Hill, Global Business Today, 12e

Hill, Global Business Today, 12e Chapter 1 Instructor’s Manual Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.1

Chapter 1: Globalization

Table of Contents Learning Objectives Chapter Summary Chapter Opening Activity Chapter Outline

Opening Case: Detroit Bikes

Introduction What Is Globalization?Did You Know Video Clip: Did You Know? Trade Tripled for the United States as a Percentage of GDP The Emergence of Global Institutions Drivers of Globalization Role of Technological Change The Changing Demographics of the Global Economy The Globalization Debate Managing in the Global Marketplace End-of-Chapter Resources Critical Thinking and Discussion Questions globalEDGE™ Research Task Closing Case: How the iPhone Is Made: Apple’s Global Production System Continuous Case Concept Additional Readings and Sources of Information

(Global Business Today, 12e Charles Hill) (Test Bank) (For Complete File, Download link at the end of this File) 1 / 4

Hill, Global Business Today, 12e Chapter 1 Instructor’s Manual Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.2 Learning Objectives 1-1 Understand what is meant by the term globalization.1-2 Recognize the main drivers of globalization.1-3 Describe the changing nature of the global economy.1-4 Explain the main arguments in the debate over the impact of globalization.1-5 Understand how the process of globalization is creating opportunities and challenges for management practice.

Chapter Summary This opening chapter introduces the reader to the concepts of globalization and international trade and provides an introduction to the major issues that underlie these topics. The components of globalization are discussed, along with the drivers of globalization and the role of the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization (WTO) in lowering trade barriers. The influence of technological change in facilitating globalization is also discussed, along with the role of multinational firms in international business.

The chapter also describes the changing demographics of the global economy, with a special emphasis on the increasingly important role of developing countries, especially China, in world trade. This discussion is complemented by a description of the changing world order, which was brought on by the collapse of communism in Eastern Europe and republics of the former Soviet Union. The chapter ends with a candid overview of the pros and cons of the trend towards globalization.

Chapter Opening Activity Conduct this activity during the first week of class, as an icebreaker.

After students introduce themselves, ask them what their aspirant professional job will be after graduation. Organize the responses into groups on the whiteboard: accountants, supply chain managers, ERP managers, business owner or entrepreneur, marketing and sales reps, etc. Then, ask what additional skills they will need to do those jobs with international customers, suppliers, and co-workers.

The idea is to help students understand they are unlikely to be successful unless they understand globalization and develop cultural competencies. Skills they might name include: comfortable with rapid change; can understand national cultural differences; can work in diverse cultures; can adapt to diverse management, leadership, and participation styles; can understand differences in intercultural communication; can build relationships, be a lifelong learner, and others.

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Hill, Global Business Today, 12e Chapter 1 Instructor’s Manual Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.3 Chapter Outline Detroit Bikes

opening case

Summary The opening case explores the globalization of the bike industry. In the 1970s, the United States produced some 15 million bikes every year. Bike 2018 however, about 95 percent of the bikes sold in the United States were assembled in China. China also produced much of the industry’s bike components, leaving U.S. bike companies to focus on design and marketing. In 2013, Detroit Bikes set out to change this trend and bring bike production back to the United States.This strategy has proved to be challenging, and even more difficult following Donald Trump’s trade war with China which targeted bike parts among other products for hefty tariffs. Detroit Bikes remains optimistic that its dream of American-made bikes will succeed, but for now, is pursuing a patchwork of strategic initiatives including importing parts from Vietnam and Taiwan to Canada, where the bikes would be assembled prior to shipping them to the United States.

Discussion Questions

• Discuss globalization and how the bike industry epitomizes the phenomenon. How has

globalization, and specifically the globalization of markets and production, changed the nature of the U.S. industry?

Globalization refers to a world where cultural differences between countries are disappearing, barriers to cross-border trade and investment are decreasing, communication and technology are rapidly advancing, and national economies are becoming globally integrated systems. In short, globalization suggests a more integrated and interdependent world economy. For the U.S. bike industry, globalization means that much of the industry has moved to Asia, and especially to China. Nearly every aspect of bike production, from sourcing of parts like tires and seats, to final assembly, now takes part in China. Indeed, U.S. companies looking to produce their product in the United States will find it difficult to acquire locally made parts and also labor skilled in bike production. At the same time, because labor costs are so much lower in China, consumers benefit from lower prices on imported bike. Paradoxically, this also means that a U.S. company like Detroit Bikes, that manages to produce its product domestically, will likely be less competitive, at least on price. Some students might note that because much of the world’s bike production takes place in Asia, disruptions to the global supply chain associated with the COVID-19 pandemic have been especially vexing for retailers, producers, and consumers.

• How has U.S. trade policy impacted Detroit Bikes? What does it mean for consumers? What

does it mean for the workforce at Detroit Bikes?

A country’s trade policy can often have unintended implications for companies. Bikes and bike parts were among the many products affected by Donald Trump’s ongoing trade dispute with China. And, while the policy was almost certainly not intended to hurt the domestic industry, in fact, the tariffs effectively raised prices for Detroit Bikes and also for consumers. To get around 3 / 4

Hill, Global Business Today, 12e Chapter 1 Instructor’s Manual Copyright © 2022 McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.4 the tariffs, Detroit Bikes has considered moving its production to Canada. This strategy, of course, would have a direct impact on its U.S. workforce and could also have local spillover effects. Moving production and assembly to Canada could be beneficial for consumers though, who would likely enjoy lower prices as well as more choice.

Teaching Tip: To extend the discussion, consider https://www.cnbc.com/2014/08/01/in- waterloo-wisconsin-a-passion-for-made-in-usa-bicycles.html.

CONNECT

Case Analysis

Detroit Bikes

Summary This activity focuses on globalization as it relates to the bike industry. In 2013, Detroit Bikes set out to reclaim bike production as an American activity. The task has proved to be much more difficult than anticipated, and challenges like the 25 percent tariffs on imported bike parts, imposed as part of Trump’s trade war with China, have forced the company to rethink its strategy.

Activity Students are asked to read a short case exploring the challenges faced by Detroit Bikes in its quest to produce its product in the United States and then respond to a series of questions related to the case.

Class Discussion Globalization has transformed some industries like bicycle production. Discuss why bike production moved to China, and why China has a competitive edge, not only in assembling bikes, but also in producing bike parts. Can Detroit Bikes produce a competitive product in the United States? How might the globalization of production and markets benefit Detroit Bikes in its endeavor? How might globalization be problematic?

Introduction

• Globalization refers to the trend towards a more integrated global economic system where

barriers to cross-border trade and investment are declining, perceived distance is shrinking thanks to advances in transportation and telecommunications, and material cultures are more similar across borders.

• The effects of globalization can be seen everywhere, from the cars people drive and the food

they eat to the jobs they have and the clothes they wear.

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