Transcript Business, Society, and Government: Strategy and Applied

CHAPTER
11
Competing in
the Global Economy
PowerPoint Presentation Design by Charlie Cook
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© 2014 Routledge, Inc., Taylor and Francis Group. All rights reserved.
Learning Outcomes
After studying this chapter, you should be able to:
1. Compare and contrast the types of businesses in the global economy
2. Contrast U.S. business ownership and government–business relations
with those in the EU, China, and Japan
3. Discuss who benefits and who pays the cost of protectionism
4. Compare and contrast types of trade barriers and explain why they are
not always successful
5. Compare and contrast the World Trade Organization (WTO), World
Bank, and International Monetary Fund (IMF)
6. Describe the systems of free trade that the EU has in common with the
United States
7. Compare and contrast grease payments, bribes, and offsets
8. Define the key terms in this chapter
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Globalization
Globalization
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The integration of national economies into one
free-trading global economy allows firms to
conduct business in multiple countries without
boundaries and with few trade barriers.
Arguments For and Against Globalization
Arguments for
Globalization
Arguments against
Globalization
1. Increases business sales and profits
1. Feeds business greed
2. Increase productivity, economies of
scale, and lower cost
2. Benefits business; not so for society
3. Promotes greater competition
4. Outsources jobs to other countries
4. Leads to a net increase in jobs
5. Replaces U.S. products with ones that
are foreign-made
5. Makes more variety of products
available
3. Helps foreign businesses
6. Results in lower consumer prices
6. Lowers wages that aren’t offset by
lower prices
7. Increases standard of living in other
countries
7. Exploits employees with low wages
and poor working conditions (MNCs)
8. Improves human rights
8. Shows little care for human rights and
even exploits them (MNCs)
9. Provides technology to improve the
environment
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9. Destroys the environment (MNCs)
Why Business Has Gone Global
The forces leading
to globalization
Availability
and mobility
of capital
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Technology
advances and
the Internet
Standardization
and economies
of scale
Lower
shipping and
delivery
costs
Continued
growth and
profitability
Increasing Globalization
Figure 11.2 Types of Business in the Global Economy
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Multinational
Companies
(MNCs)
have significant direct investment
operations in more than one country.
International
Companies
are based primarily in one country but
transact business in other countries—
imports and exports.
Domestic
Companies
conduct business in one country.
Comparative Political and Economic Systems
Types of Primary
Political Systems
Democracy
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Single
party
Military
dictatorship
Globalization: Political and Economic Issues
Human
rights
Conflict of
interest
Free market
enterprise
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Business
ownership
Centralized
state-control
Issues Affecting Global Business Trade
Free Trade vs.
Protectionism
International
Business
Regulations
Conflicting
Laws Between
Countries
The Politics of
International
Trade
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Trade Barriers
Types of public policy
trade barriers
Subsidies
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Tariffs
Quotas
Bans and
restrictions
Trade Surplus and Deficit
Trade Surplus
Imports
Exports
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Trade Deficit
Exports
Imports
U.S. Trade Policy and Law
Trade Act of 1974:
regulating commerce
with foreign nations
Executive
Branch actions
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Temporary relief
and safeguards
Presidential
retaliation
Antidumping/
LTFV protection
Effective Global Business Regulations
• A World Bank study recommended five major
steps to effective global business regulation:
1.
Simplify and deregulate competitive market
business.
2.
Focus on enhancing property rights.
3.
Expand the use of technology.
4.
Reduce court involvement in business matters.
5.
Make reform a continuous process.
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International Trade Administration Organizations
Setting international
rules of trade
World Trade
Organization
(WTO)
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World
Bank
International
Monetary
Fund (IMF)
The European Union (EU)
Adoption EU law and alignment of
individual member state laws
EU Trading
Agreement
Systems
Use of the euro as a common
currency in eurozone markets
Creation of a central banking
system (the ECB)
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The United States and Free Trade Agreements
• North American Free Trade Agreement
(NAFTA)
 United States, Canada, and Mexico
• The Dominican Republic–Central America–
United States Free Trade Agreement
(CAFTA-DR)
 Costa Rica, El Salvador, Guatemala,
Honduras, and Nicaragua, Dominican
Republic and the United States
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Ethical Issues in International Business
Types of corrupt
practices
Grease
payments
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Bribes
Offsets
Extortion
The Cost and Consequences of Corruption
Costs businesses revenue and
efficiency by undermining competition
Corruption
Distorts government allocation of
expenditures and its services
Discourages the investments needed
for economic progress
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Figure 11.6 Law and Organizations that Fight Corruption
Foreign Corrupt Practices Act
(FCPA)
U.S. law making payments to foreign
government officials to assist in obtaining
or retaining business illegal
U.S. Department of Justice (DOJ)
Responsible for enforcing FCPA law
United Nations Global Compact
Has 10 Principles for corporate
participants to follow.
Organization for Economic
Cooperation and Development
(OECD)
Somewhat like the UN 10 Principles, the
OECD has the Guidelines for Multinational
Enterprises, which also fosters global
business ethics
Transparency International (TI)
Works so government, politics, business,
civil society, and the daily lives of people
are free of corruption; measures corruption
with three indexes
Social Accountability Accreditation
Services (SAAS)
Gives SA8000 accreditation that certifies
compliance with social standards for ethical
working conditions
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Global Codes of Ethics
Ethical Quandary?
Ethical
Imperialism
Cultural
Relativism
Global Codes of Ethics
Ethical Impact Statements
and Audits
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Key Terms
antidumping
multinational company (MNC)
bribes
offsets
central state control
tariffs
competitive advantage of nations
trade bans
ethical impact statements
trade deficit
free enterprise
trade quotas
globalization
trade subsidies
grease payments
World Bank
international company
World Trade Organization (WTO)
International Monetary Fund (IMF)
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