GLOBALISATION

Globalization is the increasing interdependence, integration & interaction among people and corporation in various locations around the world.

Interdependence is a dynamics of being mutually responsible to and sharing common ET of principles with others.

Globalization refers to rapid increase in the share of economic activity taking place across national borders.

It goes beyond the international trade includes the way in which goods/ services are produced /created, delivered &sold & movement of capital.

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

GLOBALISATION

Globalisation could involve all these things!

Threat or opportunity... Globalization can be a force for good. It has the

potential to generate wealth and improve living standards. But it isn't doing that well at the moment.

The benefits from increased trade, investment, and technological innovation are not fairly distributed.

The experience of the international trade union movement suggests that the reality for the majority of the world's population is that things are getting worse.

Globalization as we know it is increasing the gap between rich and poor. This is because the policies that drive the globalization process are largely focused on the needs of business.

KEY PLAYERSThey are-Multinational firms which carry out

business across the national borders.The World Trade Organization (WTO)

THROUGH WHICH INTERNATIONAL TRAD E AGREEMENTS ARE NEGOTIATED& ENFORCD

The World Bank & International Monetary Fund (IMF) are means to assist Govt .in achieving development aims through the provision of loans, technical assistance.

STAGES IN GLOBALISATION-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 fullfledged 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.

So why go ‘Global’?Competition within your national market is

becoming too intense so you decide to push sales in overseas markets.

Your products within your national markets are reaching the end of the lifecycle so you wish to push it into national markets.

Sales and profit are generally declining in national markets.

You wish to become a global player.

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.

INTEGRATION OF ECONOMIES

Made possible by:TechnologyCommunication networksInternet accessGrowth of economic cooperation –

trading blocs (EU, NAFTA, etc.)Collapse of ‘communism’Movement to free trade

TRADE VERSUS AID?

Benefits of Trade:Increased choiceGreater potential

for growthIncrease

international economies of scale

Greater employment opportunities

Trade has led to massive increases in wealth for many countries.Copyright: budgetstock, stock.xchng

TRADE VERSUS AID?

Disadvantages of trade:Increase in gap

between the rich and the poor

Dominance of global trade by the rich, northern hemisphere countries

Lack of opportunities for the poor to be able to have access to markets

Exploitation of workers and growers

How far does trade help children like these?Copyright: clesio, stock.xchng

CORPORATE EXPANSION

Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one country but with business operations in a number of others.

No matter where you go in the world, certain businesses will always have a presence.

Copyright: mkeky, stock.xchng

OTHER ISSUES:

Accountability of Global businesses?

Increased gap between rich and poor fuels potential terrorist reaction

Ethical responsibility of business?

Efforts to remove trade barriers

There are plenty of people who believe that globalisation is a negative development, protests at the G8 summits, pollution, poverty and concern over GM crops are just some of the issues.

Copyright: stock.xchng

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STANDARIZATION VERSUS ADAPTATION

Globalization (standardization)Developing standardized products marketed

worldwide with a standardized marketing mixEssence of mass marketing

Global localization (adaptation)Mixing standardization and customization in a

way that minimizes costs while maximizing satisfaction

Essence of segmentationThink globally, act locally

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THE IMPORTANCE OF GOING GLOBAL

For U.S. companies, 70% of total world market for goods and services is outside the countryCoca-Cola earns 75% of operating income and

two-thirds of profit outside of North America For Japanese companies, 90% of world

market is outside the country 94% of market potential is outside of

Germany for its companies

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MANAGEMENT ORIENTATIONS

Ethnocentric orientation Home country is superior to others Sees only similarities in other countries Assumes products and practices that succeed at home

will be successful everywhere Leads to a standardized or extension approach

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DRIVING FORCES AFFECTING GLOBAL INTEGRATION AND GLOBAL MARKETING Regional economic agreements

Converging market needs and wants and the information revolution

Transportation and communication improvements

Product development costs

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DRIVING FORCES AFFECTING GLOBAL INTEGRATION AND GLOBAL MARKETING Quality

World economic trends Leverage

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RESTRAINING FORCES AFFECTING GLOBAL INTEGRATION AND GLOBAL MARKETING Management myopia

Organizational culture National controls Opposition to globalization