Topic 1

Globalization

Globalization

• The world economic globalization process

– Theodore Levitt’s (1983) view:

• Technological advances altered communication, transportation, travel to create a global consumer who prefers standardized products.

• The entire world [or major regions of it] is now a single entity; an organization can sell the same things in the same way everywhere.

– Today’s view

International integration of goods, technology, information, labor, and capital.

Nothing is only a local event; all inventions, victories, and catastrophes affect the whole world.

Globalization is a result of:

• Political forces

– reduce barriers to trade and foreign investment.

– induce privatization of industries.

• Technological forces

– lead to advances in computers and communications technology.

– allow low cost network computing and ubiquitous Internet collaboration across borders.

Globalization Forces

• Market forces

– lead to globalizing companies’ need for their suppliers to globalize too.

– allow easier revenue seeking activity abroad due to home market saturation.

• Cost forces

– demand economies of scale -- product line and manufacturing -- to reduce unit costs.

– lower cost production factor seeking efforts in other countries.

• Competitive forces

– more intense due to explosive growth internationally of small and new businesses.

Globalization Forces

Globalization Example

Globalization Example

Globalization Example

• Alsea is the largest restaurant operator in Latin America of global leading brands in the fast food, cafeteria and casual dining segments.

• It has a diversified portfolio, with brands such as Domino’s Pizza, Burger King, Starbucks, Chili’s, Italianni’s, California Pizza Kitchen, PF Chang’s, Pei-Wei and The Cheesecake Factory.

• As of March 31, 2012, the company operated 1,431 units in Mexico, Argentina, Chile and Colombia.

• The Company has more than 27,600 employees.

Globalization Example

• Production

• Purchasing

• Distribution and Logistics: –4 Distribution

centers

–137 Cities visited per week with more than 3,300 deliveries

–1,367 Points of sale

• Finance and Accounting

• Technology and Systems

• Human Resources

• Real state development

• Internal Audit

Globalization Example

Globalization Example

Globalization Example

Globalization Example

Globalization Example

Globalization Example

Globalization Debate

• Supporting Free trade:

– enhances socioeconomic development.

– promotes more and better jobs.

• Concerns with Globalization:

– Produces uneven results across nations and people.

– Has deleterious effects on labor and labor standards.

– Contributes to the decline of environmental and health conditions.

http://www.youtube.com/watch?v=HYVRIIKb7DI&feature=related

Conclusion Globalization is like fire.

Globalization Debate

Summary

Globalization

• Definitions of globalization

– Theodore Levitt’s (1983) view: Technological advances to have standardized products.

– Today’s view: International integration of goods, technology, information, labor, and capital.

• Globalization Forces

– Political (reduce barriers, privatization)

– Technological (advances in communications, low cost network)

– Market (globalization of suppliers, home market saturation)

– Cost (economies of scale, lower cost production factor)

– Competitive (international growth of small and new business)