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Overall Course Objectives 1. Examine 2 perspectives on globalization to explore how “flat” todays world really is 2. Explore the impact of globalization in todays world for countries, businesses & individuals 3. Define the key trends & forces which underpin globalization 4. Examine how globalization impacts businesses competitiveness & strategic focus 5. Understand the impact of globalization on your competitiveness as a business graduate & develop skills to assess your position in the global talent pool Overview of Course Structure Week 1 2&3 4 Topic of Instruction Introduction - Global Economic Issues How interconnected is our world? Driving forces & trends underpinning globalization 5 6 7 8 9 10 11 12 Globalization & Governments Global Homogenization Globalization & Businesses Part 1 / Fall Break Globalization & Businesses Part 2 Globalization & Individuals Global Labor Market Global Talent Pool Leveraging the global forces to improve your strategic competitive advantage Global Leadership Course Summary - Final Examination 13 14 Week 1 - Objectives • • • • • • • • • Course Assessment What is Globalization? Todays Global World Perspectives on Globalization Drivers of Globalization The Rise of BRIC Reasons for Globalization Key Issues What's next What is Globalization? • It refers to the rapid increase in the share of economic activity taking place across national boundaries • International Monetary Fund defines globalization as the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread Today’s Global World • Global income is more than $31 trillion a year, but 1.2 billion people of the world’s population earn less than $1 a day • 80% of the global population earns only 20% of the global income, and within countries there is a large gap between rich & poor Today’s Global World • The 3 billion people living in the 24 developing countries that increased their integration into the world economy enjoyed an average 5% growth rate in income per capita, longer life expectancy & better schooling • The digital & information revolution has changed the way the world learns, communicates & does business Today’s Global World • Two billion people, living in countries in sub Saharan Africa, the Middle East & the former Soviet Union, have been unable to increase their integration into the world economy, & their economies have contracted, poverty has risen & education levels have risen less rapidly than in more globalized countries Perspectives on Globalization • “The World Is Flat” (Thomas Friedman) • Globalization is the “ability to click, connect & collaborate” • Pankaj Ghemawat argues that the world today is not as “globalized” as many strategists believe, and that cross-border differences still matter in the world economy • Both schools of thought will be explored throughout this course The Drivers of Globalization • Multinational businesses which carry out business across national boundaries • The World Trade Organization (WTO), through which international trade agreements are negotiated & enforced • The World Bank & International Monetary Fund (IMF) assist governments in achieving development aims through provision of loans & technical assistance • National governments, who together with these international institutions, are instrumental in determining the outcomes of globalization The Rise of BRICS • • • • • • • New players in the world economy – BRIC 2010 Brazil Russia India China South Africa Mexico was not initially included in this group in 2010 but has become one of the new players in the world economy The Rise of BRICS - stats • In 2010, the BRICS countries accounted for over a quarter of the world's land area and more than 40% of the world population, hold a combined GDP of 20 trillion dollars • India has 10 of the 30 fastest-growing urban areas in the world and, based on current trends, estimated a massive 700 million people will move to cities by 2050. This will have significant implications for demand for urban infrastructure, real estate, and services Top 5 largest economies by 2050 The ten largest economies in the world in 2050, measured in GDP (billions of 2006 USD), source - Goldman Sachs Report (2007) Reasons for Globalization Firms operate globally / internationally for a number of different reasons; • They may be seeking to secure better sources of raw materials & energy • They may want to obtain low cost factors of production such as labor • They may be attracted to certain countries because of subsidies those countries provide • They may be seeking new markets for their products • Domestic markets may no longer be able to absorb production at minimum efficient scales Key Issues of Globalization • • • • Damage to Environment Exploitation of labor Monopoly of power Damage to cultures