Globalization, its stages, causes, conditions and key players in globalization
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Globalization involves the increasing flow of goods, services, capital, people, information and ideas across national borders. It affects nearly every aspect of daily life as goods and services are increasingly produced in other countries. Globalization is driven by falling barriers to international trade and investment as well as technological innovations that facilitate global communications and transportation. While it creates opportunities for businesses and consumers, globalization also poses challenges such as less job security and potential damage to local cultures and environments.
Globalization, its stages, causes, conditions and key players in globalization
- 3. Presented To: PROF. CH. Abdul Khaliq Presented By: Muhammad Umer MC16-264 Talha Tayyab Sultan MC16-263 Tahir Naveed MC16-274
- 4. Globalization Definition • - “Processes by which goods, services, capital, people, information, and ideas flow across national borders.”
- 5. Globalization Involving Us All • Nearly 23 trillion dollars accounts for the total value of imports/exports that cross national borders each year. • Your Everyday Life: – Wake up to a GE alarm clock made in China – Slip on Adidas sandals made in Indonesia – Put your American Eagle clothes on from Mexico – Unplug your Nokia phone made in the U.S. and Taiwan – Hop into your Toyota made in Kentucky – Listen to Coldplay from England – Grap a Starbuck’s coffee with beans harvested in Columbia Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson PrenticeHall.
- 6. Globalization (Continued) Two Characteristics: Two Forces: Falling Barriers to Trade/ Investment • GATT • WTO Technological Innovation • Internet • Communication • Transportation Denationalization- national boundaries becoming less relevant. Internationalization- entities cooperating across national borders. Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson PrenticeHall.
- 7. Globalization (Continued) Top Ten Globalized Countries Series1 Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson PrenticeHall.
- 8. Key Players: They are- • Multinational firms which carry out business across the national borders. • The World Trade Organization (WTO)through which international Trade agreements are Negotiated & enforced. • The World Bank & International Monetary Fund (IMF) are means to assist Govt .in achieving development aims through the provision of loans, technical assistance.
- 9. STAGES IN GLOBALIZATION • Domestic company links with dealer & distributor. • Company does the activities on its own. Company begins to carryout its own manufacturing , marketing & sales in the foreign markets. • Company starts full-fledged operations including business systems and R&D. At this stage the managers are expected to perform the tasks which they were doing in domestic markets to replicate them in foreign markets.
- 10. Conditions for globalization • Business Freedom-No unnecessary Government restrictions like restriction, restrictions on sourcing of funds and other factors from abroad. Hence the liberalization is the 1st step towards facilitating globalization. • Facilitators-Infrastructure facilitation available at home country an help entrepreneurs go globally. • Government support –Government support available in the form of policy & procedure reform encourage globalization
- 11. Continue… • Resources-Resources is an important factor which decides the ability of affirm to globalize. They include finance ,technology, brand image, company’s image, managerial expertise etc. • Competitors- This is an important factor which company’s success in global market bank on. The factors like low costs& price, product quality, product differentiation, technological superiority. After sales service, market strengths etc. are few to name.
- 12. The Difference Between Competing Internationally & Competing Globally A company will start to compete internationally by entering just one or maybe a select few foreign markets. Competing on a truly global scale comes later , after a company has established operations on several continents & is racing against rivals for global market leadership.
- 13. Causes of Globalization: 1. Improved Communications • The development of communication technologies such as internet, email and mobile phones have been vital to the growth of globalization because they help MNCs to operate throughout the world. • The development of satellite TV channels such as Sky and CNN have also provided worldwide marketing avenues for the concept and products of globalization.
- 14. 2. Improved Transport The development of refrigerated and container transport, bulk shipping and improved air transport has allowed the easy mass movement of goods throughout the world. This assists globalization.
- 15. 3. Free Trade Agreements • MNCs and rich capitalist countries have always promoted global free trade as a way of increasing their own wealth and influence. • International organizations such as the World Trade Organization and the IMF also promote free trade.
- 16. 4. Global Banking • Modern communication technologies allow vast amounts of capital to flow freely and instantly throughout the world. • The equivalent of up to $US1.3 trillion is traded each day through international stock exchanges in cities such as New York, London and Tokyo.
- 17. 5. The Growth of MNCs • The rapid growth of big MNCs such as Microsoft, McDonalds and Nike is a cause as well as a consequence of globalization. • The investment of MNCs in farms, mines and factories across the world is a major part of globalization. • Globalization allows MNCs to produce goods and services and to sell products on a massive scale throughout the world.
- 18. The Effects of Globalization: 1. Changed Food Supply Food supply is no longer tied to the seasons. We can buy food anywhere in the world at any time of the year.
- 19. 2. Division of Labor Because MNCs search for the cheapest locations to manufacture and assemble components, production processes may be moved from developed to developing countries where costs are lower.
- 20. 3. Less Job Security • In the global economy jobs are becoming more temporary and insecure. • A survey of American workers showed that people now hold 7 to 10 jobs over their working life.
- 21. 4. Damage to the Environment • More trade means more transport which uses more fossil fuels and causes pollution. • Climate change is a serious threat to our future.
- 22. 5. Cultural Impact Websites such as YouTube connect people across the planet. As the world becomes more unified, diverse cultures are being ignored. MNCs can create a monoculture as they remove local competition and thereby force local firms to close Replacing
- 23. Globalization and Marketing • Expands the market in which consumers buy from – Access EBay sellers from across the globe. • Two Strategies for Businesses: – Global Strategy • Reduce marketing costs by standardizing product and marketing strategy – Multi-National Strategy • Adapt products and marketing strategies in each national market to suit local preferences Wild, J., Wild, K., & Han, J. (2008). International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson PrenticeHall.