Globalization
- 1. Globalization Concept of Globalization Globalization means the integration of economy of the country into a world economy to ensure free flow of goods, services, capital, knowledge & technology. Globalization involves increasing interdependence & integration of countries through cross border transaction of goods, services & international capital and also through more rapid & widespread diffusion of technology. It is shift towards more integrated & interdependent world economy. Features of Globalization Reduction of trade barriers so as to ensure free flow of goods and services across national boundaries Viewing the entire world as a single market and a single unit. Sources of factors of production from any part of the globe Creation of environment for free flow of goods and services & technology Advantages of globalization Cost reduction Global learning Rapid industrialization Arbitrage advantage Better allocation of resources Reduction of poverty Employment generation Balanced development Better quality of life Human development
- 2. Disadvantages of globalization Threat to domestic industry Unemployment Exploitation of labor Overuse of natural resources Widening the gap between rich and poor Stages of globalization Domestic firm exports goods and services to foreign countries through dealers and middlemen Domestic firm exports to foreign countries directly Domestic firm set up production and marketing facilities in foreign countries Domestic firm establishes a subsidiary in foreign countries Domestic firm becomes a true global firm by serving the needs of customers worldwide. Impact of globalization on International business Globalization of market Globalization of production Globalization of investment Globalization of technology Factors that led to globalization Political factors Technological factors Social factors Competitive factors
- 3. Constraints of globalization National difference in business system National difference in consumer behavior National difference in social culture Protection of domestic industries.