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G LOBALISATION

Introduction
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.

Definitions given by IMF


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

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.

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.

Conditions for globalization


Business Freedom-No unnecessary Government
restrictions like restriction, restrictions on sourcing
of funds and other factors from abroad. Hence the
liberalization is the 1st step towards facilitating
globalization.
Facilitators-Infrastructure facilitation available at
home country an help entrepreneurs go globally.
Government support Government support available
in the form of policy & procedure reform encourage
globalization

Resources-Resources is an important factor which


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

Reasons For Globalization


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

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

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.

There is a meaningful difference between the


competitive scope of a company that operates in a
few foreign countries & company that markets its
products in 50-100 countries & expanding its
operations into additional country markets annually.
Former is termed as International Competitor while
the later qualifies as a Global Competitor.