Chapter 14
Globalization and Business
By Boundless
![Thumbnail](../../../../../figures.boundless-cdn.com/11339/square/500px-silk-road.jpg.jpg)
Globalization is the process by which the international exchange of goods, services, capital, technology and knowledge becomes increasingly interconnected.
Globalization has lead to valuable, world-wide cross-cultural understanding and the fruitful exchange of products and ideas.
![Thumbnail](../../../../../figures.boundless-cdn.com/34207/raw/e2pkh7sqlabcvfluknwg.jpg)
The increasing rate of global economic and cultural exchange has resulted in a variety of developmental challenges.
Trade barriers are government-induced restrictions on international trade, which generally decrease overall economic efficiency.
![Thumbnail](../../../../../figures.boundless-cdn.com/1296/square/125523970-e3ef82703a-b.jpeg)
Despite international trading laws and declarations, countries continue to face challenges around ethical trading and business practices.
![Thumbnail](../../../../../figures.boundless-cdn.com/29751/square/hofstede example for boundless.jpg)
It is typically more difficult to do business in a foreign country than in one's home country due to cultural barriers.
![Thumbnail](../../../../../figures.boundless-cdn.com/32030/square/abpissuqtexkzkvsjiag.jpg)
Standards-related trade measures, known in WTO parlance as technical barriers to trade play a critical role in shaping global trade.
![Thumbnail](../../../../../figures.boundless-cdn.com/15192/square/kitalogo.jpeg)
Some argue that imports from countries with low wages has put downward pressure on the wages of Americans and therefore we should have trade barriers.
![Thumbnail](../../../../../figures.boundless-cdn.com/12816/square/storck-harbour-scene.jpeg)
Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency.
![Thumbnail](../../../../../figures.boundless-cdn.com/2037/square/pean-communities-1973-1992.jpg)
A common market is the first stage towards a single market and may be limited initially to a free trade area.
![Thumbnail](../../../../../figures.boundless-cdn.com/4275/raw/us-exportimportbank-seal.jpg)
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government.
![Thumbnail](../../../../../figures.boundless-cdn.com/2036/square/nal-monetary-fund-building.jpeg)
The IMF seeks to promote international economic cooperation, international trade, employment, and exchange rate stability.
![Thumbnail](../../../../../figures.boundless-cdn.com/4272/raw/orthographic-projection-29.jpg)
NAFTA is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
![Thumbnail](../../../../../figures.boundless-cdn.com/4274/square/world-bank-building.jpeg)
The World Bank is an international financial institution that provides loans to developing countries for various programs.
![Thumbnail](../../../../../figures.boundless-cdn.com/2035/raw/european-union.jpg)
The European Union (EU) is an economic and political union made up of 27 member states that are located primarily in Europe.
![Thumbnail](../../../../../figures.boundless-cdn.com/4273/raw/apec-members-180e.jpg)
APEC is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region.
![Thumbnail](../../../../../figures.boundless-cdn.com/4271/square/wto2005.jpg)
The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement regulating international trade.
Countertrade is a system of exchange in which goods and services are used as payment rather than money.
![Thumbnail](../../../../../figures.boundless-cdn.com/4280/square/c5-2e6d-4e2e-a38a-54a8a54be8a4.jpeg)
FDI is practiced by companies in order to benefit from cheaper labor costs, tax exemptions, and other privileges in that foreign country.
![Thumbnail](../../../../../figures.boundless-cdn.com/34376/square/94gawcw1s0gu2pcflmu8.jpg)
Franchising enables organizations a low cost and localized strategy to expanding to international markets, while offering local entrepreneurs the opportunity to run an established business.
![Thumbnail](../../../../../figures.boundless-cdn.com/16305/raw/ford-logo.jpg)
With the advent of improved communication and technology, corporations have been able to expand into multiple countries.
![Thumbnail](../../../../../figures.boundless-cdn.com/16328/square/ldwide-offshoring-business.jpeg)
Offshoring entails a company moving a business process from one country to another.
![Thumbnail](../../../../../figures.boundless-cdn.com/15912/square/sony-ericsson-sign.jpeg)
In a joint venture business model, two or more parties agree to invest time, equity, and effort for the development of a new shared project.
![Thumbnail](../../../../../figures.boundless-cdn.com/14589/square/business-20outsourcing.jpg)
Outsourcing business functions to developing foreign countries has become a popular way for companies to reduce cost.
![Thumbnail](../../../../../figures.boundless-cdn.com/30908/square/800px-singaporeport1.jpeg)
Imports are the inflow of goods and services into a country's market for consumption.
When considering strategic entry into an international market, licensing is a low-risk and relatively fast foreign market entry tactic.
![Thumbnail](../../../../../figures.boundless-cdn.com/16348/square/ss-corporation-manufacture.jpeg)
In contract manufacturing, a hiring firm makes an agreement with the contract manufacturer to produce and ship the hiring firm's goods.
![Thumbnail](../../../../../figures.boundless-cdn.com/4276/square/8c-4d24-4571-b8a4-da0718bda0b9.jpg)
Exporting is the practice of shipping goods from the domestic country to a foreign country.