ADM 3318 Lecture Notes - Lecture 1: General Agreement On Tariffs And Trade, North American Free Trade Agreement, World Trade Organization

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11 Jan 2017

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Lecture 1

Started during the colonization so 1800s

More people came to North America then than today

Stopped at World War 1 - implementation of measures to filter who got in or not

More and more restrictions were put in place

1947 - General Agreement on Tariffs and Trade

3 key players

• Multinational companies (also true in the 1800s)

• Small businesses and entrepreneurs - small companies and individuals that are becoming

increasingly active in international trade and investments

• Born Global Firms - adopts a global perspective and engages in international business

Globalization - trend toward greater economic, cultural, political and technological

interdependence among national institutions, organizations and economies

Globalization of markets: convergence in buyer preferences in markets around the world

Globalization of production: dispersal of production activities worldwide to minimize cost or

maximize quality

Benefits of global market

• reduces marketing costs - ex: Head and Shoulders - the product is mostly the same, the

packaging is the same, as is the branding. costs include translating the package —> large

market but marketing costs low since shared between all new market

• creates new market opportunities

• levels income stream

Global sustainability: three markets, three strategies

• developed markets - 1 billion people (North America, Europe, etc.)

• emerging markets - 2 billion people (China, Brazil, India, Russia, South Africa)

• traditional markets - 4 billion people

Benefits of global production

• lower cost labor

• technical expertise

• production inputs

Companies can access workers and resources in favorable business climates almost anywhere in

the world

What benefits might companies obtain from the globalization of markets and the globalization of

production?

Globalization drivers

• remove barriers to trade and investment

◦ GATT

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Document Summary

More people came to north america then than today. Stopped at world war 1 - implementation of measures to filter who got in or not. More and more restrictions were put in place. 1947 - general agreement on tariffs and trade. Globalization - trend toward greater economic, cultural, political and technological interdependence among national institutions, organizations and economies. Globalization of markets: convergence in buyer preferences in markets around the world. Globalization of production: dispersal of production activities worldwide to minimize cost or maximize quality. Global sustainability: three markets, three strategies: developed markets - 1 billion people (north america, europe, etc. , emerging markets - 2 billion people (china, brazil, india, russia, south africa, traditional markets - 4 billion people. Benefits of global production: lower cost labor, technical expertise, production inputs. Companies can access workers and resources in favorable business climates almost anywhere in the world. Globalization drivers: remove barriers to trade and investment.

Related Questions

2. Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects:

	a slowdown in global economic activity.
	the increasing share of the U.S. in the total FDI stock.
	the decline in cross-border flows of foreign direct investment.
	the increasing internationalization of business corporations.

3. Globalization is criticized because it increases the power of _____.

	governments to own enterprises
	unskilled labor to form labor unions
	supranational organizations over nation-states
	nation-states to regulate markets and reduce competition

4. Which of the following is NOT a consequence of the reduction in trade barriers and restrictions on FDI since 1950?

	Firms are dispersing parts of their production process to global locations to drive down production costs and increase product quality.
	The economies of the world's nation-states are becoming more intertwined.
	Nations are becoming more independent of each other for important goods and services.
	The world has become significantly wealthier since 1950.

5.A common law system is different from a civil law system because:

	a common-law system is based on religious teachings, while a civil law system is based on cultural traditions.
	a common-law system is very rigid, while a civil law system tends to be more flexible.
	in a common law system, a judge relies on legal codes to make rulings, while in a civil law system a judge relies on his intuition and moral reasoning to make judgments.
	in a common law system, a judge has the power to interpret the law, while in a civil law system a judge has the power only to apply the law.

7. Which of the following areas of international trade is regulated by the Foreign Corrupt Practices Act?

	Making and performing commercial contracts in international trade.
	Preventing bribery and unethical acts in the conduct of international business.
	Establishing a set of safety standards to which a new product must adhere.
	Controlling the mafia activity that hinders trade in Russia, Japan, and the U.S.

8. Which of the following is a measure that is developed by the United Nations to measure the quality of life in different nations?

	Gross national income
	Human Development Index
	Purchasing power parity
	Gross domestic product

9. According to Hernando de Soto, which of the following factors is essential for the developing world to be able to reap the benefits of innovation and entrepreneurship?

	Detailed state planning
	Restricting direct investment by foreign enterprises
	Strong property rights
	Market regulation

10.Which of the following refers to the extent to which individuals can move out of the strata into which they are born?

	Caste stratification
	Class system
	Social mobility
	Individual potential

11.Which of the following is an example of ethnocentrism?

	A manager in India looks down upon his subordinates because they are from a lower caste, compared to him.
	An upper-middle-class woman talks rudely to a salesperson because she looks down upon individuals belonging to the working-class.
	An American manager criticizes the cultural practices of Saudi Arabia when he is sent there on business because it differs from his own cultural norms.
	A French business owner, who plans to expand his market to China, conducts a detailed cultural study of China to customize his marketing campaign.

13An international U.S. based company sets up a production unit in a developing country with poor environmental regulations. This contributes to:

	the noblesse obliges the situation.
	the inequity aversion.
	the global tragedy of the commons.
	the Friedman effect.

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ADM 3318 Lecture Notes - Lecture 1: General Agreement On Tariffs And Trade, North American Free Trade Agreement, World Trade Organization

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