Global Business Today 6th Edition by Charles Hill

Question

Global Business Today 6th Edition by Charles Hill

Edition 6ISBN: 978-0071083812

Global Business Today 6th Edition by Charles Hill

Edition 6ISBN: 978-0071083812

Exercise 2

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

Explanation

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Over the last three decades, the national economies of the world have become more interconnected. Money, workers, goods and services all across national borders have become easier due to the collapse of the Soviet Bloc, less trade restrictions, and new technology such as the Internet. Companies and workers are facing increasing competition from India, Japan, Brazil, China, Mexico and other nations. Wages have driven down and some occupations have moved partly or in whole to nations with cheap labor, cheap land, cheap energy and/or less intrusive regulations. Businesses increasingly have found customers and suppliers from other nations. The World Economy is larger and more interconnected. Economic growth has gone up in many developing or undeveloped nations. The economic balance has shifted. Great Britain, a former superpower, has become less industrialized due to foreign competition from Brazil because now it has a smaller economy than Brazil. Britain has involved itself into free trade, becoming a member of both the Commonwealth of Nations (Britain's former empire)and the European Union. Businesses have many opportunities to outsource jobs to cheaper areas in Eastern Europe and India. Easy migration rules also allow British companies to recruit workers from places like Poland and India. London remains the world's most prominent financial center, but Singapore and Hong Kong are increasing in importance. Financial, Insurance, and other London white collar companies increasingly set up subsidiaries or strategic partnerships across the planet to diversify. North American companies benefit from a free flow of investment capital and ideas. The North American Free Trade Agreement has led to increased trade and outsourcing between Mexico, Canada, and the US. Restrictions on international labor flow in all three countries encourage illegal immigration and outsourcing. Many manufacturing, high tech, and green companies faced massive (often foreign government supported)competitive pressures from East Asia and Europe. Many companies collapsed, but others thrived, often by exporting to burgeoning foreign markets. There has also been in sourcing. International companies including Japanese car makers often move production to North America to decrease shipping costs or to generate political goodwill from the governments, which is still the world's largest market. Hong Kong is widely known as one of the most business friendly places in the world. It has free capital flows, free labor flows, non-existent trade barriers, and is one of the easiest places on earth to create a new business. This has enabled Hong Kong to grow from a barren rock to one of the fourth Asian Tigers. Honk Kong also benefits from ties with Britain's former empire, its access to China's market, and its location at the crossroads of the most economically dynamic areas over the last three decades. Hong Kong business is likely to grow in importance and reach.