
interdependence grow to span worldwide
differences.
Economic globalization refers to the
development of an increasingly integrated
commercial system based on free markets
in which nations are open to foreign trade
and investment.
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Major Forces in
Expanding Globalization
Ideas
Capital
Labor
MNCs
Governments
Technology
Multilateral organizations
NGOs
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Pros of Globalization
Has lifted millions of people out of
poverty.
Consumer benefits of more variety,
lower costs, and higher quality of
products.
Improved working conditions for
millions of workers.
Human rights have improved.
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Erosion of Cultures
The rapid and explosive spread of American
culture throughout the world is one significant trend
within globalization.
Throughout the world there is resentment about
the transmission of certain Western cultural values.
Majorities of people in Europe like American music,
television, and films and technology but dislike the
spread of American ideas.
Economic forces of globalization have encouraged
massive migrations of peoples.
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Pressures for
Protectionism
Most domestic businesses, whether engaged in
foreign trade or not, feel pressures from foreign
competitors with better products and lower prices.
Three justifications are often given for protectionist
measures.
The U.S. has large trade deficits that must be
reduced.
Protectionists want to shield industries from
foreign competition.
Trade barriers in foreign countries restrict
American imports to them.
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Tariff Barriers in
Other Countries
China still imposes substantial barriers on imports such as
watches, automobiles, steel, textiles, and many food products.
Japanese restricts U.S. imports of meat, poultry, vegetables,
and fruit products.
Various restrictions among European Union countries are
applied to genetically engineered commodities.
Taiwan restricts imports of rice.
Korea imposes high duties maintains a broad range of trade
restrictions and nontariff barriers on agricultural and fishery
products.
Brazil still retains high tariffs on technology products.
Mexico still retains substantial trade restrictions on products
such as meat, poultry, vegetables, and fruit.
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What is Corruption?
At one end of the spectrum is what might be called
petty corruption or grease payments.
When is the payment normal, and when does it
become tainted with bribery?
A different problem in identification of bribery is
offsets, which have become popular in the
international arms trade.
Offsets can be part of an agreement to bring
investment to a company.
Contractors dislike offsets but they are an essential
part of doing business in many countries.
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Business Anticorruption
Practices and Procedures
A study by The Conference Board concluded that
anticorruption practices and procedures have become
significant more widespread, detailed and
sophisticated than in 2000.
Congress passed the Foreign Corrupt Practices Act
(FCPA) in 1977, which makes it illegal for managers of
U.S. corporations to bribe an official of a foreign
government or ministry.
Most large companies have formal policies against
corrupt payments.
Despite international, national, and corporate efforts at
eradication, corruption and bribery endure.
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Concluding Observations
MNCs have major impacts on markets,
social systems, and political institutions.
Complexities of doing global business raise
serious economic, ethical, political, social,
and moral issues for their management.
It is believed that more top managers of
U.S. corporations, with help and prodding
from government and strong activist critics,
are exercising power responsibly.
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Concluding Observations
Globalization has created enormous wealth for
people all over the world.
It has led to exploitation, dislocation, and
suffering for some who have yet to experience
its benefits.
It has changed business-government-society
relationships in profound and fundamental ways.
The forces of globalization are beneficial to the
peoples of the world and promise even greater
benefits in the future.
Important reforms are necessary.
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