The Challenges of Globalization

1
(No Transcript)
2
The Challenges of Globalization
Chapter
7

• The Process of Globalization
• The Globalization Debate
• Doing Business in a Diverse World
• Global Codes of Corporate Conduct
• Collaborative Partnerships for Global Problem
  Solving

3
The process of globalization

• Globalization
• Refers to the increasing movement of goods,
  services, and capital across national borders.
• Globalization is considered a processan ongoing
  series of interrelated events.
• Transnational corporation
• A company that does business in more than one
  country.

4
The worlds top 10 nonfinancial transnational
corporations, ranked by foreign assets
Figure 7.1
Source United Nations, World Investment Report
2002, Table IV-1, p.98. Data for the year 2000.
5
Acceleration of world trade, 1960-2001
Figure 7.2
of GDP
1990
Years
Source World Development Indicators 2003 (New
York World Bank, July 2003, and World
Development Indicators 2002 (New York World
Bank, May 2002).
6
The acceleration of globalization

• The factors that drive the acceleration of
  globalization
• Improved communications
• Improved transportation systems
• The rise of major transnational corporations
• Social and political reforms
• The rise of international financial and trade
  institutions

7
International financial and trade institutions

• The World Bank
• Provides economic development loans to its member
  nations.
• Funds used mainly for roads, dams, power plants,
  pipelines, and other infrastructure projects.
• International Monetary Fund
• Purpose is to make currency exchange easier for
  member countries so that they can participate in
  global trade.
• Lends foreign exchange to member countries.
• World Trade Organization
• An international body that established the ground
  rules for trade among nations.
• Its major objective is to promote free trade.

8
Pros and cons of globalization
Figure 7.3

• Arguments for globalization
• Increases economic productivity.
• Reduces prices for consumers.
• Gives developing countries access to foreign
  investment funds to support economic development.
• Transfers technology.
• Spreads democracy and freedom, and reduces
  military conflict.

• Arguments against globalization
• Causes job insecurity.
• Weakens environmental and labor standards.
• Prevents individual nations from adopting
  policies promoting environmental or social
  objectives.
• Undermines cultural, linguistic, and religious
  diversity.
• Is just as compatible with despotism as it is
  with freedom.

9
Comparative political and economic systems

• Democracy
• Refers broadly to the presence of political
  freedom.
• Four defining features of democracy (according to
  the U.N.)
• Fair elections
• An independent media
• Separation of powers among the executive,
  legislative, and judicial branches of government
• An open society where citizens have the right to
  form their own independent organizations to
  pursue social, religious, and cultural goals

10
Comparative political and economic systems

• Military dictatorships
• Repressive regimes ruled by dictators who
  exercise total power through control of the armed
  forces.
• Free enterprise systems
• Based on the principle of voluntary association
  and exchange. Members of society satisfy most of
  their economic needs through voluntary market
  transactions.
• Central state control
• Economic power is concentrated in the hands of
  government officials and political authorities.
  The central government owns the property that is
  used to produce goods and services.

11
Global codes of corporate conduct

• The United Nations Global Compact
• A values-based platform designed to promote
  institutional learning.
• Corporations are invited to voluntarily endorse
  core principles covering labor, human rights, and
  environmental standards.
• The OECD Guidelines for Multinational Enterprises
• Code of conduct for corporations developed by
  member nations of the OECD.
• The guidelines are voluntary, address employment
  relations, information disclosure, environmental
  stewardship, consumer interests, and the
  management of technology.

12
Global codes of corporate conduct

• The Global Sullivan Principles
• The objectives are to support economic, social,
  and political justice by companies where they do
  business.
• Calls on companies to support human rights and to
  encourage equal opportunity at all levels of
  employment.
• The Caux Principles
• Emphasizes working for the common good and
  respect for human rights.

13
A three-sector world

• Business
• Government
• Civil society
• Comprises nonprofit, educational, religious,
  community, family, and interest-group
  organizations.
• Nongovernmental organizations (NGOs)
• Concerned with such issues as environmental risk,
  labor practices, workers rights, community
  development, and human rights.

14
Distinctive attributes of the three major
sectors Business
Figure 7.4a
Source Adapted from Steven Waddell, Core
Competences A Key Force in Business-Government-Ci
vil Society Collaborations, Journal of Corporate
Citizenship, Autumn 2002, pp. 43-56, Tables 1 and
2.
15
Figure 7.4b
Distinctive attributes of the three major
sectors Government
Source Adapted from Steven Waddell, Core
Competences A Key Force in Business-Government-Ci
vil Society Collaborations, Journal of Corporate
Citizenship, Autumn 2002, pp. 43-56, Tables 1 and
2.
16
Figure 7.4c
Distinctive attributes of the three major
sectors Civil Society
Source Adapted from Steven Waddell, Core
Competences A Key Force in Business-Government-Ci
vil Society Collaborations, Journal of Corporate
Citizenship, Autumn 2002, pp. 43-56, Tables 1 and
2.