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GDP and business cycle
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Management and Globalization Global Management Why companies go global How companies for global Global Business environments Global Business Types of global business Pros and cons of global businesses Ethnic Challenges for global business Culture and Global Diversity Cultural intelligence Silent language of culture Tight and loose cultures Values and national cultures Global Management Learning Are management theories universal? Intercultural competencies Global learning goals Key concepts of the challenges of globalisation: Global economy Resources, markets and competition are worldwide in scope Internationalisation The process of increasing involvement in international operations Globalization/Deglobalization Glob- the growing interdependence among elements in the global economy The worldwide interdependence of resource flows, product markets and business competition World 3.0 Different views: World flat vs. round Distance is a metaphor that represents the degree of dissimilarities between countries Balancing cooperation in the global Global Management Global management - managing things in different countries Managing business and organizations with interests in more than one country What do we expect from global Managers Knowing how to adapt Knowing the language Global Manager Is culturally aware and informed on international affairs International Business Conducting for-profit transactions of goods and services across national boundaries International Motive Why do firms internatioalize their activities Cheaper labour Labour tax Natural resources Enrolments to do business Clientele Exclusive materials Personal benefits: Taxes Reasons why businesses go global Customers Suppluers Capital During (1993) - 4 motive 1. Market seeking 2. Efficiency Seeking 3. Resource seeking 4. Strategic Asset Seeking Cuervo Cazurra, Narula and un (2015) - 4 motive s Internationalization Motives A company may also explore the opportunities in different markets in order to take advantage and in some cases extend the product life cycle What is a Market Entry Strategy Involves the sale of goods or services to foreign markets but do not require expensive investments Franchising Exporting and importing Involve the sale of goods or services to foreign markets but do Types of market entry strategies Global sourcing Exporting Importing Licensing agreement Franchising Types of Foreign Direct Investment (FDI) strategies: Joint venture Strategic alliance Owned Subsidiary (sometimes called WOS) How to go abroad What conditions will affect the decisions of firms on how to internationalize their activities? During (1978)- Eclectic paradigm OLI model OLI- Ownership, Location and Internalization Advantages Ownership advantages Resources owned by the organization that can be transferred across locations include trademarks, production techniques and processes, managerial skills and other resources not available to the competitors Location Advantages Represent the implications of choosing to produce or to perform activities in a specific location (country or region) Internalization Advantages: The ability to internalize or to incorporate activities that add value to its business Evolution of Concepts- New Elements Although economic factors are certainly important to explain the formation, growth and expansion of firms within and across national borders, they are not sufficient to explain the additional complexity when a firm decides to expand its activities across national borders Economic factors Investigate the economic elements that affect the internationalization of firms Behavioural Elements Explaining the additional challenges (and perhaps opportunities) a firm faces in foreign host countries when compared to indigenous (local) firms Behavioural theories Johanson and Wiedersheim-Paul (1975) and Johanson and Vahlne (1977) Included the psychic Distance concept (beckerman,1956) to explain the internationalization behaviour of firms The Uppsala internationalization model Psychic distance is: the sum of factors preventing the flow of infomatio from and to the market Psychic Distance is a broad concept that includes several elements such as: language, culture, political systems, level of education, level of industrial development Firms behave in a “Risk Averse” manner It means that when the perceived risk goes down, the firm increase its commitment to the foreign market \ The Haier Group Data Strategy Big DATA and Small DATA The use of small data to satisfy individual customers’ needs, however, the book mentions a huge cultural shock at the plant in Camden, south caroline Ex: top down, hard hat colors and hierarchy Culutral Differnces can have a huge impact on the internationalization of firms Kogut and Singh (1988)- Cultural Distance Index First statsical study on the implication of ciltiral distance to the selection of entry mode When investigating in culturally distant countries, foreign firms can choose to partner with foreign firms in order to gain local knowledge and share the risk associated to the investment (higher commitment = higher risk) How Companies Go Global Global sourcing The process of purchasing materials or services around teh world for local use Exporting Selling locally made products in foreign markets Importing Buying foreign made products and selling them domestically Exports correspond to what percentage of Candain GDP What countries are the major trending partners of Canada Management and Globalization How Companies Go Global Licensing Agreement One firm pays a fee for rights to make or sell another company’s products What are the potential risks associated to licesning The case of new balance in China Franchising A fee is paid for the rights to use another firms name, branding and methods Insourcing Insourcing: refers to local job creation that results from foreign direct investment Types of insourcing Joint ventures: operate in a foreign country through co-ownership by foreign and local partners Strategic alliances: A partnership in which foreign and domestic firms share resources and knowledge for mutual gains Foreign subsidiaries: local operation completely owned by a foreign firm Criteria for choosing a joint venture partner: Familiarity with your firm’s major business String local workforce Values its customers Future expansion possibilities Strong local market for partner’s own products Good Profit potential Sound financial standing Global business environments Legal and poliical systems Trade agreements and trade barriers Regional economic alliances Legal and political systems Differing laws and practices regards Business ownership Negotiation and implementation of contracts Foreign currency exchange Protection of intellectual property rights Counterfeit merchandise Political risk Potential loss in value of foreign investment due to instability and political changes in the host country Political risk analysis (expertise/experience) Forecast political disruptions that threaten the value of a foreign investment Changes in the rules of the game Brexit US Trade Wars-mexico-China Other examples Bolivia, Venezuela, China De-globalization The process of weakening interdependence among nations Trade Agreements and trade Barriers World trade organization Most favourd nation status Tariffs Nontariss barriers (quotes, restrictions, etc.) Protectionism Regional Economic Alliances USMCA (replacment for the NAFTA-North American Free trade Agreement) EU- European Union APEC- Aisa Pacific Economic Copperation ASEAN - Association of Southeast Asian Nationas SADC - Southern Africa Development Community MERCOSUR- Chapter 5- Global Management and Cultural Diversity (part 2) Review Types of global business Global corporation MNE (multinational enterprise) or MNC (multinational corporation) with extensive business operations in more than one foreign country Transnational corporation A global corporation that operates worldwide on borderless basis Some host country complaints about MNCs Host Country companits about MNCs: Excessive profits Interference with local government Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customers Examples - War in Ukraine Disruption in global -value chains and increased pressure and interference of MNCs with local government Fertilizer imports in Brazil (one of the major producers of agricultural commodities) We must consider the triple bottom line and the impact in society, the environment and the economy $2.5 billion invest in potash mine in Brazill What about Globalization gap Large multinationals adn industrilizednaitons gaining disporoportinonally form globalization Globalization gap: Large multinational and industrialized nations gaining disproportionally from Globalization Some MNC complaints about host countries MNC Complaints about host countries: Profiit limitations Laws and regulations Overpirce resources Exploitative rules Foreign exchange restriction Failure to uphold contracts Mutual benefits for host countries and multinational companies Mutual benefits for host country and global corporation of MNC: Shared growth opportunities Shared income opportunities Shared learning opportunities Share development opportunities Develop projects together What are some of the ethical challenges for global business Ethincal challenges for global business Child labour Employmnet of children for worl otherwise done by adults Sweatshops Employment of workers at very low wages for long hours in poor working conditions Ex: Nike bad labour prices Unsafe working conditions Corruption Illegal practices that further one’s business interests Corrupiotn of froeign public officials Act makes it illegal for Candain firms and their representatives to engage in corrupt practices overseas Bribes to foreign officials Excessive commissions Non-monetary gifts Sweatshops Conflict materials What is culture Culture : The shared set of beliefs, values, and patterns of behvaiourr common to a group of people Food preferences Values and traditions Language and beliefs Religion Art music Life style Hofstede defines culture as: “The collectiv programing of teh mind distinguishing the members of one group or category of people from others” What is culture shock Culture Shock: Confusion and discoumfert a person experiences in an unfaamiliar culture Stages to adjusting to a new culture Confusion Small vitorires The honeymoon Irritation and anger Reality Cultural Intelligence The ability to adapt and adjust to new cultures What is Ethnocentrism Tendency to consider one’s own culture as superior others Slinet languages of culture Contect Low context High context Space Proxemics Ex: personal space Time Monochronic Polychronic High and low contexts cultures Edward T.Hall (1959) Def: Part of a discourse that surround a word or passage and can throw on its meaning Low context cultures Emphizes communication via spoken or written words Countries like United States, Canada and Germany High context cultures Rely on nonverbal and situational cues as well as on spoken or written works Thailand Malaysia Time Monochronic cultures People tend to do one thing at a time Canda Polychronic cultures Time is used to accomplish many different things at once Egypt Space Proxemics Study of how people use space to communicate In North American people value “personal space’ Many Latin and Asian cultures expect much less personal space Tight and Loose Cultures Cultural tightness-looseness Tight = Strength of norms that govern social behvaviour Japan, Korea, Malaysia Loose = tolerance for any deviation from norms Australia, Brazil, Hungary Values and national cultures (Hofstede) Power distance Uncertainty avoidance Individalism-collectivism Masculinity-femininty Time Orientation Indulgence vs. Restraint Comparative management How management pratices systematically differ among countries and /or cultures Intercultural competencies Skills and personal characteristics that help us be successful in cross cultural situations Global Managers (know how to adapt) Need to successfully apply management functions across interantional boundaries Global Learning goals Not universal Engage critical thinking Look everywhere for new management ideas Always consider culture Key Word Definition
Aid Assistance in the form of grants or loans at below market rates. For example, the UK provided aid to Nepal after the 2015 earthquake to help with reconstruction efforts.
Barriers to Trade Government constraints on the flow of international goods and services, such as tariffs and quotas. For example, the European Union imposes tariffs on certain agricultural products to protect its farmers.
BRICS An acronym for an association of five major emerging nations: Brazil, Russia, India, China, and South Africa. For example, BRICS nations often meet to discuss economic cooperation and development strategies.
Demographic Aging The rise in the median age of a population. For example, Japan is experiencing demographic aging, with a significant increase in the elderly population.
Economic Core Region The most highly developed region(s) in a country. For example, London is considered an economic core region in the UK due to its high level of development and economic activity.
GNP (Gross National Product) GDP plus overseas earnings, also known as GNI (Gross National Income). For example, the GNP of the United States includes the value of goods and services produced domestically and the income earned by its citizens abroad.
HIC (Higher Income Country) A country with a high level of income and development. For example, Germany is classified as a higher income country due to its high GDP per capita and advanced infrastructure.
NEE (Newly Emerging Economy) A country that is experiencing rapid economic growth and industrialisation. For example, China is an example of a newly emerging economy, having rapidly industrialised and grown economically over the past few decades.
LIC (Lower Income Country) A country with a low level of income and development. For example, Malawi is considered a lower income country, with a low GDP per capita and limited access to healthcare and education.
GDHI (Gross Disposable Household Income) The amount of money that households have available for spending and saving after taxes and social contributions. For example, in the UK, the GDHI varies significantly between regions, with London having one of the highest levels.
Gini Coefficient A measure of income inequality within a population, ranging from 0 (perfect equality) to 100 (perfect inequality). For example, South Africa has a high Gini coefficient, indicating significant income inequality within the country.
Trade Unions Organisations that promote trade between member countries, such as the East African Community (EAC). For example, the East African Community (EAC) works to promote economic integration and trade among its member states.
Fair Trade A movement aimed at helping producers in developing countries achieve better trading conditions and promote sustainability. For example, Fairtrade coffee ensures that farmers receive a fair price for their product and work under safe conditions.
FDI (Foreign Direct Investment) Investment made by a company or individual in one country in business interests in another country. For example, Toyota's investment in manufacturing plants in the UK is an example of foreign direct investment.
Debt Relief The partial or total remission of debts, especially those owed by developing countries to external creditors. For example, the Heavily Indebted Poor Countries (HIPC) initiative provides debt relief to eligible countries to help them achieve sustainable development.
International Aid Voluntary transfer of resources from one country to another, often in the form of financial assistance, goods, or services. For example, the UK provides international aid to various countries through its Department for International Development (DFID).
Top-Down Development Large-scale development projects led by national governments or international organisations. For example, the construction of the Three Gorges Dam in China is an example of a top-down development project.
Bottom-Up Development Small-scale development projects led by local communities or NGOs, focusing on the needs of the poorest and most vulnerable. For example, WaterAid's installation of hand pumps in rural villages in Africa is an example of a bottom-up development project.
Urbanisation The increase in the proportion of people living in urban areas compared to rural areas. For example, rapid urbanisation in India has led to the growth of megacities like Mumbai and Delhi.
Geopolitics The study of the effects of geography (human and physical) on international politics and relations. For example, the geopolitics of the Arctic region involves disputes over territorial claims and access to natural resources.
Quality of Life The general well-being of individuals and societies, outlining negative and positive features of life. For example, Scandinavian countries are often ranked high in quality of life due to their strong social welfare systems and high levels of happiness.
Poverty Cycle A set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention. For example, lack of education and healthcare can trap families in a poverty cycle, making it difficult for future generations to improve their living standards.
Sustainable Development Economic development that is conducted without depletion of natural resources. For example, the use of renewable energy sources like wind and solar power is a key aspect of sustainable development.
Humanitarian Aid Material or logistical assistance provided for humanitarian purposes, typically in response to crises including natural disasters and man-made disaster. For example, humanitarian aid was provided to Haiti after the devastating earthquake in 2010 to help with immediate relief efforts.
Economic Growth An increase in the production of goods and services in an economy over a period of time. For example, China's economic growth over the past few decades has lifted millions of people out of poverty.
Social Indicators Measures that describe the well-being of individuals or communities, such as health, education, and income. For example, life expectancy and literacy rates are common social indicators used to assess development.
Environmental Sustainability Responsible interaction with the environment to avoid depletion or degradation of natural resources and allow for long-term environmental quality. For example, practices like recycling and conservation of natural habitats contribute to environmental sustainability.
Infrastructure The basic physical and organisational structures and facilities needed for the operation of a society or enterprise. For example, good infrastructure, such as roads, bridges, and schools, is essential for economic development.
Globalisation The process by which businesses or other organisations develop international influence or start operating on an international scale. For example, the globalisation of technology companies like Apple and Google has led to their products being available worldwide.
Microfinance Financial services provided to low-income individuals or groups who are typically excluded from traditional banking. For example, microfinance institutions like Grameen Bank provide small loans to entrepreneurs in developing countries to help them start or expand their businesses.
Assessing the effectiveness and shortcomings/non-effectiveness of the GDP and HDI as ways of measuring developmentEconomic integration Population and GDP of ASEAN Countries Population and GDP of ASEAN CountriesThe countries of ASEAN vary widely in population size and income level, yet nonetheless have achieved a high level of economic integration. ASEAN is considered to be one the developing world’s most successful regional economic cooperation zones. Unlike its primary counterparts in the developed world, the European Union (EU) and the United States–Mexico–Canada Agreement (USMCA), ASEAN has followed a more gradual and flexible approach to integration, accommodating the diversity of its member states. ASEAN has prioritized trade liberalization, sustainable development, and attracting foreign investment over deepening political integration or adopting a common currency. ASEAN’s economic integration efforts began with the creation of the ASEAN Free Trade Area (AFTA) in 1992, which successfully reduced tariffs between ASEAN’s first six members (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) to 0–5 percent by 2002. Vietnam, Laos, Myanmar, and Cambodia were required to sign the AFTA agreement upon joining ASEAN. Today tariffs between ASEAN countries are close to zero. In 2007 the ASEAN Economic Community Blueprint was signed in Singapore with the goal of achieving four objectives by 2015: (1) create a single market and production base, (2) become a highly competitive economic region, (3) promote equitable economic development within the region, and (4) fully integrate the region into the global economy. The AEC was implemented in 2015, although approximately 20 percent of measures toward achieving a single market remain in progress and have been deferred to a new deadline of 2025. The ASEAN-Japan Comprehensive Economic Partnership (AJCEP) was implemented in 2008, and the ASEAN-China Free Trade Agreement (ACFTA) was implemented in 2010. In 2020 ASEAN joined Australia, China, Japan, New Zealand, and South Korea in signing the Regional Comprehensive Economic Partnership (RCEP), the largest trade agreement in history. Get Unlimited Access Try Britannica Premium for free and discover more. Significant challenges remain for ASEAN’s economic integration, including pervasive nontariff barriers, restrictive investment measures, and vast disparities in GDP per capita. Domestic issues such as political instability and corruption in member states exacerbate these challenges. The COVID-19 pandemic created severe economic disruption in sectors such as industrial production and tourism; nonetheless, ASEAN coordinated a regional response to align economic recovery strategies and maintain open trade routes. Ultimately, ASEAN has demonstrated an exemplary and ongoing commitment to strengthening cooperation and integration and maximizing the region’s economic potential.The Columbian Exchange was the widespread exchange of animals, plants, culture, disease, people, and ideas that began between European countries and their colonies in North and South America. The Spanish came to the Americas in search of gold and other riches. The Europeans wanted to convert the Native Americans to Christianity/Roman Catholicism. Spain had the greatest impact on the culture of Latin America. Sugarcane was a crop that was grown in the Caribbean that required a lot of land and labor. Native populations died out largely due to diseases that they had no natural immunity to before the arrival of Europeans. When the Native populations died out, African slaves were brought over to work. Two cultural elements in Latin America that resulted from the Columbian Exchange were language - Spanish, and religion - Roman Catholicism/Christianity. Environmental Issues Deforestation is the clearing of forests for human demands such as farmland, timber, and mining. The Amazon Rainforest in Brazil is one area experiencing major deforestation. Hurricanes can damage the economies in the Caribbean and Central America by keeping tourists away. Economy The three economic indicators used to determine the Human Development Index (HDI) are: life expectancy, literacy rate, and GDP per capita. Higher literacy rates, GDP per capita, and life expectancy are associated with more developed countries, while lower literacy rates, GDP per capita, and life expectancy are associated with less developed countries. The three sectors of the economy are primary/agriculture (e.g. rancher), secondary/manufacturing (e.g. table factory), and tertiary/services (e.g. teacher). A single product economy is when a country depends on just one product for almost all of its jobs, like the Caribbean Islands depend on tourism. Three disadvantages of a single product economy are: having to import other goods/resources, facing competition from other countries for the same product, and if the product fails, the economy is ruined which could restrict access to goods/resources. A free enterprise/market economy is when individual people and businesses make all economic decisions. A command/communist economy is when the government makes all basic economic decisions. Cuba has a communist economy where the government controls all aspects of the economy.Agriculture Agriculture is the main source of livelihood in every country in the region except Brunei and Singapore. Agricultural employment, however, has been declining. More than two-thirds of the workforces of Cambodia and Laos practice agriculture. As the economies of the ASEAN countries have been restructured toward growth in industry and services, there has been a corresponding decline in the proportion of the gross domestic product (GDP) derived from agriculture, most significantly in Indonesia, Malaysia, and Thailand. Agricultural output in Southeast Asia has increased significantly since 1970. There are wide variations in this growth across the region, with the greatest gains in Malaysia and Thailand and little or no increase in Cambodia, Laos, and Vietnam. Hunger and malnutrition are problems in pockets of even the most developed countries, but they have been especially serious in Cambodia because of crop failures and internal strife. The condition of the rural population everywhere is clearly related to limited access to land, the landless experiencing greater poverty and poorer health. Landlessness is perhaps most serious in the Philippines. The dominant form of agriculture in the region is wet-rice cultivation. Where conditions permit, two crops typically are planted each year. Other food crops such as corn (maize), cassava, and pulses (legumes) frequently are grown in drier areas where there is too little water for a second planting of rice. Rice production requires a reliable water supply. Thailand and the Philippines rely heavily on rain-fed systems, while Indonesia utilizes irrigation to a large extent. Irrigation or some other form of water control is especially critical in the cultivation of the high-yielding varieties (HYVs) of rice that have been introduced since the 1960s. The spread of the so-called Green Revolution—in which HYVs and chemical fertilizers and pesticides are utilized—has brought mixed results. There is little doubt that production has increased because of the higher yields of these hybrid strains and because their more rapid maturation increases the possibility of multiple annual crops. Frequently, however, poorer farmers are not able to take advantage of these strains, because of the high cost of their use. The goal of rice self-sufficiency has been difficult to achieve for most countries. A large variety of cash crops are grown for the local and export markets, both on large commercial estates and by individual growers or smallholders. Tree crops are the most important in terms of value, although the area devoted to them is limited largely to equatorial areas. Rubber and palm oil are significant in Malaysia, Indonesia, and southern Thailand, while coconuts and sugar are important in the Philippines. Other major export crops are cacao, coffee, and spices, while crops grown largely for local and regional consumption include chilies, sweet potatoes, peanuts (groundnuts), and tobacco. The cultivation of opium poppies is important in parts of Myanmar and Thailand. The emphasis on rubber and palm oil production is in response to a considerable (though fluctuating) worldwide demand for these commodities and because of a nearly continuous harvest period that provides year-round employment. Foreign corporations once dominated production, but, as the region’s countries gained independence, much of the production was nationalized. Government ownership continues to predominate, with increasing private ownership. Fishing contributes only a token amount to the GDP of Southeast Asian countries, but it is an important livelihood in certain areas and supplies a significant portion of the local diet. Marine output has gradually expanded with new technologies. The maritime nations of Thailand, Indonesia, Malaysia, and the Philippines all have globally important fishing industries. Shrimp catches are especially in demand in the world economy. Aquaculture has become increasingly important in the region, such species as shrimp, carp, and grouper being raised in excavated ponds.Industry of Southeast Asia Industrialization in Southeast Asia is a relatively recent phenomenon, much of the development having occurred only since the early 1960s. As mentioned above, industrialization policies have been critical goals in the market economies of the ASEAN countries; and, in all of them except Brunei, industry’s share of the GDP has grown considerably. The most significant increases have occurred in Singapore, Thailand, and the Philippines. Manufacturing in particular has accounted for the greatest changes, with Indonesia, Malaysia, and Thailand making especially large gains during the 1980s. Small factories dominate, both in terms of the number of companies and the number of workers employed. Agricultural processing is most important in virtually all nations. The notable exception is Singapore, where the manufacture of a variety of products, headed by electrical and electronic and transport equipment, is dominant. In Thailand, Myanmar, and the Philippines, textiles and clothing are significant, as is the chemical industry in Thailand and Indonesia. Light, labour-intensive goods, such as electrical and electronic products, are increasingly important. It is in the manufacture of these products and textiles that the most employment has been gained. Tin is the most important metallic mineral in the region in terms of value, and Thailand, Malaysia, and Indonesia account for more than half of world production. In Malaysia and elsewhere, however, alluvial lodes are becoming depleted, and the remaining concentrations are less economical to mine. Fluctuating market prices have also discouraged tin production. Nickel, copper, and chromite are also mined, although the quantities produced in the region are minor in terms of world production. Southeast Asia has considerable reserves of oil and natural gas, notably in Indonesia, Malaysia, and Brunei. Trade Given Southeast Asia’s strategic location and the early development of trade there, it is not surprising that trade is especially important to all nations in the region. The value of regional trade is about one-third that of the United States. Most striking is the almost total dominance of trade by the market economies. Exports, as a percentage of the GDP, are small in Cambodia, Myanmar, Vietnam, and Laos and moderately so in Thailand, the Philippines, and Indonesia. Countries with a relatively large proportion of export trade are Singapore, Malaysia, and Brunei. Composition of exports is important. In this respect, Indonesia—the trade structure of which long has been dominated by oil—has been relatively successful in diversifying its exports toward plywood, rattan, coffee, rubber, and textiles. Conversely, Malaysia, with a trade pattern of exporting palm oil, tropical hardwoods, and tin, now derives the majority of its export income from petroleum products. This revenue has been used to build up the country’s industrial base. Thailand exhibits a much less diverse export structure, where food and manufactured goods account for nearly all of its total trade. Likewise, Brunei relies almost entirely on its petroleum exports. Singapore, however, has utilized its unique geographic position and highly educated labour force to attract multinational corporations. As a result, investment in the manufacturing and, increasingly, service sectors has greatly expanded. Intraregional trade among the ASEAN members, while important, accounts for only about one-fifth of Southeast Asia’s total trade. Philippine trade within the region is especially small, reflecting its long-term orientation toward the United States. Far more important, therefore, is the trade with countries outside the region, dominated by that with Japan, Europe, and the United States; increasingly significant, however, is the trade with Taiwan, China (especially Hong Kong), and South Korea.LESSON 4. Cellular Respiration • Define cellular respiration • Identify the stages of clan respiration You have just learned how the energy from the sun is captured, processed, and stored in the form of glucose. Cellular respiration, another important life process, is the means by which cells release the stored energy in glucose to make adenosine triphosphate (ATP). The primary goal of this life process is to convert stored energy into usable form, such as ATP, for the cells to carry out their functions. Cellular respiration involves several chemical reactions. The reactions can be summed up in the following equation: C6 H12 O6 + 602 ----- 6 CO₂ +6H₂O + ATP Glucose oxygen carbon dioxide water energy Aerobic respiration reactions, or cellular respiration that takes place in the presence of oxygen, can be grouped into three stages glycolysis, Krebs cycle, and electron transport chain (ETC). Stage 1: Glycolysis Glycolysis is the process that breaks down one molecule of 6-C glucose into 3-C pyruvates or pyruvic acids. It also releases four molecules of ATP. This process occurs in the cytoplasm of the cell. The following is the step-by-step process of glycolysis. Take note that several enzymes are involved in this process. 1. The first step of glycolysis requires energy. It can only proceed when the two ATP molecules donate energy to the glucose by transferring a phosphate group with the help of an enzyme, producing glucose 6-phosphate 2. Then, a specific enzyme promotes the rearrangement of the atoms, producing the fructose 6-phosphate. 3. The action of the enzyme in step 2 promotes the transfer of a phosphate group from another ATP molecule, forming fructose 1,6-bisphosphate. 4. The resulting fructose 1,6-bisphosphate molecules, with the help of another enzyme, splits into two molecules, each with three carbon backbones. These two sugars are dihydroxyacetone phosphate and glyceraldehyde 3-phosphate. 5. Another important enzyme then rapidly interconverts the molecules of dihydro-xyacetone phosphate and glyceraldehyde 3-phosphate. This produces two molecules of glyceraldehyde 3-phosphate or 3-phosphoglyceraldehyde (PGAL) 6. The succeeding step involves another enzyme-mediated action. The hydrogen (H) from PGAL is transferred to the oxidizing agent, nicotinamide adenine dinucleotide (NAD), which forms NADH. A phosphate (P) is also added from the cytosol of the cell to oxidize the two molecules of PGAL, forming two 1.3-bisphosphoglycerate. 7. A phosphate (P) from 1,3-biphosphoglycerate is transferred to ADP to form ATP. This happens for each of the two 1,3-bisphosphoglycerate. resulting to a yield of two ATP and two 3-phosphoglycerate molecules. 8. A phosphate is transferred from 3-phosphoglycerate molecules from the third carbon to the second carbon, forming 2-phosphoglycerate molecules A hydrogen atom and a hydroxyl ((OH) group is released, which then combines to form water (H2O). The removal of H2O from 2-phosphoglycerate results in the formation of 2- phosphoglycerate molecules. 9. A hydrogen atom and a hydroxyl ((OH) group is released, which then combines to form water (H2O). The removal of H2O from 2-phosphoglycerate results in the formation of two phosphoenolpyruvic acid (PEP) 10. Phosphate (P) from PEP is transferred to ADP (and forms ATP) and the final product, pyruvic acid. This reaction yields two molecules of pyruvic acid and two ATP molecules In summary, a single glucose molecule that undergoes the process of glycolysis produces two molecules of pyruvic acid, four molecules of ATP, two molecules of NADEL and two molecules of H.O. However, only two molecules of ATP are counted as net products since two molecules of ATP are spent throughout the process. Stage II: Krebs Cycle The Krebs cycle, named after its proponent Sir Hans Adolf Krebs, is a cyclical series of enzyme-controlled reactions. This stage of cellular respiration occurs in the matrix of the mitochondria. It is sometimes. called the citric acid cycle (CAC) since it produces citric acid. Citric acid contains three carboxyl (COOH) groups; hence, it is also called the tricarboxylic acid cycle (TCA). This requires the pyruvic acids produced during glycolysis. The main function of this cycle is to produce high-energy-yielding molecules, namely, NADH and flavin adenine dinucleotide (FADH) that will later on be used in the electron transport chain reaction. Figure 6-7. Summary of glycolysis and corresponding products in each reaction presented (See Appendix F on page 285 for an enlarged and complete version of the image.) An initial process is needed for the Krebs cycle to begin. As a pyruvate molecule from glycolysis enters the mitochondrion, it undergoes an important preliminary ate to form acetyl-CoA reaction. Coenzyme-A (COA) combines with pyruvate help of an enzymatic complex. This conversion also produces CO, and NADH. The Krebs cycle is summarized as follows. Take note that several enzymes are involved in this process. 1. The Krebs cycle technically begins when the acetyl-CoA combines with oxaloacetic acid (OAA), a 4-C molecule, to produce citric acid, a 6-C molecule. 2. With the aid of an enzyme, the citric acid now goes through a series of reactions that releases energy. Water molecule is removed from the citric acid and is returned in a different location. The-OH group is repositioned, forming the molecule isocitrate. 3. Isocitrate is then oxidized, forming the a-ketoglutarate, a 5-C molecule. The byproducts of this reaction are NADH and CO, 4 The a-ketoglutarate loses its CO, and a coenzyme-A is added in its place. The decarboxylation occurs with the help of NAD, which then becomes NADH. The resulting molecule is called succinyl-CoA. 5. Succinyl-CoA is converted into succinate. Also in this reaction, a molecule of guanosine triphosphate (GTP) is synthesized. The GTP molecule has similar structure and energy properties to that of ATP and is used by cells the same way. The free phosphate group attacks the succinyl-CoA molecule, which detaches the COA. Then, phosphate is attached to GDP to come up with GTP, similar to the process that occur in ATP synthesis (from ADP to ATP). 6. Two hydrogens are removed from succinate, A molecule of flavin adenine dinucleotide (FAD), a coenzyme similar to NAD, is reduced to FADH, as it takes the hydrogens from the succinate. This reaction produces the fumarate. 7. Fumarate is then converted into malate as the addition of a water molecule is catalyzed. The final reaction is the regeneration of oxaloacetate. The resulting byproduct of this regeneration is NADH Recall that two pyruvate molecules were produced during glycolysis, causing the Krebs cycle to turn twice. Each tuts produces three molecules of NADH, single ATH one FADIH, and the by-product CO, which is exhaled. Stage III: Electron Transport Chain The electron transport chain (ETC) is a series of photon pumps on the inner membrane of the mitochondrion. Electron transport is the last stage of the cellular respiration. In this stage, the energy from NADH and FADH, from the Krebs cycle is transferred to ADP to produce ATP. This process is generally known as oxidative phosphorylation. This energy coupling mechanism in the cell was revealed by the work of Peter stored energy in the form of proton (1) gradient to phosphorylate (add phosphate) ADP and produce ATP. The pumping of hydrogen sons across the inner membrane creates higher concentration ions in the inner membrane than on the outside of the membrane. This chemiosmotic gradient causes the ions to flow back across the membrane where the concentration of ions is lower. ATP synthase lined in the matrix serve as a channel protein, helping the ions to move across the membrane. The chemiosmotic gradient powers the phosphorylation of ADP to ATP, which also occurs in the ATP synthase. After passing through the ETC, the oxygen, being the final hydrogen acceptor, combines with two electrons and two protons, forming a water molecule. Water is a by-product of cellular respiration and is excreted. MINI TEST 6-3 1. Which energy-releasing pathway yields the most ATF in each glucose molecule? 2. Briefly describe the two stages of aerobic respiration that follow glycolysis: (a) Krebs cycle (b) Electron transport chain Anaerobic Respiration Most cells carry out arrobic respiration when oxygen is present. Aerobic respiration is an efficient process that yields a lot of ATP. However, many organisms thrive in mud, marshes, animal gut, canned goods, sewage treatment pond, and deep oceans where oxygen is scarce. Organisms that can live without oxygen are called anaerobes. Cellular respiration that proceeds without the presence of oxygen is called anaerobic respiration. In the event that the oxygen supply becomes low, aerobic cells also perform fermentation and lactic acid fermentation anaerobic pathways. There are two common anaerobic pathways in these cells, alcoholic fermentation and lactic acid fermentation. In alcoholic fermentation, ethyl alcohol and carbon dioxide are produced by some cells using the pyruvate from glycolysis. Each pyruvate molecule is rearranged into acetaldehyde and carbon dioxide, which is eventually released. NADII gives up electrons to acetaldehyde to form ethanol Fermentation is widely used in the industry. Yeast, a fungus used in making bread. can undergo anaerobic respiration. Bakers aux sugar, flour, water, and yeast to form the bread dough. The dough rises due to the carbon dioxide and alcohol released by the yeast cells trapped in air bubbles. Beer and wine manufacturers, we yeast to ferment the sugars in wheat and grape juice, forming alcoholic beverages such as beer and wine. In some cells, glycolysis produces two pyruvates, two NADH molecules, and two ATP molecules. Pyruvate itself becomes the final acceptor of the electrons from the NADH that produces the final product: lactate. Oftentimes, this product is called lactic acid. Human skeletal muscles can carry out fermentation when the blood cannot supply the cells with adequate oxygen during strenuous activities. When lactic acid builds up in the muscles, fatigue, burning sensation, and cramps result. Lactic acid will continue to build up until there is adequate supply of oxygen. Lactic acid is then converted back into pyruvate in the liver. Muscles also restore normal functions. Have you ever wondered why milk or cream turns sour after some time? Bacterial cells that undergo fermentation are responsible in producing lactate that turns the milk sour. These bacteria are used in manufacturing yogurt and sour milk products. Fermentation pathways do not breakdown and utilize the glucose completely. ATP is no longer produced beyond the process of glycolysis. Thus, energy produced is just enough for some single-celled organisms, or the energy can only be used by multicellular organisms for a short period.