September 2, 2014
The World is Exceedingly Interconnected
INTERPRETATION: Any place highlighted in white, yellow, or orange can be reached within a matter of hours (less than a day) using “ground” travel (road, rail, or river) from the nearest major city. Those that are darker reds and blacks take longer than a day.
TIDBIT: World’s most remote place is on the Tibetan plateau. It takes a three-week trip (one day by car, 20 on foot) from the nearest city.
Road to where?
Who is benefiting the most from globalization?
US is losing, while others are gaining
National Sovereignty and Cultural Identity
Critics of globalization argue:
Loss of National Identity (undue influence of WTO, Worldbank, IMF)
Imposing Western values as “universal” (cultural imperialism)
Supporters of globalization argue:
Interaction across boundaries leads to the mixing of cultures in particular places and practice
Is leading to greater appreciation of cultural differences in developed countries (e.g., culinary diversity, entertainment – movies and music)
Tangibility -physical object, can touch
Storability-can be preserved
Seperability- how much you can separate the goods from the service
Homogeneity- it’s the same
Examples: Toys, automobiles, and shoes
Types of Service
Examples: Computer software, advertising, and equipment leasing
Characteristics: Tangibility, storability, separability, homogeneity, depends on physical object for storage and export
Can divide the production and the consumption of what you’re doing
Examples: Restaurants, hotels, health care (hospitals)
Characteristics: Intangibility, perishability, inseparability (you have to be where the service is provided), heterogeneity (there are differences with each case)
There is no export option for soft service, you don’t have to worry about losing these jobs to other countries. Ex. Frandgchies
Soft Service requires simultaneity of production and consumptions
Requires physical proximity between he service provider and the consumer. No export option.
Factors of production
Land- any natural resource: farm land, water, climate, etc.
Labor – what your minimum wage is, while taking into account how much people work
Entrepreneurship-creative ideas, decision making, management (ex. hiring engineers)
Collectivist- good of the whole
Totalitarianism- ex. someone elected democratically, but then the elected official dictates how things will be
Democracy and Totalitarianism
In most totalitarian regimes there is widespread political repression there are no free and fair elections media is censored basic civil liberties are denied challenges to the regime are prohibited
Usually totalitarian regimes are characterized by widespread political repression, a lack of free and fair elections, censored media, and a lack of basic civil liberties. It’s also hard to challenge this type of regime. You may recall hearing about Google’s problems in China for example. Google would like to provide Chinese citizens with the same search results it provides to citizens in democratic countries like the United States, but is finding that its efforts to do so are hampered by restrictions from the Chinese government.
Property Rights and Corruption
Finland has least corruption
Remember, that this type of corruption is present in every country, but it’s much more prevalent in countries with weak legal systems. Transparency International, a nonprofit organization that fights corruption, ranks Finland and New Zealand as some of the least corrupt nations in the world, and Bangladesh and Nigeria as being among the most corrupt.
Why is this important for companies? Most companies will be significantly more cautious when doing business in countries with high levels of corruption. This can be quite