Discussion: Globalization and Investment
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We are all familiar with the factors of production: land, labor, capital and natural resources. (Some people believe that technology is a fifth factor.) All of these factors except for land are mobile or can be moved from one nation to another. We simply cannot pick up a piece of land and move it to another country but we can move the labor supply, the natural resources needed, and the capital or funding needed for production.
Moving capital to other countries (through Foreign Direct Investment - FDI - or portfolio investment - is at the core of globalization and international trade. It's very easy for companies to invest internationally.
Labor regulations, supplies and demands contribute greatly to production costs. Companies most often operate under a production model where the company has an obligation to produce goods where the cost is the lowest. For example, if it is less costly to produce a cotton sheet in Vietnam, then the company will move production to Vietnam. This production model is cost efficient and allows more consumers - on a global basis - to afford to purchase more products. They also believe that this model allows economic gain in developing nations. Other people believe that this model hurts employment in the home country by sending jobs (and money) overseas.
You overhear your superior tell another manager in the company: "I'm tired of our nation's companies sending manufacturing jobs abroad and offshoring service work to lower-wage nations. Don't any of them have any national pride?" The other manager responds, "I disagree. It is every company's duty to make as much profit as possible for its owners. If that means going abroad to reduce costs, so be it."
•Do you agree with either of these managers? Explain and defend your position.
•As part of your argument, find an article on the Internet that describes a company's decision to relocate some or all of its business operations (goods or services). - Describe this situation and summarize your findings.
- Respond to the following questions:
* What reasons are stated for the relocation?
* Was any consideration given to employees who might be put out of work?
* Was any consideration given to containing costs for its consumers?
* Was the company justified in relocating?
Assignment
1.There are several methods that governments use to restrict unwanted trade. Explain and distinguish between the following methods:
a.Tariff
b.Quota
c.Embargos
d.Sanctions
e.Currency controls
2.Define "Eclectic Theory" and explain how this theory affects Foreign Direct Investment.
Requirements
This lab assignment relates to information found in the textbook and through your research.
1.Use a cover page and a reference page as needed. Write in complete sentences.
2.Justify and support your responses, using information found in your text and through research. If you are asked to "discuss" a topic, give your opinions and conclusions based on information found in your text and through research.
3.Avoid copying text directly from the textbook. This is considered plagiarism and is not acceptable. Your answers must be written in your own words; however, it is understood that you will use information from your textbook.