Chapter 1 Assignment

1. 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?

Over the last 30 years, there has been a shift away from a world in which national economies were relatively self-contained entities, isolated by barriers to cross-border trade and investment, and by national differences in government regulation, culture, and business systems; and moving toward a world where barriers to cross-border trade and investment are declining, material cultures are becoming similar, and national economies are merging into an integrated, interdependent global economic system.
As companies from Japan and emerging markets like China play a more vital role in the world economy, the dominance of companies from the United States and Western Europe has diminished. Significant implications for British firms involve looking beyond Europe and America for investment and opportunities. Consumer spending power is growing quickly in developing countries. For North American companies, the same holds true, although the importance of the growing prosperity in Latin America suggests a potentially huge market in “their backyard.” Hong Kong is perceived as the gateway to the immense market of mainland China. Since Hong Kong firms are now less taken for granted, access to China is improving along with the move towards a market economy within China. International businesses based in all three locations are facing new opportunities and threats.

2. "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.

Globalization is changing the world economy. Firms, even small ones, can no longer