GLOBALIZATION AND INTERNATIONAL LINKAGES
Globalization is one of the most profound forces in our contem-porary economic environment, although support for free trade and open borders is not universal.
The practical impact of global-ization can be felt on all aspects of society, and effective man-agement of organizations in an increasingly complex global environment is crucial for success. In nearly every country, in-creasing numbers of large, medium, and even small corporations are engaging in international activities, and a growing percent-age of company revenue is derived from overseas markets.
Yet, continued economic and political uncertainties in many world regions, the rise of more nationalistic political movements, and continued concerns about the impact of immigration have caused some to question the current system for regulating and overseeing international trade, investments, migration, and financial flows.
Nonetheless, international management—the process of applying management concepts and techniques in a multinational environment—continues to retain importance. Although globalization and international linkages have been part of history for centuries (see the International Manage-ment in Action box “Tracing the Roots of Modern Globalization” later in the chapter), the principal focus of this opening chapter is to examine the process of globalization in the contemporary world.
The rapid integration of countries, advances in informa-tion technology, and the explosion in electronic communication have created a new, more integrated world and true global com-petition. Yet, the complexities of doing business in distinct mar-kets persist.
Since the environment of international management is all-encompassing, this chapter is mostly concerned with the economic dimensions, while the following two chapters are focused on the political, legal, and technological dimensions and ethical and social dimensions, respectively. The specific objectives of this chapter are
1. ASSESS the implications of globalization for countries, industries, firms, and communities.
2. REVIEW the major trends in global and regional integration.
3. EXAMINE the changing balance of global economic power and trade and investment flows among countries.
4. ANALYZE the major economic systems and recent devel-opments among countries that reflect those systems.
The World of International Management An Interconnected World
On the morning of April 10, 2018, Facebook founder and president Mark Zuckerberg, dressed in a suit and tie rather than his typical gray T-shirt and hoodie, headed to the Hart Senate Office Building in Washington, D.C. Surrounded by intense media coverage, Zuckerberg was facing perhaps the most serious and high-profile crisis in his young company’s history: a breach of data privacy for nearly 90 million Facebook users.
The trouble for Facebook began back in March 2018, when it was revealed that Aleksander Kogan, a university research as-sociate, and Cambridge Analytica, a British political consulting firm, had released a third-party Facebook application called “This Is Your Digital Life.” Although the application itself was simply a personality quiz, users of the application unknowingly enabled Cambridge Analytica to collect detailed information from their Facebook profiles.
Personal information such as home location, current city, interests, and birthdates was gathered from users of the application, as well as from their Facebook friends. Only a few hundred thousand people actually downloaded the application, yet 87 million people had their personal data compromised.
Using the information gathered through the application, Cambridge Analytica was able to profile Facebook users based on personality, age, location, and interests. These users could then be targeted with political advertisements that would be more likely to influence their political opinion. Even before the Cambridge Analytica scandal was revealed in March 2018, Facebook was already facing serious integrity issues and eroding public trust due to its lack of content control and oversight.
The Russian government’s utilization of social me-dia to interfere in the 2016 U.S. presidential election, including the spread of misinformation, went unchecked and unrestricted by Facebook. More than 3,000 advertisements and 80,000 posts, originating from Russian-based operatives and designed to incite political divisions, were posted to the site in the two years prior to the election. Facebook first estimated in October 2017 that up to 10 million users had been targeted by Russian-purchased election advertisements but later confirmed that as many as 125 million U.S. users could have seen posts or adver-tisements from Russian-based operatives.
After reading chapter 1 , you should have in mind some of the downsides of globalization. In 1-2 pages, identify and briefly discuss what you feel are the downsides.
