G LOBALISATIONG LOBALISATION

Along with decisions about positioning, Along with decisions about positioning, mergers, & acquisitions ,decisions about mergers, & acquisitions ,decisions about global moves are among the most global moves are among the most important ones the strategists make. important ones the strategists make. A firm that is considering doing business A firm that is considering doing business abroad must have a rationale & logic for abroad must have a rationale & logic for how it can compensate for & overcome the how it can compensate for & overcome the liabilities &disadvantages that arise from liabilities &disadvantages that arise from its foreignness. its foreignness.

Globalization is the increasing Globalization is the increasing interdependence, integration & interaction interdependence, integration & interaction among people and corporation in various among people and corporation in various locations around the world. locations around the world. Interdependence is a dynamics of being Interdependence is a dynamics of being mutually responsible to and sharing common mutually responsible to and sharing common ET of principles with others. ET of principles with others.

Globalization refers to rapid increase in Globalization refers to rapid increase in the share of economic activity taking the share of economic activity taking place across national borders. place across national borders. It goes beyond the international trade It goes beyond the international trade includes the way in which goods/ includes the way in which goods/ services are produced /created, delivered services are produced /created, delivered &sold & movement of capital.&sold & movement of capital.

DefinitionsDefinitionsA typical - but restrictive - definition can be taken A typical - but restrictive - definition can be taken from the from the International Monetary Fund which stresses which stresses the growing economic interdependence of countries the growing economic interdependence of countries worldwide through increasing volume and variety of worldwide through increasing volume and variety of cross-border transactions in goods and services, free cross-border transactions in goods and services, free international capital flows, and more rapid and international capital flows, and more rapid and widespread diffusion of widespread diffusion of technology..

This goes beyond the international trade in This goes beyond the international trade in goods and includes the way those goods goods and includes the way those goods are produced, the delivery and sale of are produced, the delivery and sale of services, and the movement of capital.services, and the movement of capital.

Threat or opportunity...Threat or opportunity...Globalization can be a force for good. It has the Globalization can be a force for good. It has the potential to generate wealth and improve living potential to generate wealth and improve living standards. But it isn't doing that well at the moment. standards. But it isn't doing that well at the moment. The benefits from increased trade, investment, and The benefits from increased trade, investment, and technological innovation are not fairly distributed. technological innovation are not fairly distributed. The experience of the international trade union The experience of the international trade union movement suggests that the reality for the majority of movement suggests that the reality for the majority of the world's population is that things are getting worse. the world's population is that things are getting worse. Globalization as we know it is increasing the gap Globalization as we know it is increasing the gap between rich and poor. This is because the policies between rich and poor. This is because the policies that drive the globalization process are largely that drive the globalization process are largely focused on the needs of business. focused on the needs of business.

KEY PLAYERSKEY PLAYERSThey are-They are-Multinational firms which carry out Multinational firms which carry out business across the national borders.business across the national borders.The World Trade Organization (WTO) The World Trade Organization (WTO) THROUGH WHICH INTERNATIONAL THROUGH WHICH INTERNATIONAL TRAD E AGREEMENTS ARE TRAD E AGREEMENTS ARE NEGOTIATED& ENFORCDNEGOTIATED& ENFORCDThe World Bank & International Monetary The World Bank & International Monetary Fund (IMF) are means to assist Govt .in Fund (IMF) are means to assist Govt .in achieving development aims through the achieving development aims through the provision of loans, technical assistance.provision of loans, technical assistance.

STAGES IN GLOBALISATION-STAGES IN GLOBALISATION-Domestic company links with dealer & Domestic company links with dealer & distributor.distributor.Company does the activities on its own. Company does the activities on its own. Company begins to carryout its own Company begins to carryout its own manufacturing , marketing & sales in the foreign manufacturing , marketing & sales in the foreign markets.markets.Company starts fullfledged operations including Company starts fullfledged operations including business systems and R&D. At this stage the business systems and R&D. At this stage the managers are expected to perform the tasks managers are expected to perform the tasks which they were doing in domestic markets to which they were doing in domestic markets to replicate them in foreign markets. replicate them in foreign markets.

Conditions for globalizationConditions for globalizationBusiness Freedom-No unnecessary Government Business Freedom-No unnecessary Government restrictions like restriction, restrictions on sourcing restrictions like restriction, restrictions on sourcing of funds and other factors from abroad. Hence the of funds and other factors from abroad. Hence the liberalization is the 1liberalization is the 1stst step towards facilitating step towards facilitating globalization. globalization.

Facilitators-Infrastructure facilitation available at Facilitators-Infrastructure facilitation available at home country an help entrepreneurs go globally.home country an help entrepreneurs go globally.

Government support –Government support available Government support –Government support available in the form of policy & procedure reform encourage in the form of policy & procedure reform encourage globalizationglobalization

Resources-Resources is an important factor Resources-Resources is an important factor which decides the ability of affirm to globalize. which decides the ability of affirm to globalize. They include finance ,technology, brand image, They include finance ,technology, brand image, company’s image, managerial expertise etc.company’s image, managerial expertise etc.Competitors- This is an important factor which Competitors- This is an important factor which company’s success in global market bank on. company’s success in global market bank on. The factors like low costs& price, product quality, The factors like low costs& price, product quality, product differentiation, technological superiority. product differentiation, technological superiority. After sales service, market strengths etc are few After sales service, market strengths etc are few to name.to name.

Reasons For GlobalizationReasons For Globalization

Firm operate internationally for a number of Firm operate internationally for a number of reasons:reasons:They may be seeking to secure better sources of raw materials They may be seeking to secure better sources of raw materials & energy.& energy.They may want to obtain access to low cost factors of They may want to obtain access to low cost factors of production such as labour.production such as labour.They may be attracted to certain countries because of They may be attracted to certain countries because of subsidies those countries provide.subsidies those countries provide.They may be seeking new markets for their products.They may be seeking new markets for their products.Domestic markets may no longer be able to absorb production Domestic markets may no longer be able to absorb production at minimum efficient scale.at minimum efficient scale.

Contd…Contd…

They may be motivated by life style They may be motivated by life style factors.Domestic markets become factors.Domestic markets become saturated .As they mature , firms look saturated .As they mature , firms look abroad for new opportunities.abroad for new opportunities.They may be seeking opportunities for They may be seeking opportunities for economies of scope & for learning.economies of scope & for learning.

So why go ‘Global’?So why go ‘Global’?Competition within your national market is Competition within your national market is becoming too intense so you decide to push becoming too intense so you decide to push sales in overseas markets.sales in overseas markets.Your products within your national markets Your products within your national markets are reaching the end of the lifecycle so you are reaching the end of the lifecycle so you wish to push it into national markets.wish to push it into national markets.Sales and profit are generally declining in Sales and profit are generally declining in national markets.national markets.You wish to become a global player.You wish to become a global player.

The Difference Between Competing The Difference Between Competing Internationally & Competing GloballyInternationally & Competing Globally

A company will start to compete A company will start to compete internationally by entering just one or maybe a internationally by entering just one or maybe a select few foreign markets. Competing on a select few foreign markets. Competing on a truly global scale comes later , after a truly global scale comes later , after a company has established operations on several company has established operations on several continents & is racing against rivals for global continents & is racing against rivals for global market leadership. market leadership.