8/8/2019 AIMreading

1/17

ASSESSINGASSESSING

INTERNATIONALINTERNATIONALMARKETSMARKETS

8/8/2019 AIMreading

2/17

READINGLISTREADINGLIST

II GlobalizationGlobalization

8/8/2019 AIMreading

3/17

8/8/2019 AIMreading

4/17

TheThe anxietiesanxieties generatedgenerated byby globalizationglobalization::ensuringensuring adequateadequate levelslevels ofof employment,employment,establishingestablishing socialsocial safetysafety netsnets;; providingproviding

medicalmedical andand socialsocial insurance,insurance, andand caringcaring forfor thethepoorpoor

WelfareWelfare statestate

InternationalInternational economiceconomic integrationintegration posesposes aaseriousserious dilemmadilemma:: GlobalizationGlobalization increasesincreases thethedemanddemand forfor socialsocial insuranceinsurance whilewhilesimultaneouslysimultaneously constrainingconstraining thethe abilityability ofofgovernmentsgovernments toto respondrespond effectivelyeffectively toto thatthatdemanddemand

TheThe needneed forfor socialsocial insuranceinsurance forfor thethe vastvastmajoritymajority ofof thethe populationpopulation thatthat lackslacksinternationalinternational mobilitymobility hashas notnot diminisheddiminished

8/8/2019 AIMreading

5/17

InIn thethe marketmarket forfor goods,goods, servicesservices.. Labour,Labour, andandcapital,capital, internationalinternational tradetrade createscreates arbitragearbitrage

ChildChild labourlabour inin HondurasHonduras replacingreplacing workersworkers ininSouthSouth CarolinaCarolina

TradeTrade usuallyusually redistributesredistributes incomeincome amongamongindustries,industries, regions,regions, andand individualsindividuals questionsquestionsofof fairnessfairness andand legitimacylegitimacy

EmployersEmployers cancan movemove abroadabroad butbut employeesemployeescannotcannot

A mistake:wage levels and productivityA mistake:wage levels and productivity

GlobalizationGlobalization greatlygreatly enhancesenhances thethe opportunitiesopportunitiesavailbaleavailbale toto thosethose whowho havehave thethe skillsskills andandmobilitymobility toto flourishflourish inin worldworld marketsmarkets..

A mistake:wage levels and productivityA mistake:wage levels and productivity

8/8/2019 AIMreading

6/17

GlobalizationGlobalization greatlygreatly enhancesenhances thethe opportunitiesopportunitiesavailbaleavailbale toto thosethose whowho havehave thethe skillsskills andandmobilitymobility toto flourishflourish inin worldworld marketsmarkets..

At At thethe samesame timetime globalizationglobalization doesdoes exertexertdownwarddownward pressurepressure onon wageswages ofof underskilledunderskilledworkersworkers inin industrializedindustrialized countries,countries, exacerbateexacerbateeconomiceconomic insecurity,insecurity, callcall intointo questionquestion acceptedacceptedsocialsocial arrangementsarrangements andand weakenweaken socialsocial safetysafetynetsnets..

8/8/2019 AIMreading

7/17

II..22.. InternationalInternational EconomicsEconomics::UnlockingUnlocking thethe MysteriesMysteries ofof

GlobalizationGlobalization TheThe mostmost notablenotable featuresfeatures ofof thethe newnew worldworld

economyeconomy areare thethe increasingincreasing linkslinks betweenbetween thethe

highhigh-- andand lowlow--incomeincome countriescountries NationalNational economieseconomies areare becomingbecoming moremore

integratedintegrated inin fourfour fundamentalfundamental waysways:: trade,trade,finance,finance, production,production, andand growinggrowing webweb ofoftreatiestreaties andand institutionsinstitutions

ItIt isis nownow possiblepossible toto dividedivide upup thethe valuevalue chainchain

TheThe enormousenormous andand increasingincreasing rolerole ofof MNCsMNCs ininglobalglobal tradetrade

8/8/2019 AIMreading

8/17

IncreasingIncreasing harmonizationharmonization ofof economiceconomicinstitutionsinstitutions

WillWill globalizationglobalization promotepromote fasterfaster economiceconomicgrowth?growth?

WillWill globalizationglobalization promotepromote oror undermineunderminemacroeconomicmacroeconomic stability?stability?

WillWill globalizationglobalization promotepromote growinggrowing incomeincomeinequality?inequality?

HowHow shouldshould governmentalgovernmental institutionsinstitutions adjustadjusttheirtheir powers?powers?

LongLong--termterm growthgrowth dependsdepends onon increasedincreasedproductivityproductivity andand innovationinnovation andand thatthat thetheincentivesincentives forfor bothboth dependdepend onon thethe scopescope ofof thethemarketmarket

8/8/2019 AIMreading

9/17

GainsGains inin growthgrowth maymay notnot bebe sharedshared byby allall::geographygeography andand climateclimate

PressuresPressures forfor rapidrapid liberalizationliberalization ofof internationalinternationalcapitalcapital flowsflows

LessLess thanthan 55%% ofof thethe UU..SS.. labourlabour marketsmarkets ininapparel,apparel, footwear,footwear, toys,toys, assemblyassembly operations,operations,andand thethe likelike aa appearsappears toto bebe inin thethe directdirect linelineofof firefire ofof lowlow wageswages fromfrom AsiaAsia

However,However, increasedincreased globalizationglobalization limitslimits thetheabilityability ofof unionunion workersworkers toto achieveachieve wagewagepremiumpremium

InternationalInternational tradetrade maymay havehave changedchanged thethebargainingbargaining powerpower ofof workersworkers visvis----visvis capitalcapital

8/8/2019 AIMreading

10/17

GlobalizationGlobalization isis supportingsupporting aa newnew winnerwinner--taketake--allall approachapproach toto laborlabor marketsmarkets.. SkilledSkilled workersworkers

findfind anan expandingexpanding market,market, whilewhile unskilledunskilledworkersworkers seesee nono particularparticular gainsgains inin anan expandingexpandingmarketmarket..

8/8/2019 AIMreading

11/17

8/8/2019 AIMreading

12/17

UnderlyingUnderlying technologicaltechnological trendstrends leadingleading toto ananincreaseincrease inin thethe demanddemand forfor skilledskilled laborlabor andandreducingreducing thethe wageswages ofof thethe relativelyrelatively unskilledunskilled

tradetrade isis aggravatingaggravating thethe downwarddownward movementmovementinin thethe relativerelative wageswages ofof thethe leastleast--fortunatefortunateworkersworkers inin thethe economieseconomies ofof thethe advancedadvancedindustrialindustrial countriescountries

tradetrade expansionexpansion almostalmost necessarilynecessarily createscreatessomesome loserslosers inin thethe economyeconomy

wewe havehave toto startstart byby recognizingrecognizing that,that, forfor tradetradetoto bebe aa sourcesource ofof gainsgains inin termsterms ofof efficiencyefficiency andand

growthgrowth formform anan economyeconomy itit hashas toto bebe associatedassociatedwithwith somesome destructiondestruction ofof jobsjobs andand somesomedistributionaldistributional consequencesconsequences

wewe needneed toto rethinkrethink somesome ofof thethe mechanismsmechanisms inin

thethe WTOWTO thatthat alllowalllow forfor nationalnational safeguardssafeguards

8/8/2019 AIMreading

13/17

II..44.. GGloballobal CustomerizationCustomerization ofofMarketsMarkets hashas ArrivedArrived

A A companycompany whichwhich maintainsmaintains aa singlesingle nationalnationalallegianceallegiance andand marketmarket orientationorientation isis employingemployingaa precariousprecarious strategicstrategic orientationorientation

WorldWorld MarketMarket forforgoodsgoods andand servicesservices

GATTGATT andand WTOWTO

TradingTrading BlocksBlocks encouragingencouraging firmsfirms toto expandexpandandand devlopdevlop productsproducts

IncreaseIncrease inin crosscross--borderborder acquisitionsacquisitions mergersmergers::exploitingexploiting thethe relativerelative advantageadvantage whichwhich occuroccurinineacheach regionregion

8/8/2019 AIMreading

14/17

8/8/2019 AIMreading

15/17

DevelopDevelop aa strategicstrategic mapmap ofof countriescountries

CustomerCustomer valuesvalues andand expectationsexpectations becomebecome thethedrivingdriving forceforce toto thethe stagestage ofof globalizationglobalization inin eacheach

economyeconomy

EmphasizesEmphasizes aa specificspecific strategystrategy toto createcreate aareputationreputation andand uniqueunique valuevalue forfor thethe chosenchosencustomerscustomers

MNCsMNCs mustmust constantlyconstantly redefineredefine valuevalue buybuycontinuouslycontinuously raisingraising customerscustomers expectationsexpectationstowardtoward theirtheir chosechose strategystrategy

SustainedSustained successsuccess requiresrequires corecore businessbusiness processprocess

toto possesspossess certaincertain assetsassets thatthat continuallycontinually enhanceenhanceperformanceperformance andand valuevalue

CustomersCustomers continuecontinue toto becomebecome moremore notnot lesslessawareaware andand sophisticatedsophisticated

8/8/2019 AIMreading

16/17

NewNew trendstrends:: productproduct customization,customization, intimateintimatecustomercustomer relationship,relationship, reengineering,reengineering, supplysupplychainchain managementmanagement

NoNo productproduct oror serviceservice isis soso goodgood thatthat itit cannotcannot bebeimprovedimproved

ChangeChange:: FromFrom aa sellerssellers marketmarket toto aa buyersbuyersmarketmarket

ResponsivenessResponsiveness:: thethe firmfirm thatthat respondrespond totocustomercustomer needsneeds thethe fastestfastest havehave aa clearclearadvantageadvantage andand tendtend toto dominatedominate thethe marketmarket

ResponsivenessResponsiveness:: exciteexcite customerscustomers;; fastfast toto marketmarket

(anticipate(anticipate customerscustomers needs)needs);; fastfast toto produceproduce;;fastfast toto deliverdeliver;; fastfast toto serviceservice

It is thecustomer!It is thecustomer!

InIn aa buyersbuyers marketmarket aa customercustomer--centriccentric

orientationorientation isis paramountparamount

8/8/2019 AIMreading

17/17

CustomerCustomer buybuy moremore thanthan aa product,product, theythey buybuyutilityutility oror perceivedperceived valuevalue

ThereThere isis aa needneed toto bebe flexibleflexible toto makemake

adaptationsadaptations::

VaryingVarying economic/culturaleconomic/cultural settingssettings

MassMass customizationcustomization:: productsproducts andand processesprocesses areare

modularizedmodularized toto easilyeasily makemake changechange atat customercustomerpreferencepreference pointspoints

TheThe futurefuture ofof anan MNCMNC doesdoes notnot dependdepend onondevelopingdeveloping newnew customerscustomers butbut ratherrather onon keepingkeepingcurrentcurrent customerscustomers andand largelarge purchasespurchases