Slide- CH 15

• Globalization


  Process of decreasing constraints on the interactions among the nations and peoples of the world
• Economic globalization


  • Integration of fragmented markets into a global economy
• Political globalization


  • Process by which world power relationships change, and there is a loss of sovereignty by the states
• Social or cultural globalization

  • Emergence of a worldwide cultural system
• Implications of globalization for business

  • Damage to environment
  • Support for oppressive regimes
  • Criticism of marketing practices
  • Arms trade
  • Treatment of employees in developing countries
  • Indigenous Peoples attempt to regain control over ancestral lands
  • Genetic modification of plants and animals
  • Corruption, bribery and questionable payments
• Globalists' arguments


  • Trade is encouraged as it leads to the most efficient production of goods and services from which all gain
  • Private corporations and open markets provide better goods and services to society
  • Opportunities for employment and higher incomes are enhanced in developing countries
  • The standard of living has increased in most developing countries
  • The transfer of capital, technology, intellectual property, and even skilled labour occurs
  • Several stakeholders benefit, including owners, consumers, suppliers, and employees
  • Cost of living reduced in developed countries
• Anti-globalists' arguments


  • The expansion of global corporations is undesirable as decisions are based on profit-making or greed
  • Conspiracies exist between corporations and governments resulting in any benefits being received by a few
  • Unemployment is created in developed economies
  • Poverty and inequality increases in the developing economies
  • Periodic financial crises are caused disrupting the economies of many countries
  • There is destruction of local environments as standards are lowered to attract developments
  • The cultures of societies are lost or changed
  • Human rights are violated, in particular in relation to sweatshops
  • Questionable payments are made to governments or their officials to facilitate business
  • Intellectual property is not respected
  • The sovereignty of nations is undermined
  • Worldwide organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization have too much influence
• World Trade Organization (WTO)


  The only global international organization dealing with the rules of trade between nations
• Major trade agreements signed by Canada

  • North American Free Trade Agreement (NAFTA) – now called USMCA – Canada/USA/Mexico
  • Comprehensive Economic and Trade Agreement (CETA) – Canada and Europeans Union
  • Comprehensive and Progressive Agreement for Trans-Pacific Trade Partnership (CPTPP) – Canada and 10 countries in Asia Pacific region
• International Non-governmental Organizations (INGOs)


  Groups that hold shared values and attitudes about the issues relating to globalization and advocate for changes to improve conditions in developing countries
• INGOs


  • Put pressure on corporations and governments
  • Often opposed to globalization and excessive influence of multinational corporations
• Supranational institution


  International organization that transcends national boundaries where the member states share in decision making on particular issues pertaining to the members
• Important supranational institutions


  • World Bank
  • International Monetary Fund (IMF)
  • International Labour Organization (ILO)
  • World Trade Organization (WTO)
  • World Economic Forum (WEF)
• Ways globalization affects Canadian business

  • Pressure to forge international links
  • Must meet the challenges of global market restructuring as new trading agreements are completed by governments
  • Must attract more investment in plants that further process our natural resources
  • Must be competitive with those from other countries in order to also behave as responsible corporate citizens
  • More direct investment abroad
• Areas covered by global standards of conduct

  • Political factors
  • Sociocultural objectives and values
  • Disclosure of information
  • Competition
  • Financing
  • Employment and HR
  • Science and technology
  • Corrupt practices
  • Environmental protection
  • Stakeholder consideration
  • Corporate governance
• Global standards of conduct developed by international organizations


  • Caux Round Table: "Caux Principles of Business"
  • OECD "Guidelines for Multinational Enterprises"
  • "Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance"
  • Equator Principles (EPs)
  • United Nations' Principles for Responsible Investment (PRI)
  • United Nations Global Compact
  • Global Reporting Initiative (GRI)
• Challenges confronting Canadian business in the global economy

  • Presence of corruption
  • Respect for human rights
  • Use of sweatshop production
  • Reduction of poverty
• Corruption


  Abuse of entrusted power for private gain
• Bribery

  Making questionable payments, or bribes, to government officials to influence their decisions