International Management MGMT 309 EXAM 1

What is Globalization

increasing interdependence across borders in economics, politics, and culture. But in this course, it’s not portrayed as a neutral force — it is deeply tied to capitalism.

Economic Globalization

Markets, production, and finance are globally integrated (outsourcing, global supply chains).

Social & Cultural Globalization

Ideas, lifestyles, and culture spread globally

Example: K-pop in the U.S. or Starbucks in China.

Political Globalization

Governments and global institutions (WTO, IMF, World Bank, UN) shape and regulate.

Ideological Globalization

Debate about whether globalization increases prosperity or inequality. Some argue globalization = capitalism on a global scale. modern day globalization is synonymous with capitalism”. That reflects the critique that globalization often spreads capitalist systems and neoliberal economic policies.

Historical Roots of Globalization

 Silk Road (200 BCE–1400s)?

The Silk Road was the first large-scale network linking East and West, moving goods like silk and porcelain alongside culture, religion, and language. It created the first sense of interdependence, with societies relying on one another for what they could not produce locally. The critique is that even this earliest form of globalization carried risks, as seen in the spread of disease such as the Black Death. The Silk Road connects forward by laying the foundation for later globalization—colonialism would expand these flows but through empire, technology, and coercive power.

 

Historical Roots of Globalization

Colonialism & the Industrial Revolution (1500s–1900s)

Colonial expansion transformed global exchange into a system of domination. Colonies were forced to provide raw materials, while Europe’s Industrial Revolution mass-produced goods for world markets. This era created sharp inequalities, concentrating wealth and power in Europe while locking colonies into dependency. The critique is that globalization in this form was not free exchange but exploitation, using violence and hierarchy to control markets. This stage connects forward because the global North-South divide it created still shapes inequality today, and the extraction patterns of colonialism became the economic structures that Cold War institutions would later manage.

Historical Roots of Globalization

Cold War Era (1945–1991)

After WWII, globalization was reshaped by the rivalry between capitalism, led by the U.S., and communism, led by the Soviet Union. The world economy was divided into blocs, but this was also when the IMF, World Bank, and GATT (later WTO) were founded to enforce the capitalist model. Newly independent nations sought loans, often forced into neoliberal reforms that favored powerful states. The critique is that these institutions claimed to promote stability but instead deepened inequality, keeping poorer countries dependent while protecting wealthier ones. This stage connects forward because when the Soviet Union collapsed, capitalism no longer had a rival, and globalization accelerated under a single dominant ideology.

Historical Roots of Globalization

Post-Fordist Era (1990s–Today)

The fall of the Soviet Union marked the beginning of globalization’s current phase, dominated by neoliberal capitalism and flexible supply chains. Outsourcing, free trade agreements, and digital platforms allowed companies like Apple to design in one country, produce in another, and sell worldwide. The critique is that while this era has generated efficiency and wealth, it has also created fragile interdependence, exploitative labor systems, and vulnerability to crises such as COVID-19. This stage connects forward because it represents the culmination of earlier patterns: the networks of the Silk Road, the extraction of colonialism, and the institutions of the Cold War, now combined into a single global capitalist order.

Institutions of Globalization – The “Sisters”

International Monetary Fund (IMF) (UN Financial Wing)

The IMF was created after World War II (1944–45) to provide emergency loans and stabilize currencies for countries in crisis. It was designed as the financial arm of the postwar order. The critique is that the IMF does not simply hand out money—it imposes strict conditions, often forcing countries to adopt neoliberal capitalist reforms such as privatization, open markets, and subsidy cuts. This has led many to argue that the IMF prioritizes the interests of wealthy nations, especially the United States, rather than the needs of poor borrowers. Its connection to globalization is that it became one of the main tools used to spread capitalism worldwide, particularly in newly decolonized nations that needed funding but were pressured into restructuring their economies to fit the global market system.

Institutions of Globalization – The “Sisters”

World Bank

The World Bank was also created after WWII as the development wing of the new international system. Its original purpose was to finance reconstruction in war-torn Europe and later to support development in newly independent nations through large infrastructure projects like dams, roads, and energy grids. The critique is that while the World Bank presents itself as humanitarian, its loans often come with high interest rates and requirements that entrench neoliberal policies. Many countries in the Global South became trapped in cycles of debt, unable to repay while still forced to meet World Bank conditions. The Bank connects to globalization by serving as a key mechanism through which decolonized countries were drawn into the global capitalist order, ensuring their integration into markets on terms set by wealthier states.

 

Institutions of Globalization – The “Sisters”

World Trade Organization (WTO)

The WTO grew out of the General Agreement on Tariffs and Trade (GATT) and was officially established in 1995 to oversee global trade rules and resolve disputes. Its role is to ensure that markets remain open and predictable. The critique is that membership often comes under pressure, and poorer countries have little leverage compared to powerful states. In practice, the WTO has been accused of serving the interests of developed economies while undermining local industries in developing countries. Its connection to globalization is that it formalized the rules of global capitalism by enforcing trade liberalization worldwide, locking in the shift from the Cold War’s divided blocs to the single neoliberal order of the post-1991 era.

Institutions of Globalization – The “Sisters”

United Nations (UN)

The United Nations was founded in 1945 after World War II with the mission of promoting international peace, security, and cooperation. It plays a broad role, addressing human rights, climate change, sustainable development, and global health through its various agencies. The critique is that although it presents itself as a neutral body, its decisions and actions often reflect the dominance of powerful states—especially the permanent members of the Security Council (U.S., U.K., France, Russia, China). Many developing nations see the UN as inconsistent, quick to intervene where powerful interests are at stake but slow to act in poorer regions. Its connection to globalization is that it provides the overarching political and humanitarian framework within which the IMF, World Bank, and WTO operate. While those institutions directly enforce economic rules, the UN serves as the global political forum that legitimizes international governance and reinforces the post-WWII system of global order.

BRIC(S) – Emerging Economies

BRIC, later expanded to BRICS, refers to Brazil, Russia, India, China, and South Africa—large emerging economies that began driving global growth in the 1990s and 2000s. These countries represent a major shift in the balance of economic power away from the traditional Western core. The critique is that while these nations are labeled as success stories, they remain deeply tied to the global system, often supplying labor and resources while wealthier states retain control over finance and branding. The connection is that BRICS economies symbolize the “great transformation” of globalization, showing how formerly peripheral regions became central players in the post-Cold War order.

The Triad (Top of Pyramid)

The Triad refers to North America, Western Europe, and Japan, which dominated the global economy through most of the 20th century. They were considered the “top of the pyramid” in the old model of globalization, setting the rules and controlling trade, finance, and technology. The critique is that this dominance was built on colonial wealth, Cold War institutions, and control of markets, which left much of the Global South dependent. The connection is that the rise of BRICS and other emerging economies directly challenges the Triad’s long-standing supremacy, signaling a more multipolar global order.

Base of the Pyramid (BoP)

The base of the pyramid refers to the billions of people living on less than $2,000 a year, representing both a massive untapped market and the persistence of extreme poverty. Companies view this population as a growth opportunity, often promoting low-cost products or services. The critique is that while framed as “empowerment,” BoP strategies can exploit the poor by turning poverty itself into a profit opportunity without addressing systemic inequality. The connection is that BoP shows globalization’s contradictions: it creates wealth and new markets, yet leaves much of the world’s population marginalized.

Gross Domestic Product (GDP)

GDP measures the total market value of all final goods and services produced within a country in a given year. It is the most common way to compare economies by size and output. The critique is that GDP only measures production, not distribution, quality of life, or inequality—it can rise even while poverty worsens. The connection is that GDP became the primary benchmark of economic performance in globalization, shaping how countries are ranked and compared, but it must be paired with other measures to show the real impact on people.

Purchasing Power Parity (PPP)

PPP adjusts GDP by considering cost-of-living differences across countries, allowing for more accurate cross-country comparisons of real income and consumption. For example, $1 may buy more goods in India than in the United States. The critique is that PPP calculations rely on assumptions and baskets of goods that may not reflect local realities, and they can hide inequalities within countries. The connection is that PPP demonstrates how globalization forces us to look beyond raw economic size, focusing instead on how far money goes in different environments, especially in emerging economies.

Per Capita Income

Per capita income divides GDP by the population to give the average income of citizens in a country. It is often used to measure standard of living. The critique is that it averages wealth and therefore hides inequality—one billionaire can raise the average while millions remain poor. The connection is that per capita income shows globalization’s uneven effects: while national economies may grow, the benefits often concentrate at the top, leaving large segments of society behind.

The Nike Paradigm (Class Case)

Nike pioneered the separation of branding from production, outsourcing manufacturing to low-cost countries while keeping design, marketing, and brand power in-house. This model turned the brand into the main source of value, while factories became replaceable. The critique is that this shows how globalization prioritizes image and marketing over labor and production. The connection is that the Nike model became the template for modern global firms, tying into outsourcing, VRIO (brand as a rare and inimitable resource), and the shift from tangible to intangible assets.

Race to the Bottom (No Logo)

The “race to the bottom” describes how global subcontractors compete to offer the lowest prices to brands and retailers. To win contracts, firms cut wages, reduce worker protections, and move production to countries with the weakest regulations. The critique is that globalization here maximizes efficiency and profit for corporations but does so by exploiting labor, eroding standards, and shifting all risk downward. The connection is that this dynamic explains why power in supply chains sits with big brands and retailers like Walmart and Amazon—those at the top dictate prices while producers and workers at the bottom bear the costs.

Institution-Based View

The institution-based view argues that firm success is shaped by the rules of the game—both formal institutions like laws, tariffs, and regulations, and informal institutions like culture, ethics, and social norms. Strong rules reduce opportunism, giving firms predictability and stability when making investments.

 

Critique: Institutions are not neutral; they often reflect the interests of powerful actors. Rules can favor domestic firms over foreign entrants, and weak enforcement in developing countries can make property rights and contracts unreliable.

 

Connection: This view shows that globalization is not just about market efficiency—it depends heavily on the legal and cultural environments in which firms operate. It ties directly into property rights, legal systems, and the institutions of globalization like the WTO and IMF.

Resource-Based View

The resource-based view focuses on what firms themselves possess: tangible resources (like factories and finances) and intangible ones (like brand, culture, and know-how). Firms succeed when their resources are valuable, rare, inimitable, and organized (VRIO), allowing them to build competitive advantages that rivals cannot copy.

 

Critique: Not all resources translate into success, and even valuable resources can be undermined by hostile or unstable institutional environments. Globalization accelerates imitation, making it harder for advantages to last.

 

Connection: This view links directly to the Nike paradigm (brand power as a rare and inimitable resource), the Apple case (supply chain management as a capability), and VRIO as the framework that explains why some firms dominate while others fail in the global marketplace.

Democracy

 

Description: A political system with elected leaders and rule of law. Businesses benefit from transparency, stronger property rights, and predictable contracts.

Critique: Democracy is not always better for business—frequent elections cause policy swings, and corruption or gridlock can weaken stability.

Connection: Democracies create frameworks that support globalization, but their volatility shows why rules alone don’t guarantee success.

Totalitarianism

Description: A system where one party or leader holds unchecked power. Decisions are made quickly, and governments may steer economic growth.

Critique: Risk is high—laws can change overnight, assets can be seized, and corruption is widespread. Stability is often an illusion.

Connection: Totalitarianism highlights globalization’s dangers: firms may gain from efficiency but face major political and reputational risks, as seen with Apple in China.

Market Economy

Description: An economy driven by private ownership and the “invisible hand” of supply and demand. Encourages innovation and competition.

Critique: Market systems often create inequality and can fail to protect workers or the environment.

Connection: Market economies fuel globalization but show how efficiency can come at the expense of equity and stability.

Command Economy

Description: An economy where the state controls the “commanding heights”—deciding what is produced and at what price.

Critique: Limits innovation, creates inefficiency, and often leads to shortages or waste.

Connection: Command economies illustrate the opposite of market-driven globalization, but their weaknesses pushed many states toward liberalization after the Cold War.

Mixed Economy (Most Common)

Description: Combines private markets with government regulation. Balances innovation with state oversight.

Critique: Can still suffer inequality and political conflict over how much control the state should have.

Connection: Mixed economies are the most common today, showing that globalization operates through compromise between free markets and government intervention.

Common Law

Description: A legal system based on precedent and judicial decisions. Contracts are long and detailed to cover uncertainties.

Critique: Complexity can raise transaction costs and make legal disputes expensive.

Connection: Common law provides predictability for globalization but can slow business with its detail-heavy approach.

Civil Law

Description: A legal system based on written codes. Contracts are shorter because codes fill in the gaps.

Critique: Less flexibility than common law; outcomes depend heavily on the written code.

Connection: Civil law underpins globalization by simplifying contracts. Important: Civil law contracts are not longer than common law contracts (quiz anchor).

Theocratic Law

Description: A legal system based on religious principles, such as Islamic or Jewish law.

Critique: Can create uncertainty for foreign firms unfamiliar with religious rules and subject to stricter moral or cultural standards.

Connection: Theocratic law shows how culture and religion shape globalization, reminding firms that not all markets follow secular systems.

Property Rights (Article)

Description: Property rights are the legal system of privatizing land and assets so individuals can claim ownership, trade them, and use them as collateral. In many developing countries, this model is not historically “normal” but was introduced through capitalist reforms. Titling turns land into private property that can be bought and sold in markets.

Critique: While framed as empowering, property rights reflect a form of privatization rooted in capitalism. They can exclude those who cannot afford titles, and elites often manipulate the system to grab land. Weak enforcement, corruption, and gender discrimination worsen inequality.

Connection: Property rights show how globalization spreads capitalist norms—transforming communal or informal systems into private assets. This ties directly to the institution-based view of globalization, where rules of ownership are reshaped to fit global markets.

Intellectual property rights

Description: IPR protects intangible assets like patents, copyrights, and trademarks (quiz anchor: e.g., the Nike swoosh). These rights encourage innovation by granting creators exclusivity.

Critique: IPR is a form of capitalist privatization, turning ideas into property that can be owned or monopolized. Strong protections attract investment, but your class noted that weak enforcement—as in China or in AI in the U.S.—can lower costs, expand access, and even stimulate economic growth in the short term.

Connection: IPR reflects globalization’s tension between control and openness. Strong rights benefit corporations, while weaker rights can broaden access and boost markets, showing how rules shape who gains in the global economy.

Tangible Resources

Description: Tangible resources are physical and financial assets a firm can see and measure, such as factories, machinery, raw materials, or capital. Example: Apple’s production facilities and cash reserves.

Critique: Tangible resources are often easier to imitate, which limits their ability to provide long-term competitive advantage. Competitors can build similar factories or raise funds.

Connection: Tangible resources are important for global competition, but by themselves they rarely sustain success. This links directly to VRIO, which shows that lasting advantage usually comes from harder-to-copy assets.

Intangible Resources

Description: Intangible resources are non-physical assets that are harder to observe or measure, such as reputation, brand value, culture, or know-how. Example: Nike’s brand image or Apple’s ecosystem of design and innovation.

Critique: Intangible resources can be difficult to develop and protect. They often depend on legal systems (like trademarks or copyrights) and can be undermined in countries with weak enforcement.

Connection: Intangibles are central to globalization because they travel across borders more easily than physical assets. They tie into the Nike paradigm, where branding and reputation, not factories, became the real source of profit.

Capabilities – How Firms Deploy Resources

Description: Capabilities are the skills, processes, and routines that allow firms to effectively use their tangible and intangible resources. Example: Apple’s ability to manage a global supply chain or Toyota’s lean manufacturing system.

Critique: Resources alone don’t guarantee success—firms must know how to coordinate and deploy them. Many companies with strong assets fail because they lack the organizational capability to use them strategically.

Connection: Capabilities explain why some firms outperform others even with similar resources. They connect directly to the VRIO framework, since advantage comes not just from owning resources but from organizing them to capture value in global competition.

Commoditization

Description: Commoditization occurs when products that were once unique gradually lose their distinctiveness and become interchangeable commodities. As products lose uniqueness, firms are forced to compete mainly on price, which drives lower profits and shrinking margins. Example: when once-premium smartphones or clothing brands are copied and turned into cheaper generic versions.

Critique: Globalization accelerates commoditization by spreading products rapidly across markets, making it difficult for companies to sustain uniqueness. Firms that fail to adapt are pushed into price wars and may lose their advantage entirely.

Connection: The main defenses against commoditization are branding, innovation, and differentiation, which allow firms to maintain uniqueness and escape the race to the bottom. This ties directly to the Nike paradigm (brand power as a shield) and to VRIO, where only resources that are valuable, rare, and inimitable protect firms from being commoditized.

Value Chain

Description: The value chain is the series of activities a firm performs from upstream (sourcing and production) to downstream (distribution, marketing, and service), with each step adding value. Example: Apple adds value from design to retail experience.

Critique: Outsourcing parts of the chain can cut costs but also creates dependency on external suppliers and exposes firms to risks like supply chain disruptions.

Connection: The value chain explains how globalization organizes production worldwide, linking directly to the Nike paradigm, where branding and marketing were emphasized over manufacturing.

Benchmarking

Description: Benchmarking is the practice of comparing a firm’s performance in value chain activities against competitors to identify strengths and weaknesses.

Critique: Benchmarking can highlight gaps, but it only measures relative performance—it doesn’t guarantee firms will close those gaps or innovate beyond them.

Connection: Benchmarking helps firms adapt in globalization by learning from competitors and improving efficiency, showing how firms compete not just through resources but through constant comparison.

Two-Stage Model

Description: The two-stage model in value chain analysis asks: (1) Does the firm have or can it build an advantage in this activity? (2) If not, should it outsource or redesign the process?

Critique: This model simplifies decisions, but outsourcing too much can hollow out a firm’s core strengths and make it overly reliant on external partners.

Connection: The two-stage model explains why many firms, like Nike, outsource production but retain branding and marketing—activities where they hold clear advantages.

VRIO Framework

Description: VRIO is a tool for analyzing whether a firm’s resources and capabilities can provide lasting advantage. It asks if a resource is Valuable, Rare, Inimitable, and Organized. If a firm meets all four, it achieves a sustained competitive advantage.

Critique: Few resources fully meet all four criteria. Globalization speeds imitation, so even rare or valuable resources can lose their edge quickly if firms aren’t well organized to protect them.

Connection: VRIO explains why firms like Apple and Nike dominate—Apple combines valuable technology with rare brand loyalty and strong organization, while Nike leverages its brand as an inimitable resource. It ties directly to the resource-based view and shows why some firms succeed globally while others fail.

Outsourcing

Description: Outsourcing is when a firm turns over an activity to an external supplier. It allows companies to cut costs and focus on their core strengths.

Critique: Outsourcing often prioritizes efficiency over labor protections, creating weaker oversight and exposing firms to supply chain risks.

Connection: Outsourcing reflects globalization’s shift to flexible supply chains, as seen in the Nike paradigm where production was outsourced while branding stayed in-house

Offshoring

Description: Outsourcing is when a firm turns over an activity to an external supplier. It allows companies to cut costs and focus on their core strengths.

Critique: Outsourcing often prioritizes efficiency over labor protections, creating weaker oversight and exposing firms to supply chain risks.

Connection: Outsourcing reflects globalization’s shift to flexible supply chains, as seen in the Nike paradigm where production was outsourced while branding stayed in-house

Onshoring

Description: Onshoring is outsourcing within the same country, often to reduce costs while avoiding the risks of going abroad.

Critique: Onshoring can be cheaper than in-house production but usually lacks the dramatic savings of offshoring.

Connection: Onshoring shows that outsourcing isn’t always global—firms may still restructure domestically to remain competitive.

Captive Sourcing (FDI)

Description: Captive sourcing happens when a firm sets up its own subsidiary abroad to perform activities in-house, also called foreign direct investment (FDI).

Critique: This gives more control than outsourcing but requires heavy investment and exposes the firm directly to foreign risksS.

Reshoring

Description: Reshoring is when firms bring previously offshored activities back to their home country. It is often driven by rising foreign costs, supply chain fragility, or political pressure.

Critique: Reshoring reduces reliance on unstable global supply chains but raises costs and can reduce efficiency.

Connection: Reshoring highlights the pendulum of globalization—firms expand abroad for cost savings, then return home when risks outweigh benefits.

OEM (Original Equipment Manufacturer)

Description: OEMs manufacture products based on blueprints provided by other firms. They don’t design or brand.

Critique: OEMs earn slim margins and are easily replaceable in global supply chains.

Connection: OEMs are at the bottom of the value chain, showing why branding and design (Nike model) capture most profits.

ODM (Original Design Manufacturer)

Description: ODMs both design and manufacture products, giving them more control than OEMs.

Critique: ODMs still depend on larger brands for marketing and distribution, limiting their profit share.

Connection: ODMs illustrate the middle step toward OBMs, climbing the value chain in globalization.

OBM (Original Brand Manufacturer)

Description: OBMs design, manufacture, and sell under their own brand name. Example: Apple, which controls design, production, and brand identity.

Critique: OBMs take on more risk and require major investments in marketing and brand building.

Connection: OBMs capture the most value in global supply chains, showing why branding is central in the Nike paradigm.

BPO (Business Process Outsourcing)

Description: BPO outsources business tasks like customer service, payroll, or back-office work to third parties.

Critique: It cuts costs but can reduce service quality and disconnect firms from their customers.

Connection: BPO illustrates how globalization extends beyond manufacturing, reshaping even service industries.

KPO (Knowledge Process Outsourcing)

Description: KPO outsources higher-level knowledge tasks such as data analysis, research, or engineering support.

Critique: KPO offers greater value but risks intellectual property leaks and quality issues if oversight is weak.

Connection: KPO reflects the globalization of knowledge work, showing how even specialized tasks can be shifted across borders.