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Another concern voiced by critics of globalization is diat today’s increasingly interdependent global economy shifts economic power away from national governments and toward supranational organizations such as the World Trade Organization, the European Union, and the United Nations. As perceived by critics, unelected bureau­crats now impose policies on the democratically elected governments of nation-states, thereby undermining the sovereignty of those states and limiting the nation-state’s ability to control its own destiny.

The World Trade Organization is a favorite target of those who attack the headlong rush toward a global economy. As noted earlier, the WTO was founded in 1994 to po­lice the world trading system established by the General Agreement on Tariffs and Trade. The WTO arbitrates trade disputes between the 159 states that are signatories to the GATT. The arbitration panel can issue a ruling instructing a member state to change trade policies that violate GATT regulations. If the violator refuses to comply with the ruling, the WTO allows other states to impose appropriate trade sanctions on the transgressor. As a result, according to one prominent critic, U.S. environmentalist and consumer rights advocate Ralph Nader:

[...] Under the new system, many decisions that affect billions of people are no longer made by local or national governments but instead, if challenged by any WTO member nation, would be deferred to a group of unelected bureaucrats sitting behind closed doors in Geneva (which is where the headquarters of the WTO are located). The bureaucrats can decide where or not people in Califomia can prevent the destruction of the last virgin forests or determine if carcinogenic pesticides can be banned from their foods; or whether European countries have the right to ban dangerous biotech hormones in meat ... At risk is the very basis of democracy and accountable decision making [...]

In contrast to Nader’s rhetoric, many economists and politicians maintain that the power of supranational organizations such as the WTO is limited to that which nation- states collectively agree to grant. They argue that bodies such as the United Nations and the WTO exist to serve the collective interests of member states, not to subvert those interests. Supporters of supranational organizations point out that the power of these bodies rests largely on their ability to persuade member states to follow a cer­tain action. If these bodies fail to serve the collective interests of member states, those states will withdraw their support and the supranational organization will quickly col­lapse. In this view, real power still resides with individual nation-states, not suprana­tional organizations.

15.6. Internet Practice:

15.6.1. Web Activities:

· While English is often referred to as the global language of business, companies are beginning to question this notion. Today, as businesses increasingly rely on the Internet for sales and customer service a new attitude toward language is emerging. Companies are realizing that doing international business requires juggling multiple languages. A local language infrastructure chances the United Parcel Service (UPS)[10] website, supporting the company’s belief that meeting the customer’s needs in the customer’s language is critical to success. In fact after translating its Asian websites, the company saw a 225 percent increase in usage of the site. Consider the Internet’s role in the globalization of business. Discuss how the Internet may not only be bringing people closer through its instant communication mechanism, but also be driving people apart as companies create websites designed for specific groups. Then, go to www.ups.com. Examine the home site and click on several of the international sites. Consider the costs of developing websites for individual countries or groups of individuals. Then consider the translation challenges facing companies as they consolidate information from their various international websites and deal with issues such as the use of local slang.

· The benefits of globalization are frequently touted by numerous parties. Companies are excited about the opportunities for greater profits presented by both the globalization of markets and the globalization of production. Consumers enjoy lower prices and a wider product line as a result of globalization. Governments recognize that globalization has brought increased levels of development in the forms of jobs and investment. However, some countries complain that globalization is not necessarily all good – that all countries are not sharing equally its advantages. According to several countries attending the recent U.N. World Summit for Sustainable Development, globalization means that the rich countries get richer, while the poor countries get poorer. Go to the UN website (www.un.org) and explore the perspectives of both rich and poor countries toward globalization. Consider issues related to the impact of globalization on jobs, wages, the environment, working conditions, and national sovereignty. Some poorer countries contend that richer nations, including the United States, are making little effort to spread the wealth brought about by globalization. Do you agree with this allegation? Should companies help poorer nations realize the benefits of globalization? If so, how?

15.7. Critical Thinking & Discussion Questions:

· Describe the shifts in the world economy over the past 30 years. What are the implications of these shifts for international businesses based in Great Britain? North America? Hong Kong?

· The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms. Evaluate this statement.

· How have changes in technology contributed to the globalization of markets and production? Would the globalization of production and markets have been possible without these technological changes?

· Ultimately, the study of international business is no different from the study of domestic business. Thus, there is no point in having a separate course on international business. Evaluate this statement.

· If current trends continue, China may be the world’s largest economy by 2050. Discuss the possible implications for such a development for: (a) the world trading system; (b) the world monetary system; (c) the business strategy of today’s European and U.S.-based global corporations.


[1] Daimler AG (formerly DaimlerChrysler) is a German multinational automotive corporation. Daimler AG is headquartered in Stuttgart, Baden-Württemberg, Germany. By unit sales, it is the thirteenth-largest car manufacturer and second-largest truck manufacturer in the world. In addition to automobiles, Daimler manufactures buses and provides financial services through its Daimler Financial Services arm. As of 2013, Daimler owns or has shares in a number of car, bus and truck marques including Mercedes-Benz, Mercedes-AMG, Smart, Freightliner, Western Star, Thomas Built Buses, Setra, BharatBenz, Mitsubishi Fuso, as well as shares in Denza, KAMAZ, Beijing Automotive Group, Tesla Motors, and Renault-Nissan Alliance. At the end of 2012, the company closed the Maybach marque.


[2] William Jefferson “Bill” Clinton (born William Jefferson Blythe III; August 19, 1946) is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation. Clinton has been described as a New Democrat. Many of his policies have been attributed to a centrist Third Way philosophy of governance.


[3] Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City. Citigroup was formed from one of the world’s largest mergers in history by combining the banking giant Citicorp and financial conglomerate Travelers Group in October 1998 (announced on April 7, 1998). The year 2012 marked Citi’s 200th anniversary. It is currently the third largest bank holding company in the United States by assets. Its largest shareholders include funds from the Middle East and Singapore.

[4] B & S Aircraft Alloys Incorporated has been a highly recognized supplier of Titanium, Nickel, Aluminum, Stainless and other high temperature metals including Exotic and commercial alloys primarily used by the aircraft and aerospace industries as well as the petro-chemical, steam turbine, and electro-mechanical fields.

[5] The Nikkei 225 more commonly called the Nikkei, the Nikkei index, or the Nikkei Stock Average is a stock market index for the Tokyo Stock Exchange (TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1950. It is a price-weighted index (the unit is yen), and the components are reviewed once a year. Currently, the Nikkei is the most widely quoted average of Japanese equities, similar to the Dow Jones Industrial Average. In fact, it was known as the “Nikkei Dow Jones Stock Average” from 1975 to 1985. The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949. Since January 2010 the index is updated every 15 seconds during trading sessions.

[6] The peso (sign: $; code: MXN) is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 15th–19th century Spanish dollar, most continuing to use its sign, “$”. The Mexican peso is the 8th most traded currency in the world, the third most traded in the Americas (after the US Dollar and Canadian Dollar), and the most traded currency in Latin America. The current ISO 4217 code for the peso is MXN; prior to the 1993 revaluation, the code MXP was used. The peso is subdivided into 100 centavos, represented by “¢”. As of January 27, 2014 the peso’s exchange rate was $18.3763 per euro and $13.4408 per U.S. dollar.


[7] Airbus SAS is an aircraft manufacturing division of Airbus Group (formerly EADS). Based in Blagnac, France, a suburb of Toulouse, and with significant activity across Europe, the company produces approximately half of the world’s jet airliners. Airbus began as a consortium of aerospace manufacturers, Airbus Industrie. Consolidation of European defence and aerospace companies in 1999 and 2000 allowed the establishment of a simplified joint-stock company in 2001, owned by EADS (80 %) and BAE Systems (20 %). After a protracted sales process BAE sold its shareholding to EADS on 13 October 2006.


[8] The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. According to its preamble, its purpose was the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis”. It was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1948 and lasted until 1993, when it was replaced by the World Trade Organization in 1995.

[9] The Charter of the United Nations is the foundational treaty of the international organization called the United Nations. It was signed at the San Francisco War Memorial and Performing Arts Center in San Francisco, United States, on 26 June 1945, by 50 of the 51 original member countries (Poland, the other original member, which was not represented at the conference, signed it two months later). It entered into force on 24 October 1945, after being ratified by the five permanent members of the Security Council – the Republic of China (later replaced by the People’s Republic of China), France, the Union of Soviet Socialist Republics (later replaced by the Russian Federation), the United Kingdom, and the United States – and a majority of the other signatories.

[10] United Parcel Service of America, Inc., typically referred to as UPS, is an American global package delivery company headquartered in Sandy Springs, Georgia, United States in Greater Atlanta. It delivers more than 15 million packages a day to more than 6.1 million customers in more than 220 countries and territories around the world. UPS is well known for its brown trucks, internally known as package cars (hence the company nickname “Brown”). UPS also operates its own airline based in Louisville, Kentucky.


Date: 2014-12-21; view: 1448

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