Flashcards in Globalization Deck (9)
What are the major drivers of globalization 3.0 today? Why?
Individuals, Non-western people
-Advanced technology makes the world a much smaller place
-People in developing countries move into developed countries to seek a better life as immigrants.
1. How is globalization changed over the past few hundred years?
2. How will it change going forward?
1. (Thomas Friedman)
Military force drove global integration (often inspired by religion or imperialism, or a combination of both)
-Technological innovation in hardware
→Breakdown of Soviet system symbolized the end of this period
-Shrinking world scale (small to tiny)
-Global fiber-optic network
*1.0 and 2.0 driven by European and American and mostly companies. 3.0 by non-westerners and individuals
In firm strategy, profit determined by: (2 things)
- The amount of value customers place on firm’s goods or services
- Firm’s cost of production
Firm creates profit by
increasing value or lowering cost
Two basic strategies to create value and attain competitive advantage:
What is location economy and what are the benefits?
Realized by performing a value creation activity in an optimal location anywhere around the globe.
Can lower costs of value creation to enable low cost strategy and/or help in differentation of products from competitors.
Main drivers of Globalization
-reducing trading barriers
-free markets (market based economy)
Why has the US a relativly small trade intensity compared to other developed countries?
- US GDP is enourmos compared to the world GDP and People who live in the US ( 25 % of World GDP, 5 % of people)
- GDP is so high because of:
- no war damages
- Invention of liberalization of markets
- immigration ( the did not have to sell to other countries because everyone was coming to the US)
- very high consumption