Materials, Ch. 1-6Pursuing globalization and living it differ from mere involvement in international business activities.

More important, the rise of global thinking and practice has made business interests and orientations more necessary then ever. Global trade expended rapidly from 1600 to 1800. Forbes magazine indicates that between 1870 and 1910 the free flow of labor was impressive and capital moved freely among major countries.

In the second half of the nineteenth century, 15 million people crossed the Atlantic to settle in North America.

It is not Free Trade between any two countries that is the true aim; but to remove obstacles in the way of the stream of the freely exchanging commodities, that ought to like the Oceanus of primitive geography, to encircle the whole habitable world.

Globalization is defined as a set of beliefs that foster a sense of connectivity, interdependence, and integration in the world community.

At the firm level, the globalization should mean the ability of corporation to conduct business across borders in an open market, maximizing organizational benefits, without inflicting social damage or violating the rights of people from other cultures.

Global Corporation should treat globalization as a view and outlook that broadens and energizes human minds and perspectives.

Practically and spiritually, globalization must be inclusive rather than exclusive, endeavor.

The pillars of globalization are open trade and vital civil and legal institutions that uphold individual and group rights while facilitating social and economic integration.

Industrial Revolution helped to connect European and overseas economies in complementary development patterns that transmitted changes in the rhythm of economic growth in the industrial world overseas.

World economy is broader in terms of the number of national markets that are engaged; it is deeper in terms of the density and velocity of interaction and flows of trade and finance; and the dominant mode of organization of world economic transactions has changed significantly from the market (trade and portfolio) investment to internationalization of production through MNCs.

Capital now moves with startling speed around the world. Each day over $1 trillion is traded in a global foreign exchange market that never closes.

Even small- and medium- sized companies recognize that the competition for market share is global, and that participating in the global economy is no longer a choice but a necessity.

FDI flows set a record as International Corporation responded to economic liberalization in various countries. Inflows increased by 39 percent, to $644 billion. While outflows rose 37 percent, to $649 billion.

Increases in FDI inflows in 1998 exceeds the growth in the nominal value of world gross domestic product (GDP) and international trade, which grew by 2.5 percent and 3.6 percent respectively.

The liberalization and restructuring of world economies have induced international corporations to pursue a wide range of investment activities.

Liberalization of much of the world economy and active engagement of international corporations facilitate not only knowledge transfer but also labor movement and integration among countries.

Workers’ wages in MNCs are generally higher, more equal, and converge faster across economies than those of the total manufacturing sector.

The liberalization of services and of trade in services fosters the application of new management techniques, facilitates relations between various stages of design production, and marketing of products and services, and generates greater economies of scale.

Internet revolution has made universal connectivity a reality.

While cultural homogenization is far from being a reality, cultural integration and cross-cultural familiarity are advancing quickly.

Nations have become more accepting of convergence around the effective techniques that ensure their vitality and competitiveness.

In the last few decades, there has been a phenomenal dominance of transnational capital in the world economy, which in tern induces the transnationalization of social classes.

The formation and acceptance of transnational elites weaken the nation-state system and all its relative frames of reference.

The world gradually has become increasingly united, and this has manifested itself in a holistic consciousness.

Several types of exchange predominate in social relationships: material exchange (e.g. trade, capital accumulations); political support of security, coercion, surveillance, and

authority; legitimacy and obedience; and symbolic exchange by means of all types of communication, publication, and information transfer mechanisms.

The widespread appeal of the free market system induces a firm to act as a citizen of the market in which it operates.

The issue of a home country is still important in the firm’s conduct, but it will gradually fade.

Corporate alliances and networking circle the globe and eventually render corporate boundaries obsolete.

Managers eventually recognize that every person, even in the remote corner of the world, is a potential customer.

Corporate involvement in a societal and environmental issues is a good business practice and a source of business advantage.

Instant transmission of information to most of the world’s regions sensitizes people to issues that are global in nature and induces them to demand no less then the best quality, price, and services.

NGOs’ involvement in solving social, economic, and political problems compels governments and business organizations to cooperate and tackle issues that seem to be local but often have consequences beyond national borders.

The national-state as an entity is not in danger of collapsing in the near future; rather, it is assuming new functions that are in line with globalization trends and the principal of the civil society.

Intellectual, political, and cultural entities, especially in industrial countries, have a stake in advancing their conceptual designs for the world.

There are no inherent contradictions between global integration and increasing awareness of social, ethnic, and religious identity, among many segments of the world’s populations.

Liberalization was reinforced by the conclusion, in 1994, of the Uruguay Round of multilateral trade negotiation and the establishment of the World Trade Organization and as nations and investors alike have acquired confidence in and are motivated by its mission, objectives and procedures.

Liberalization policies have significantly widened the effective economic space available for producers and investors.

Liberalization is endangered by the rise of national protectionism and the use of economic sanctions by the leading economic powers.

Since the 1950s, trade has been expanding faster than world output. In fact, world GDP and trade grew at ostentatious rates in 1997 despite the Asian financial crisis.

The share of advanced industrial countries in world FDI inflows and outflows was about 72 and 92 percent respectively.

International corporations are the most important instruments for global trade and investment.

The dominance of advanced industrial countries in world economic activities reflects historical patterns initiated since the industrial revolution and that these countries offer competitive conditions for firms to expand and grow.

One of the most volatile forces in the past two decades has been capital flows.

By the end of the 1980s, many governments abandoned capital controls, and fixed currency rates were determined more by markets than by states.

Governments appear unwilling if not unable, to a large extent, to regulate capital movements.

Substantial capital flows, in recent years have reached more countries and come in more diverse forms and instruments than ever before.

Some experts argue that the 1997-1998 financial crisis does not differ from the earlier crisis, such as one that the United States experienced in 1842.

The Marshal plan was introduced and the Bretton Woods agreement created the World Bank and the IMF to enhance development and stabilize the crisis.

Bankers and Investors showed, in the last decade, a sudden interest in the developing countries.

Availability of Financial Information enables people to trade huge amounts of short-term flows.

Most of the loans were short term in nature (up to one year). There has been a gradual decline in the share of the public sector in total loans.

Commercial banking in the major industrial countries was under pressure, due to deregulation, to find alternative sources of business to increase return.

The globalist economic philosophy’s attribution of a divine design to the unregulated play of the market is not a rationally defensible position.

While we talk of financial crisis across the world, 1.3 billion people live on less than $1 a day; 3 billion live on under $2 a day; 1-3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to power.

The starting point for the establishing appropriate programs to cope with the financial, economic, and social crisis is to enlist the contributions of NGOs and other grassroots associations that have allegiances to global causes.

The issues of sovereignty and aspiration for supremacy of others competitors render many of the US world projections and designs far from realistic.

The world seems to move from economic and possible technological competition between countries toward a competition between ideas and values.

The state was evolved to perform various functions (e.g. security, economics, international relations, and politics social relations.

The rise of nationalism and liberation movements among CDSs and increasing worldwide awareness of the extend of the damage that had been inflicted upon CDs forced many colonial countries to change their courses of action.

Sassan (1993) and Sauer-Thompson and Smith (1996) maintain that globalization weakens national boundaries and the power of national and subnational communities.

Government policies and priorities are likely to remain differentiated from each other. As such, states may assume new roles in conducting their affairs.

Emerging global organizations have been gradually displacing and assuming some functions of the sovereign state. A corner stone of globalization thinking is the commonality among people across cultures and borders.

The most noticeable structured integration and change, however, is taking place in the world economy and in world culture.

In conducting their affairs, organizations assume various roles and pursue diverse activities. Globalization intensifies and widens such involvement.

The challenges that firms face come from business and non-business rivals alike.

Several dimensions related to organizational conduct and involvement can be identified: trade (business), international relations, organizational, intellectual and moral.

The Body Shop claims that defending human rights around the globe “embodies our conviction that business should be about social responsibility as well as profit.”

In terms of structuring organizational functions and activities, globalization induces a profound realignment.

The intellectual component is a product of contradictory trends; integration and differentiation at the global “societal” level and intense competition and cooperation at the firm level.

Practitioners have always sought to enhance public image and involvement in social activities as necessary conditions for strategically positioning a firm in the market place.

One of the most pressing arguments is that the global free-market economy, caring, loyalty, and moderation are not priorities as gains are privatized to the benefits of the power holders, and costs are socialized by charging them to those who have no political or economic power.

The most important challenge for twenty-first century is to engineer a new balance between the market and society-one that will continue to foster the creative energies of private enterprises without eroding the social foundation of cooperation.

It seems that business leaders, rather than scholars, are taking the lead in highlighting some crucial dimensions (e.g. intellectual, international relations) in their discourse and conduct.

Develop marketing and/or production strategies that span nation-state borders to maximize the use of its resources and skills.

It is generally accepted that as a pact evolves toward protectionism (discriminating against nonmembers) and moves to take advantage of its market size and comparative advantage, regionalism constitutes a setback to worldwide market liberalization efforts.

RTPs are assumed to either create trade (specialization and competition induce higher productivity and stimulate demand for good and services from within or outside the pact) or divert trade (increasing intrapact trade at the expense of international trade).

Existing RTPs have two things in common: a tendency to structure their economies behind projectionist barriers and to have free trade within the pacts but protectionism toward nonmember countries.

Currently there are more then thirty-three RTPs involving more than 120 countries on all continents.

In today’s world of instant communications and rapid knowledge transfer, along with low transportation costs, geographic proximity is not an overriding factor for ensuring the success of the RTPs.

Cultural differences tend to be more limited and prospects for interconnectedness and assimilation tend to be enhanced.

Similar outlooks and expectations regarding trade and economic systems stimulate cooperation and produce effective negotiations to deal with issues significant for RTPs.

Countries that lack demographic institutions and the political will to make RTPs operational have failed to make reasonable progress in the quest for building sound regional trade.

Regional integration is seen as a popular pursuit and offers these regimes an opportunity to improve the public image.

RTPs are not a unified concept and cannot by themselves be the organizing principal for a new economic global order.

One of the most significant fears among trade observers is that though the discrimination within the RTPs is not permitted, it is tolerated against outsiders.Regional trade pacts are often viewed as necessary mechanisms for trade liberalization, as driving forced that motivate members of the trade pacts to engage in global bargaining and focus on the most urgent and serious trade problems.

RTPs also enhance global vision by strengthening the common elements while maximizing the negative impact of ongoing trade disputes.

A common perception exists among ordinary and intellectual individuals, especially in the CDSs, that globalization has drifted from its natural path and many have been left out.

The gap between rich and poor is increasing both within and between the countries around the globe.

Globalization has reduced the power of individuals and communities to shape their destinies.

Operating in an open, competitive market is a prime vehicle for ensuring that the best producers of goods and services have access to markets and that consumers have plenty of choices, thereby maximizing their welfare.

One of the most intriguing phenomena in the globalization of the economy is the rise and evolution of global corporations.

Modern firms (e.g. transnational corporations, or global corporations) operating across borders are different from traditional world companies, be they colonial trading or resource extraction companies.

Today’s companies are not necessary extensions of colonial powers and domination; likewise, they are not blindly motivated to control natural resources of other nations.

At least 53,607 firm operate across borders, which have about 44,917 worldwide affiliates.

Export of foreign affiliates more than doubled between 1982 ($732 billion) and 1994 ($1,850billion).

The ratio of FDI stocks in 1997 to world GDP was 21 percent.

Firms have increasingly used cross border agreements (e.g. joint ventures, licensing, franchising, etc.)

Firms operating across borders directly employ more than 73 million people in nonagricultural activities worldwide.

Cross-border mergers and acquisitions (M&A) have become a major mode of investment by major corporations.

Service firms have become increasingly involved in the globalization of the world economy.

In practice, there are considerable variations in the way that firms perceive themselves.

Unilever, however, differentiates between an international and a global firm in terms of strategy.

Some experts have a tendency to refer to MNCs as global corporations.

Generally, scholarly literature on the organizational forms of corporations operating on a global scale can be classified in terms of orientation, strategy, structure, and networking and alliances.

Global organization operates in a “borderless world” that does not focus primarily on its home country.

Global organizations play a crucial role in internalizing the challenge of globalization.

Global corporations have three major characteristics-inner security, inner direction, and inner coherence.

Domestic firm is a firm that operates only in a local market.

MNC- the Company views itself as a collection of relatively autonomous subsidiaries operating in two or more countries.

International firm, because of its senior managers’ orientations, type of business, or the extent of operations, does not show any sensitivity to variations in international markets.

Worldwide company is a company that has, for the most part, largely standardized its products and operations all over the world.

Global corporations are those that internalize globalization’s challenges. These corporations have a culture that reconciles, in their mission and operations, contradictions that are common among TNCs and MNCs.

Global corporations think of everything they do in term of the entire world and capitalize on ideas everywhere; produce stronger world-class technology; and access the most qualified people.

Some of the benefits that global corporations appear to gain by globalization are: networking, revitalization and growth, and world citizen image.