LO1-1 What Is Globalization?

What does “globalization of markets” mean?

It’s the merging of distinct national markets into one global marketplace due to falling barriers to trade and investment.

What causes globalization of markets?

Falling barriers to cross-border trade and investment make it easier for companies to sell internationally.

What do scholars say about consumer preferences worldwide?

They argue that tastes and preferences are converging toward a global norm.

What are examples of global consumer products?

Coca-Cola, McDonald’s, Starbucks, IKEA, Sony, and Apple — sold similarly worldwide.

How do these firms contribute to globalization?

By offering the same basic product globally, they help create and reinforce a global market.

Do small and medium-sized firms also benefit from globalization?

Yes — in the U.S., 98% of exporters are small or medium-sized firms; similar patterns exist in Germany and China.

What limits the globalization of markets?

National differences in culture, consumer preferences, distribution systems, business practices, and regulations.

What company example shows the need for local adaptation?

Uber — it adjusts its entry strategy in each country to fit local regulations.

Which markets are the most global?

Industrial goods and commodities like oil, wheat, microchips, aircraft, software, and financial assets.

What trend is seen in high-tech consumer products?

Many, like Apple’s iPhone, are sold the same way worldwide.

What happens to competition in global markets?

Rivalries become global — e.g., Coca-Cola vs. Pepsi, Ford vs. Toyota, Boeing vs. Airbus, Samsung vs. Apple.

What’s the overall result of globalization of markets?

Greater uniformity replaces diversity — many industries now operate in one global market rather than separate national ones.

What is the globalization of production?

It’s when companies source goods and services from around the world to benefit from differences in cost and quality of labor, land, energy, and capital.

Why do companies globalize production?

To increase productivity, improve product quality, and compete more effectively.

How does Boeing illustrate globalization of production?

Boeing outsources major parts of its aircraft to foreign suppliers — 30% of the 777 and 65% of the 787 are built by foreign companies.

Which countries contribute to Boeing’s aircraft production?

Japan, Singapore, Italy, and others — Japan alone accounts for 35% of the 787’s outsourced value.

Why does Boeing outsource to foreign suppliers?

Because they’re world leaders in their specialties and outsourcing helps Boeing win orders from airlines in those countries.

What is the benefit of a global web of suppliers?

It produces a better final product and strengthens competitiveness against rivals like Airbus.

How has outsourcing expanded beyond manufacturing?

Companies now outsource services using the Internet — like radiology, software testing, and customer service.

Give an example of service outsourcing in healthcare.

U.S. hospitals send MRI scans to India for overnight analysis; workers in the Philippines transcribe American medical files.

How does outsourcing benefit software companies?

Indian engineers test and debug U.S. software overnight, reducing development time and costs.

What is the estimated cost savings from outsourcing in U.S. healthcare?

Over $100 billion could be saved by outsourcing administrative tasks.

What does Robert Reich argue about global production?

It’s becoming meaningless to label products by nationality — many are now “global products.”

What challenges limit globalization of production?

Trade barriers, foreign investment restrictions, transport costs, political and economic risks, and coordination difficulties.

What example shows the managerial challenge of global production?

Boeing’s 787 faced delays and cost overruns due to coordination problems among global suppliers.

Why can’t hospitals fully outsource radiology work?

Government regulations restrict outsourcing of medical interpretation to developing nations.