Globalization Summary Sheets PDF

UNIT 1 HISTORY AND DEVELOPMENT OF GLOBALIZATION Globalization V1.0 According to Niall Ferguson British historian Ferguson’s theory of globalization is based on two basic axioms The role of history: Ferguson sees...

UNIT 1 HISTORY AND DEVELOPMENT OF GLOBALIZATION Globalization V1.0 According to Niall Ferguson British historian Ferguson’s theory of globalization is based on two basic axioms The role of history: Ferguson sees the West Current phenomena and contexts are derived from the thought as an Anglo-American patterns of past times. powerhouse since the The role of history helps explain the present from the past. end of the Middle Ages. At the beginning Eurocentrism: of the 15th century, The origin of globalization can be traced back to Europe. Europe, depopulated The West forms a sociographic and cultural historical unit that shaped by wars and plague the process of globalization epidemics Ferguson sees the period before 1914 as the previous age of globalization, or KILLER APPLICATIONS Globalization V1.0. Ferguson also sees imperialism as the political corollary of An abstract idea, legal, economic developments towards the end of the 19th century, a precursor of socio-cultural decisions today’s globalization. that have given the In Globalization V1.0, the British Empire was that driving force. England’s Western sphere global dominance was based militarily and economically on the world’s competitive advantages largest navy and marine fleet, the Bank of England was the major investor in the international monetary system. What globalization V1.0 still has in common with the current state of globalization is its increased vulnerability to crises that can spread KILLER APPLICATIONS internationally. It remains difficult to accurately predict global financial and -Competition economic crises. -Science -Property rights History of Globalization -Modern medicine Globalization means the phenomenon of increasing interdependence of economic organizations, institutions, and individuals across national borders. -Consumer society Since the second half of the 20th century, the term globalization has been -Work ethics increasingly used, replacing concepts of classical modernity such as imperialism or colonialism. Globalization is the concept of modernity. Therefore, globalization can be seen as a result of modernity- postmodernism. Postmodernism has been From a Eurocentric perspective, the history of globalization mark used to question the basic the end of the Middle Ages. This includes the final collapse of the Byzantine axioms of modernity. It has a socio-cultural and Empire in 1453 and the landing on the American continent by Christopher also a political-eco- Columbus in 1492. nomic dimension. The Portuguese navigator Ferdinand Magellan, the first circumnavigation of the world by between 1519 —1522, who proofs the fundamental importance for the modern understanding of globality, enabled the socio-cognitive revolution to understand the world as a globe. British social scientist Roland Robertson identified the “three waves of globalization.” The first wave in the period around 1500 when European explorers, missionaries, and colonizers set out for the New World. The second wave in the period of industrialization, i.e., in the middle of the 19th century. The third wave is the period since the Second World War. Knut Borchardt also supports a wave model by questioning what is actually new about the individual waves of globalization compared to the preceding ones. Borchardt sees the last historical wave of globalization, before the present. Ulrich Beck considered globality to be a desideratum of a cosmopolitan world society that is no longer hindered by nation-state barriers. A central area in Beck’s theory is the concept of global risk, new global risks are increasingly man-made and therefore more unlimited, uncontrollable, and no longer compensable (e.g., nuclear reactor disasters). non-simultaneous is One of the The main driving forces of globalization paradoxes of modernity, not all states and societies go through the -Technological progress: the expansion of worldwide air transport process of progress at the same networks, the reduction in the cost of travel and the internet. time and with the same intensity. For example, gender equality. In -Regulatory framework conditions: free movement of goods and some countries women are in migration of labour. leader position and well graduated while in some countries women are -Demographic factors: a growth in global population, which lays exclude from school and forbit in the foundation for new sales markets. leader roles (Ernst Bloch). Factors Influencing Economic Globalization Economic policy (de-)regulation: The agreement on international customs and trade agreements, such as the GATT (General Agreement on Tariffs and Trade) for promoting global economic network, dismantling of trade barriers and the liberalization of world trade. Such agreements concerning varying degrees of intensity include customs union, an economic union, and a monetary union. Labor costs: The wage gap between industrialized countries and low- wage countries. Global village describes International logistics: The introduction of standardized container the phenomenon of the formats at the beginning of the 1960s led to more cost-effective entire world becoming handling of cargo as unloading times could be significantly reduced. more interconnected as Payment flows: standardization, simplification, and reduction of the the result of the cost of payment transactions such as credit card. propagation of media technologies throughout Migration: the possibility of workers migrating to countries with higher the world. wages to attract cheap labour to the manufacturing industry or the domestic service sector and to cover the shortage of skilled labour in ปรากฎการณ์ที่โลกเชื่อมถึงกันด้วย economic sectors. ความเจริ ญก้าวหน้าทางเทคโนโลยี การสื่อสารและการคมนาคมระหว่าง ประเทศ Factors Influencing Cultural Globalization Media: The invention of telephone, television, and internet in particular has become symbolic of global networking for communication. The internet has played a major role in the world growing together into a global village. Language: The English language plays a special role as a common language. Mass tourism: a greater number of people to visit distant countries in their leisure time and to experience foreign cultures. Value systems: Each culture may have different legal standards, normative value systems, and religions. Multiculturalism: the coexistence of different cultures in one geographical area (equal rights). Interculturality: intersections between one’s own and foreign cultures. Starting from basic patterns of communication (such as gestures and facial expressions) to overcome communication barriers and understanding between cultures. Transculturality: a counter-concept to multiculturalism to removing cultural boundaries. Hyperculturality: the most modern term that clearly bears postmodern traits (hyperspace). The Tension Between Globalization and Localization The local actions of many individuals, such as purchasing behavior have an impact on global flows of goods, overseas production, transcontinental logistics cooperation and, on the environment. Networking is part of the essence of globalization, all local actors in the global system are linked to each other via cause-and-effect relationships. Hybrid: the exchange Ubiquity of global products give access to products at lower prices such as and innovation of some of those luxury goods become more available to all customers in lower ideas and artifacts price (commodification). between cultures as a product of migration Thus, the tension between globalization and localization is characterized by and globalization. simultaneity, complementarity, and paradoxes. Glocalization describe a product or service that is developed and distributed globally but is also adjusted to accommodate the consumer in a local market. For example, Coca-Cola tastes good to a worldwide consumer base. The product differentiation is based on the varying willingness to consume calories with the aim of ensuring that the taste of the sugar-free version also comes as close as possible to the original product. Networking: a variety Regionalism: the tendency to shift Commodification: good of subareas of competencies from higher-level increasingly becomes a globalization (e.g., the structures to smaller territorial units. mass product by networking of data, increasing quantities and decreasing prices. transport routes, relationships, or ecological systems).  corporate social responsibility and corporate citizenship Companies can and must assume social responsibility in order to manage the consequences of globalization, and to operate ethically in accordance with the principle of sustainability. Companies have to put efforts to behave with regard to their environment, employees, and customers. Social standard and environmental standards are two main areas of ethical issues. The problems of occupational safety and child labour or forced labour. The OECD Guidelines for Multinational Enterprises cover areas of these issues with privacy and data security concerns to fight against corruption. The ISO 26000 standard is an international guide to business ethics that contains recommendations for socially responsible and sustainable action by businesses (human rights, working conditions, business practices, ecological concerns, consumer rights, and the involvement of the company as part of a local or regional community. Unit 2 International Marketing International Consumer Behavior The four Ps model of marketing mix. Successful marketing begins with understanding of consumer behavior, knowing their preferences, decision patterns, and purchase triggering motives of their product target group. A common scheme in marketing research for systematizing this price scope for decision-making is the four Ps model. placement promotion Consumers’ decision-making processes via contextual factors, differences in consumer behavior made in three levels. macro: general economic conditions (gross national income, household income, values and social norms, the role of women, degree of urbanization, demographic factors). meso: economic, cultural, and regional within a country recorded. micro: local population density, local infrastructure. There are situational factors that can also influence purchasing behavior such as Christmas festivals. MASLOW HIERARCHY OF NEEDS MODEL explain human motivations. Hofstede models of consumer behavior focus more on socio-cultural criteria for analysing consumer decisions. Six cultural dimension relevant for the assessment of purchasing decisions. power distance: In countries with a high-power distance (countries without a democratic system) leadership elite makes decisions alone and enforces them from the top down. individualism vs. Collectivism: relationship between individuals and social groups. masculinity vs. Femininity: how the distribution of roles between the sexes is organized in a culture. uncertainty avoidance: how unknown situations and risks are dealt with in different cultures. A high degree of uncertainty avoidance, order and law are valued more highly with less error in societies. long-term vs. short-term orientation: region of Asia value is placed on long-term personal relationships while the United States is placed on short-term oriented. indulgence vs. Restraint: ethical-normative disposition of a culture that has direct effects on the decision to buy or to refrain from consumption. Sinus milieu Milieus describe subsets of a society that can be distinguished from one another on the basis of certain characteristics and sometimes overlap. The milieus of different societies have different characteristics in relation to the society as a whole. It is assumed that people of one specific milieu are more likely to display similar purchasing behavior, even if from different countries. Sinus-Milieus have practical relevance in the analysis of target groups and the segmentation of buyer groups, mainly in consumer goods marketing such as in research on media use. For example, the audience ratings of TV station. Market Research The tasks of market research identify and analyse the target market. Observing new global market to anticipate new market opportunities. Maintaining marketing information. Generate flexible database to help making decision regarding 4Ps products, price, placement, and promotion. observing international consumer behavior. Measure standardization or adaptation based on regional or local conditions. measurement of marketing performance and review. Three types of market research objectives Exploratory research: gather basic information with limited preliminary information to derive initial working hypotheses. Descriptive research: a high degree of preliminary information to derive description and clarification of decisive details in quantitative and qualitative terms such as attitudes of a target group. Causal research: to explain observations and to test hypotheses. market research uses two primary methods to generate knowledge and data. Primary source: personal research (field research) such as visits to personal interview. Secondary sources: indirect sources of information that can be researched and evaluated in literature, in databases, or on the internet.  The process of international market research Indicate definition of the information Development a research design implementation of data collection analyse information and prepare for results. Report and recommendation. survey designs available to market researchers. cross-sectional surveys: look at a market condition in a defined time frame. longitudinal surveys: look at changes in a market over a continuous period of time. Experiments: field trials. The challenges of international market research Lack of access to current data Language barriers and translation problems time-consuming Difficulty in forming survey samples. The corporation of people to answer the survey questions. Standardization and Adaptation Factors that may make an adaptation of the product unavoidable or undesirable - Different national regulations and legal provisions (prohibition of certain ingredients) - Insights from market research (different taste tendencies of the target group) - Customs, practices, values, and norm (driving on the left side of the road) - Language barriers - Different power relations between manufacturer and dealer - availability of distribution channels supply chain management describes the efficient and smooth design of global supply chains from raw material suppliers to the processing industry, and on to the end consumer. raw material suppliers processing industry end consumer 4 scenarios of brand policy Global umbrella brand Scenario 1: The brand is standardized worldwide and not adapted due to local factors. Scenario 2: The brand is supplemented by national product brands (claims) Scenario 3: The co-branding between the global umbrella brand and local brand adaptation (local private label). Scenario 4: The brand is replaced with a strong national brand In price-sensitive markets, a global standard price will often be prohibitive and will offer opportunities for local, low-cost suppliers.  Three possible types of consumption using the concept of Global Consumption Orientation (GCO) Global products Localized products Pricing Strategies Hybrid Consumer behavior patterns in the GCO concept Assimilation: the adoption of global products to replace local products Separation: the rejection of global products Hybridization: mixed forms, e.g., the use of Asian spices in German cuisine -Break-even analysis (ROI but in modified, less spicy preparation calculation) Marginalization: Three main influencing factors play a decisive role in pricing. - price cap: no customers no demand - lower price limit: if the price falls below the lower price limit = loss - internal and external: excess demand or excess supply strategic approaches in competitive pricing The various standardized campaigns are used in communication policy to advertise the products. Campaigns can be successful in - Short-term sales: temporary price contributing to the uniform appearance of a global brand. But reductions - Profit maximization: a price that gives sometimes campaigns can be a market failure, for example, not very maximum profit or maximum ROI well received messages can have an impact on negative translating - low price strategy: low price to consumers or neglected slogan that leads to sensitive culture compared to the competition context. - Quality leadership: high price strategy compared to the competition International Branding The value of a brand criteria awareness of the company or brand brand loyalty high quality Patents, trademarks, and private labels Kotler’ s five brand identities Fundamental decisions must be taken into the context Actual identity of international branding. brand positioning brand name brand owner (manufacturer’s brand/a private label) brand development Desired Ideal identity identity (multi-brand strategy/single-brand strategy) Successful international brand name requirements name should be unique. name should reflect advantages of the product. easy to pronounce and memorize. easily translatable with no negative meaning to foreign language. registered as a trademark. Perceived Communicating identity identity  International Marketing Communications The goal of international marketing communication is to send a clear, consistent, and compelling message about the company, its performance, and its brands in an effective and efficient way. To establish efficient communication a company will want to follow these steps. Identify the target group. Define communication goal. To motivate the receiver of the communication to buy the goods or services: - Create awareness to draw attention. - Create brand knowledge. - Create positive feelings toward the brand. - Preferences. - Build a conviction. - Purchase offers. Design communication message. Communication message must be: - attract attention. - represent the product benefit. - provide rational and emotional incentives to buy. - provide high level of credibility. Select communication media. The internet-based marketing communication media make it easier to measure the immediate response to communicative efforts—for example, click rates, page views, or feedback. Measurement of the success. To communicate these messages, companies can use communication mix as communication channels. Digital Personal Comparative advertising: communica communic tion ation Making a direct comparison with a named of competitor. messaging The budgeting of marketing communication Digital communication and e-marketing play a central measures. role because they can react faster to changing conditions and correspond to the media usage behavior of today’s all-you-can-afford method. consumers. To implement successful websites, 7 Cs must percentage of sales method. be observed. competitive parity method. Context objective and task method. Content Community Customization Communication Connection Commerce  Unit 3 International Operation Global Production Networks Offshoring describes the relocation of Global production networks can be designed on the basis of three different business processes from one country framework concepts. to another. Common examples of global commodity chains global value chains linear structure offshoring is relocating call center global production networks services to countries abroad. approach pursues a higher degree of complexity that can be mapped in a network-like manner (network structure called configuration and The main reasons for offshoring. network management called coordination. Cost reduction through lower wage Global production networks are ultimately made up of a large number of Access to qualified personnel national sites thus, the central task of configuration is the selection of the most Shorter “time to market” suitable sites. Access to new markets Local content requirements: regulations for the provision of certain Utility value analysis: a procedure for evaluating alternatives according to a service in a particular coumtry scoring model. Tax aspects Lower environmental standards Outsourcing is the “transfer of property rights and/or internal company know-how to third companies (supplier). The reasons for outsourcing. Cost savings Higher quality Insourcing/backsourcing: The process of Focus on core competencies. reintegrating previously outsourced Flexibility and capacity fluctuations processes and functional areas due to Access to special know-how cost advantages of an outsourcing Transfer of risks to the supplier solution never occur. The cost aspect is therefore not the only decisive factor; strategic factors of market outsourced control is more difficult proximity, specialization, and risk management are also important. than expected. outsourced parties are incapable of delivering the required level of quality. The support processes sorting which sub-functions of the company organization Risks of success-critical know-how is are outsourced more or less. migrating from the company. outsourced party needs to be scaled IT operations and services back. Training Supply chain Human resources and personnel management ( recruiting). Finance and accounting Customer relationship management and marketing Contributor location: product development A simplified model differentiates between four different site roles. an isolated factory: deals with operational/productive Outpost location: Source location: activities in closed production areas. own purchasing a receiving factory: adapt to more rapidly changing and logistics, own process tasks. maintenance, development a hosting network player: operates the exchange of handling of information/ trains the staff of other locations. technical processes, and an active network player: operates proactive exchange production of innovations/ sends employees to other locations. Server location: supplier network Offshore location: development process improvements  Production technology perspective Global Logistics logistics should “efficiently manage the flow of materials and related information within the framework of the strategic specifications”. Four different systems of global logistics. procurement logistics includes all flows of goods, information, and capital that are related to sourcing and purchasing. production logistics include all physical movements of raw, auxiliary, and operating materials as well as semi-finished products, preliminary products, modules, and components. For example, the production and assembly of aircraft is an extremely complex production logistics system. distribution logistics is all about transporting the finished goods to the end users. disposal logistics is about recycling of goods residues and waste products. Logistics information can be divided into two classes of data Logistical master data: article numbers, article dimensions or location data such as addresses. Logistical transactional data: order number, invoice number. Objectives of global logistics The challenges of global logistics Ensure the flow of materials. The volatility of times. Guarantee the flow of information. Delays and damages from transportation. Reduce throughput times. The decreasing of economic efficiency. Ensure the lowest possible level of stock. Different infrastructure (roads, rails, electricity). Media breaks (changes of transportation plan The overall strategic objective of global logistics is to due to the infrastructure problems, lead to time- reduce the amount of capital that is tied up. consuming. Efficient logistics management will focus on the shortest possible throughput times and an economic balance between buffer stock and just- in-time production.  Unit 4 International Personnel Management management styles leadership excellence is the process of continuously development and reflection on leadership behavior, consists of Authoritarian three types of competence. Patriarchal Professional competence: knowledge of the areas of responsibility (high level of expertise). Consultative Methodological competence: knowledge of techniques and Cooperative instruments to cope the tasks. Social competence: ability to interact productively with others with Delegative a goal-oriented manner. Laisser-faire The challenge of international personnel management is to expand these three types of basic competence by the dimension of intercultural Autonomous competence in order to act culturally appropriate when leading multinational teams. Three strategies of corporate culture in global organizations An employee who is sent abroad on a medium- to long-term assignment will The ethnocentric strategy: the parent company generally apply generally go through the following five benchmarks for all organizational units abroad. the company-wide phases. spread of a parent company culture as a common identity, this strategy is often used on a business that focused on the home country. - Expectation The geocentric strategy: mixing individual cultures, this strategy is often - culture shock pursued by globally operating brand manufacturers whose brand image - adaptation is closely linked to the image of the company. - counter-culture shock The polycentric strategy: freedom in shaping their respective corporate - readjustment cultures, this strategy is often the case with conglomerates. Expatriate Management Expatriates are employees who are temporarily or permanently transferred from their home country to work at a foreign subsidiary. Common motivations for seeking a foreign assignment from the employee’s point of view include: personal challenge opportunity for personal development attractiveness of the foreign location expectation of positive career or fear that a refusal could have negative consequences for the career. monetary considerations. One of the problems that their partner or family does not support the decision to go abroad. Companies can, of course, help to solve these difficulties by developing special relocation programs such as finding accommodation, and organizing family matters (registering children for school) but this increases the cost factor which is the main disadvantages from the company point of view. Some types of foreign assignments can reduce risks and costs of companies i.e., short-term foreign assignment, regular business trips, virtual work abroad, video conference, or long-term foreign deployment. Inpatriate: An employee who is transferred from one Types of preparation for prospective expatriate of the company's national subsidiaries to the foreign -attend language course headquarters. - intercultural training - trainee programs  Localization of Personnel Successful personnel management will have to ensure that personnel are prepared for local working conditions include: knowledge of the local language, mentality, customs, and communication habits. knowledge of relevant legal framework conditions. knowledge of the formal requirements of the local work organization, e.g., health regulations, safety regulations, labor law. knowledge of technical used production goods, work equipment, IT systems. International Personnel Development Human resources (HR) management systems control the deployment of The objectives of international personnel personnel from the planning of work schedules, recording of working time, payroll development mainly include: accounting. - ensuring efficient and smooth workflows. - Having qualified employees. The methods of international personnel development include: - avoidance of under- and overload. - Job rotation: reassigning employees to positions that involve a large number - increasing the motivation of staff. of activities at different locations. personnel development is a system for - job enlargement: employees take responsibility with further activities employees to get wider range at the same level of requirements. opportunities to grow in their career. - job enrichment: employees take responsibility with further activities at a higher level. - International trainee programs - coaching - own personal development ESS = web-based/IT-based employee self-service portals. Unit 5 International Finance Institutions that are relevant in the context of international financing. o The International Monetary Fund (IMF): Provide short-term loans, under certain conditions, to countries in financial straits, the promotion of free trade and capital movements. Increasingly, the IMF functions as a lender that supports financially ailing states over a longer period of reform. o The World Bank: concentrates on long-term projects especially in developing countries. Borrowers can be government organizations, private companies, and organizations. International financial transactions o Clearing: bilateral agreements between governments to offset the value of surpluses (transactions between banks) o Exchange rate hedging: This provides protection against rising exchange Bretton Woods rates, currency futures. Agreement: ensured a o Arbitrage transactions: advantage of local pricing, minimal price fluctuation. fixed exchange rate o Speculative transactions: options, futures, forward transactions. against the U.S. dollar o Credit transactions: taking loans and repay. for all currencies. o International investments: Bonds (forms of investment fund that invests in comparatively safe bonds (e.g., government bonds). o Financing of commercial transactions  Forfaiter refers to the resale of medium- to long-term receivables from a foreign transaction to a buyer. This means an exporter can resell their receivable after the transaction has taken place if they have a longer payment term and can thus refinance themes more quickly. The prerequisites for forfaiting are: o service or delivery has been rendered in full. o no objections or complaints that endanger the claim for payment. o claim is not burdened with third parties claim. o monetary claim is in principle assignable. The risks of international financing are: o risks of delay o legal risks o currency and interest rate risks (currency swaps: to offset exchange rate fluctuations). o country risks (the local currency can no longer be converted, political insecurity). Unit 6 International Procurement and Distribution Global markets are divided into -procurement markets: companies supply themselves with the necessary raw, auxiliary, and operating materials. To expand the search radius for suitable procurement objects both internationally and globally, digitalization and the growing importance of the internet make it easier to systematically search across global procurement markets for the best possible offer and to choose a global sourcing strategy. global sourcing strategy: The -distribution or sales markets: systematic search for products and services on a global level. The main driver factors of global procurement are: - Simplifications - cost reductions balance of trade: a comparison of imports and exports in cross-border - internet trade between two countries. - Lower procurement costs - Non-availability of procurement objects in the domestic market - Strategic reasons - Access to new technologies: The regulatory objective behind this is to avoid an import or export surplus in the balance of trade between states. general importer: a domestic trading However, international procurement also generates other cost: higher company that has an exclusive transport, logistics, and storage costs, import fees, quality inspections contract with a foreign manufacturer cost, market research cost, agents/service providers/brokers cost, or for the import of products translation cost. Two forms of import organization: o Direct import (if purchasing the desired goods directly from a manufacturer abroad with no intermediate trade stages involved) o Indirect import (if purchasing procurement objects originating abroad from a general importer or wholesaler based in the country)  Risks of International Procurement o quality risks: The products supplied may not meet the required quality standards. o supply risks: Incorrect deliveries time can lead to bottlenecks in supply. o logistical risks: long transport distances and frequent changes of the means of transport give rise to risks of damage or even loss. These risks apply to international or global procurement. The different between international sourcing and local sourcing lies in the longer supply chains and a constant need for increased warehousing. These risks can be cushioned by using capital commitment. Capital commitment: when the capital is tied International Distribution Policy up in goods and will not be liquid until the goods are sold. Distribution can be divided into direct and indirect approaches. Direct distribution: >the manufacturer sells its products directly to the end user with Factors for choosing the right distribution the internal agents on behalf of the manufacturer. policy: >direct contact between the manufacturer and the buyer. Product-related factors Indirect distribution: Company-related factors > involves the use of at least one intermediary (middleman) who Market-related factors resells the goods from the manufacturer to the final customer. Customer-related factors Intermediary related factors Major differences between direct and indirect sales in levels of control Competitive factors and costs. Considerable advantages and disadvantages associated Environmental factors with both sales channels. Methods to select suitable sales agents in indirect distribution Points evaluation process (scoring procedure): determines the preferred sales channels or sales agents. Analyses of strengths and weaknesses: qualitatively compare the market development potential and weaknesses of selected sales agents. Gain and loss analyses: check the friction losses or additional profits when using parallel distribution channels. Investment calculation method: calculate the profitability of an investment in the company’s own distribution channels compared to the investment in maintaining distribution channels outside company. indirect distribution channel is usually associated with a loss of control on the pricing on the end-consumer part. The direct distribution channel has a higher degree of controllability and usually provides immediate market information. A profit comparison calculation is made between costs and volume-dependent profits in acquisition-based distribution across different channels to make a well-sounded decision for an indirect or direct distribution channel.