Globalization Strategies Globalization and International Trade Positive Affects

+ Globalization Strategies

+ Globalization and International Trade Positive Affects: Outsourcing – other countries have cheaper resources (labor and materials) Lower Prices (Improved Human Rights? ) Increased Productivity Innovation (Better Jobs? ) Increased Capital Flow – Smaller companies can borrow because of connection to large international corporations.

+ Negative Effects of Globalization Lost Canadian Jobs Fear of job loss Loss of Canadian productivity – loss of comparative advantage because of labor cost Exploitation of Cheap Labour Increased Pollution Unhealthy Products – Spread of Fast Food? Tainted Products Spread of Disease – H 1 N 1, SARS, HIV/AIDS Increase in the income gap Influence of international corporations on governments

+ Corporate Globalization Strategies Global Strategy – The world is 1 big market and the product and its marketing should be uniform. Centralized location in home country. Strengths – allows companies to take advantage of economies of scale (savings gained by producing larger quantities), develop products faster and coordinate activities. Weaknesses – Lack of response to individual cultures, need for intense communication between countries

+ Multidomestic Strategy n Remember – Culture Matters. So corporations need to adapt to different cultures. Defined: Customizing products for local cultures. Decentralized decision-making to meet local needs. Strengths: increased product differentiation, greater responsiveness to local needs, local management is important. Weaknesses: Does not necessarily take advantage of economies of scale.

+ Transnational Strategy n Combines the best of local and global strategies. Attempts to respect the needs to the local market while maintaining the efficiencies of a global strategy. Strengths: Products are manufactured at the least expensive source, marketing and labour is derived from the local market. Can produce products cheaply, while employing management from local economies.

+ Trade Agreements n Countries to encourage globalization and trade engage with one another in trade agreements like NAFTA or the USMCA. n. A trade agreement is an enforceable treaty between two nations. This treaty allows corporations to operate in more than one country and to employ their strategy of choice.