01 Globalization

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By

Shaji Berjin M.S

G. Sathya sree

P. Helen jasmineM. Josephine Amala Jothi

A. Arockia Paul Jennifer


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INTRODUCTIONy Globalization has brought in various changes in the

following areas. They are,

Privatization

Liberalization

Global economy

Political and social changes

Impact on consumers and consumerism


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Privatizationy Privatization is the incidence or process of transferring ownership of a

business, enterprise, agency or public service from the public sector(the state or government) to the private sector (businesses that operatefor a private profit) or to private non-profit organizations.

y In a broader sense, privatization refers to transfer of any governmentfunction to the private sector - including governmental functions likerevenue collection and law enforcement.[1]

y The term "privatization" also has been used to describe two unrelatedtransactions.

y The first is a buyout, by the majority owner, of all shares of a public

corporationor holding company's stock, privatizing a publicly tradedstock, and often described as private equity. The second is ademutualization of a mutual organization or cooperative to form ajointstock company.[2]


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Advantages1. privatization is accurateness and commitment towards

the service as they private organizations are very muchconcerned about the profits they make ultimately whichdepend on the quality of service being provided by themand the public response to it.

2. 2. Privatization generates more revenue compared togovernment enterprises, thus govt can indirectly earn a

bit more by leasing out enterprises to privateorganizations.

3. 3. Customer support and satisfaction basically is of muchinterest in private enterprises comparatively.


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Disadvantagesy 1. The biggest threat is reliability. There is nothing that

backs up the private organizations, where as govt can

back up its enterprises easily in terms of funds. Thereare more chances of bankruptcy in private orgs whereare 0 to few in govt orgs.

y 2. Though the quality of service may be little

compromised, its reliable.y 3. Some departments need social responsibility which

can be done only by government like policedepartment, traffic management


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Liberalisationy In general, liberalization refers to a relaxation of

previous government restrictions, usually in areas of

social or economic policyyVarious forms of liberalisation are

1. Reduction of tariff and non-tariff barriers

2. Deregulation of domestic regulatory measures

3. Enhanced transparency of trade policies/regulations.4. Trade facilitation


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Objectives of liberalizationy Acceleration of industrial development.

y Better capacity utilization.

y Achieving economies of scale.y Removing and reducing procedural implements.

y Development of backward areas.

y Export promotion and import substitution.

y Increasing competitiveness and competition.


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ADVANTAGESy Promote a conductive economic and business climate necessary

for continuous growth.

y Promote a cost effective environment, encourage competition

and enhanced efficiency.y Liberalisation of trade and investment regimes as well as

deregulation and privatisation of government business activitiesgenerate opportunities for expansion of trade investment andtechnology flows.

yObtain market openings by trade partners particularly in thecontext of multi-national, regional and bilateral negotiations.

y Wider choice of goods and services.

y Reduced prices resulting from increased competition andspecialisation.


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Disadvantagesy Loss of jobs-high rate of downsitting, rightsitting.

y Increasing need of new skill sets.

y

Hire and fire policies.y Continuous struggle to prove one`s worth.

y Transfer to new geographic locations.

y Negative changes in remuneration and benefits.

y Constantly changing peers, supervisors andsubordinates.

y The stability and security factor of life hasdeteriorated.


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Globalizationy Globalization means integrating the economy of a

country with world wide economy with a view to

eliminate supply bottlenecks, improving investmentclimate and improving the quality of the products andservices provided to the ultimate customers.


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Advantagesy Allows for greater realization of potential.

y Economies of scale of operations.

y Technological and productivity improvements to crossborder specialisation.

y Utilisation of global factors of production andtechnology.

y Allows for more productive applications of capital.yWorld wide increased standard of living.

y Maximum rates of return on savings and investments.


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Disadvantagesy Perceived loss of employment.

y Production shift to low wage countries.

y Globalisation has led to environmental damage inIndia as with many developing nations.

y Due to large scale industrialisation, urban slums haveformed air and water pollution has dramatically

increased.


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Globalization and its opportunityWith regard to the dimensions of the labor force, we must be

aware of the following aspects :y The demographic component will continue to exert strong

pressure on the labor market over the next 15 years.y The socio-cultural impact of the rise of the participation of

women in the labor force.With regard to the dimensions of the supply of jobs, it is

important to stress that :y

As a result of opening of the economy and the imperativeof competitiveness and productivity.y An organizational restructuring of the productive sector

will demand the abolition of certain intermediatecategories of jobs.


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On the side of the demand for labor, our actions are to

be concentrated on :y Sustained economic expansion by means of policies to

promote growth conciliated with stabilization.

y The development of specific policies for the generationof employment, with a resumption of large scale

investments in the infrastructure and social areas.y Technical and financial support for better training in

labor intensive sectors.

y Tax incentives, improved conditions of financing for

productions and technical support for small andmedium companies

y The stimulus through financing from statedevelopment banks, of programs which preserve andcreate jobs.


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Political changes and social

changes due to globalizationy Effects that took place due globalization is increase in

inequalities across the countries as well as within the

countries.y So far globalization has created global economy, but it

has not created global community.

y The rules of world trade largely favor the rich and

powerful countries and more often work against 0rignore the interests of the poor or weak countries.


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New Industrial Policyy National Renewal fund (NRF)

y Main objective training and deployment of workers.

yVoluntary retirement scheme (VRS)y To make it better, people should concentrate on public

distribution system.

y The poor did not benefit from policies of liberalisation

& globalization and only a small section of people arebenefitted.


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Macroeconomic policy &

Employment Generation Policyy This policy emphasizing acceleration of growth rates &

presumed that employment generation would be a

concomitant of growth.y During 1983-1993, GDP rate grows lesser as to that of

employment rate.

y Restriction of expansion of public sector due to VRS &

downsizing took place. Private sector failed to fill thegap.


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y Later employment in agriculture dried. So, privatesector investment is essential

y

It provides infrastructure, water management, credit &marketing strengthenment.

y It is essential to tap the backward people to directinvestment.

y It is a strong need to provide Revival in agriculture.


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Improving productivity of

Employmenty In India, open employment is small than the under-

employment.

y

Bulk of under-employment people lies behind povertyline.

y Many awareness programmes were conducted by thegovernment. But this has to be strengthened.

y Relatively higher employment elasticities should bepromoted.

yWith appropriate policies, higher employment growthobjectives can be simultaneously furthered.


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BalancedRegional Developmenty Regions UP, MP, Bihar, & Maharashtra.

y Largely populated dependent on agriculture.

y Development strategy-agriculture modernization,rural industrialization, rapid ruraldevelopment(educational, health & skill development)

y If supported by programmes, benefit on both growth

rate and employment.y Leads to expansion of industries with the need of huge

Investments that leads to reduction in regionaldevelopment.


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Social sectory Human capital formation help in promoting capabilities of

the people to reap the benefits of globalization.

y

Globalization increases needs of skills & MNCs are themain people who uses latest technologies.

y To save poor, public sector investment should be increased

y Important to promote employment growth & socialsecurity, education, health & an effective poverty reductionprogramme.

y Programmes-Jawahar Rozgar Yojana, EmploymentAssurance Scheme(EAS), PM`s Rosgar Yojana etc,.


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Impact ofGlobalization on

Consumer & Consumerismy Indian consumerism is not well educated and hence unable

to understand the complex methods of marketing.

y

They often become victims of false claims for productsmisled by deceptive advertisements, misled by packaging,poor after sales and service and so on.

y Consumerism today, as a collective action of the consumersto protect their own interest indicates failure on the part of

the business system.y To ensure consumer protection the responsibilities lies on

the shoulders of the business, the government and theconsumer themselves.


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y The global consumer

y This impact was felt by 1980. certain changes took place in

socio-economic environment to adopt unethical practices.y Since market flooded with goods, difficult for customer to

ascertain Quality or utility of G`s & S`s.

y To capitalize unethical practices like fictitious pricing,unsafe products, adulteration, misleading advertisements,black marketing and false warranties.

y Entry of new competitors willing to make enormous longterm investments cut into the profitability of marketers.


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y Rapid rise in consumer earning. Fall in savings.Generating increasing disposable income to be sent on

consumer products and services.y Factorsresponsible forsadplightof consumerism

1. Severe imbalance in demand and supply of essentialcommodities. Produced evils in the form of

hoarding, black marketing, profiteering, corruptionnepotism, red tapism, irresponsibility and arrogancein dealing with customers.


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2. Consumers are not aware of their rights because of lowlevels of literacy.

3. Flooded marketed goods and services leads to imperfect

and inefficient competition. Consumers forced to make achoice of alternative G`s & S`s.

4. Absence of proper information, leads consumers becomeeasy victims and accept substandard, inferior and evendefective products.

5. Consumerism is still in infancy stage and hence, not wellorganized.

6. Legal frame work is still a time consuming and tiresomeprocess.


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y Hence, consumers seek redressal of their grievances bytaking the help of judiciary.

y

To succeed, international marketers must understandthe nature and extend of differences betweenconsumers of different societies.

y So, that they can develop effective targeted marketing

strategies to use in foreign market of interest.y Consumers should themselves assert their rights and

protect themselves from business malpractices.


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Conclusiony Globalization has brought different changes in the different

walks of life of people. To sum up,

a) Increased of imports than exports.

b) Increased foreign investment.

c) Increased self employment

d) Inequality and poverty has reduced.

e) More employment for women.

f) Promotion of skill development.On the whole , India has been forced to depend upon foreign

MNC`s and the initiative to introduce new organizationsin India by Indians has declined.

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01 Globalization