Globalization

• Trade and investment barriers are disappearing.

• Perceived distances are shrinking due to advances in transportation and telecommunications.

• Material culture is beginning to look similar.

• National economies merging into an interdependent global economic system.

What is “Globalization”?

“The shift toward a more integrated and

interdependent world economy.”

Markets

Production

• “What Friedman means by "flat" is "connected": the lowering of trade and political barriers and the exponential technical advances of the digital revolution that have made it possible to do business, or almost anything else, instantaneously with billions of other people across the planet. “

• “Globalization 3.0, as he calls it, is driven not by major corporations or giant trade organizations like the World Bank, but by individuals: desktop freelancers and innovative startups all over the world (but especially in India and China) who can compete--and win--not just for low-wage manufacturing and information labor but, increasingly, for the highest-end research and design work as well. “

Source: Amazon.com: The World is Flat, http://www.amazon.com/gp/product/0374292795/sr=8-1/qid=1155682537/ref=pd_bbs_1/104-5610007-5973554?ie=UTF8 8/15/2006

The Global Retail Market

Development Drivers

Decline in cross-border investment barriers.Saturation and slow growth in local markets.Carrefour began the expansion followed by Tesco and Wal-Mart.Retailers believed they would benefit from economies of scale from global buying power.These retailers held strong domestic market positions.

Top 25 Retailers

Market Share

%

2000 2009

16

40

Globalization of Production• “The sourcing of goods and

services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (labor,energy, land and capital).”

• Companies hope to lower their overall cost structure and/or improve the quality or functionality of their product offering - increasing their competitiveness.

“Global Products”

Outsourcing Definitions

• The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.www.answerstat.com/articles/glossary.html

• A formal agreement with a third party to perform a service for an organization.www.austin.cc.tx.us/audit/Glossary/LetterO.htm

• 1. Performance of a production activity that was previously done inside a firm or plant outside that firm or plant. 2. Manufacture of inputs to a production process, or a part of a process, in another location, especially in another country. www-personal.umich.edu/~alandear/glossary/o.html

• The practice of turning-over responsibility of some to all of an organization's information systems applications and operations to an outside firm.www.cbu.edu/~lschmitt/I351/glossary.htm

Outsourcing Examples

• Call centers

• Accounting

• Reuters - news

• Personal Remote Executive Assistant

• Tutoring

• McDonalds

http://en.wikipedia.org/wiki/Image:Bangalore_Infy.jpgWikimedia Commons

• Motorola• HP• 3M• Siemens• ITI

http://en.wikipedia.org/wiki/Electronics_City

Dalian ,China

http://www.arlington.com/en/pr_2_Shanghai.aspx#MorePics

International Trade Survey

• Survey conducted by UW Marshfield and Mid-State Technical College students in May of 2000.

• Letter sent to 1600 businesses in the Central Wisconsin area. 171 firms responded.

46 firms of 171 have some involvement in international

trade• A&B Process Systems

• American Logistics

• Crandmor Cranberry Company

• Graebel Moving and Storage

• Grande Cheese Co

• Kerry Inc

• Lamers Bus Lines, Inc.

• Lampert-Lee & Associates

• Mall Furniture of Marshfield

• McCain Foods

• Membrane System Specialties

• Northland Cranberries, Inc.

• Travel Guard International Inc.

• Wild Birds Unlimited

Over 44 countries

• Argentina• Asia• Australia• Belgium• Brazil• Chile• Canada

• Czech Republic• Indonesia• Israel• Lithuania• South Africa• Taiwan• Philippines

Foreign Ownership

• Spiegel (catalog)• Mack Trucks• Pillsbury• CBS Records• Burger King• Smith and Wesson

• Germany• France• Britain• Japan• Britain• Britain

How important is it?

• In 2005, WI exported $14,923,486,505 worth of goods.

• According to the U.S. Department of Commerce, nearly 200,000 jobs in the state depended upon manufactured exports.