Globalization - LESSON 1 PDF

# Globalization The image depicts a world map with various brand logos superimposed on it. The title "Globalization" is written at the bottom of the image. # What is Globalization? * Globalization can be defined as a process of rapid economic, cultural, and institutional integration among countri...

# Globalization The image depicts a world map with various brand logos superimposed on it. The title "Globalization" is written at the bottom of the image. # What is Globalization? * Globalization can be defined as a process of rapid economic, cultural, and institutional integration among countries. * This unification is driven by the liberalization of trade, investment and capital flow, technological advances and pressures for assimilation towards international standards. * Globalization makes the world more accessible to everyone. # Types of Globalization 1. Economic * Countries that trade with many others and have few trade barriers are economically globalized. 2. Social * Measure of how easily information and ideas pass between people in their own country and between different countries, including access to the internet and social media networks. 3. Political. * The amount of political cooperation there is between countries. # Causes of Globalization * Trade liberalization * Improvements in technology * Reduced cost/improvement of communications and transportation * Deregulation of financial markets * Increased significance of TNCs (Transnational Corporations) ## Trade Liberalization * Trade liberalization refers to a reduction of trade barriers, this will open up worldwide markets. * Trade barriers have fallen since the Second World War. * New organizations were formed to increase integration: GATT (General Agreement on Tariffs and Trade), WTO (from 1995) ## Improvements in Technology * Improved technology makes it easier to communicate and share information around the world. * The most important development in the recent years is the internet. ## Reduced Cost and Improvement of Communications and Transportation * Fall in the real cost of transporting goods has allowed cheaper importation and exportation of goods. * Decline in the cost of communications has also helped this. * Improvements in transportation have also allowed firms to split up the production process to cash in on varying conditions in different parts of the world. * This has helped to facilitate the growth of TNCs. ## Deregulation of Financial Markets * There have been moves towards removing restrictions on the movement of financial capital between countries. * Many countries have removed capital controls making operation globally easier for firms. * Development in technology that enables financial transactions to be undertaken more quickly and efficiently, i.e., the internet. * Financial markets have increased globalization due to their being set up in various countries * They allow for more interface and communication between different parts of the world over the trade of financial assets. ## Increased Significance of TNCs * After the Second World War more economic power was shifted to corporations, leading to an accelerated growth. * TNCs have grown further due to favorable corporation tax rates in many countries and tax breaks, as TNCs supposedly bring in more jobs. * TNCs participate in foreign direct investments, which increases the integration of economies. * Many TNCs want to gain entry to for example the EU due to its single market and China due to its large and growing market. # Effects of Globalization The following are the impacts of globalization: * **Increased Competition:** The image shows various fast food restaurants and beverage companies illustrating that globalization has led to an increase in competition. * **Exchange of Technology:** "MARUTI SUZUKI, Way of Life!" and "Globalization causes exchange of technology," show that the interchange of technology is a significant impact of globalization. * **Knowledge and Information Transfer:** "Globalization helps in knowledge and information transfer across the globe," shows the effect of globalization on knowledge sharing and information transfer. * **Increase in Investment Levels and Rise in Opportunities:** "Globalization has led to increase in investment levels and rise in opportunities," shows the positive of globalization that is investment and opportunities. * **Vast Multinational and Multicultural Management:** The image shows various people connected with lines in a network, and "Globalization has led to vast Multinational and multicultural management," indicating that globalization has led to organizations with diversity. * **Procurement and Outsourcing:** The image of "accenture, High performance. Delivered" and "Globalization leads to Procurement and Outsourcing," indicates the outsourcing and procurement as a result of globalization. * **Economic Development:** The graph depicts India's GDP growth rate, showing the positive impacts of globalization on economic development. * **Migrant Workforce:** "About 85% of Dubai's population consists of migrant workers, a majority of whom are from India," indicates the effect of globalization on the increase in migration. # Advantages of Globalization The following are the advantages of globalization: * **Cheaper Goods for Consumers and Better Product Quality**: * Increased competitiveness may also lead to decline in the prices of goods, improvements in quality of goods and choice of goods. * **Increase in Skilled Workers:** * Increased international labor mobility has led to an increase in skilled workers. * **Lower Cost of Production**: * Nike shoes are made in Vietnam due to lower cost of production, showing that globalization reduces the cost of production. * **Improvement in Education**: * The spread of the internet has helped to improve education, shows that globalization is improving access to education. * **Cultural Diversity**: * Increased movement of labor leads to an increase in the spread of different cultural ideas, demonstrating that globalization is increasing diversity. * **Poverty Reduction**: * GDP of the developing countries has increased twice as much as before, showing that globalization has led to poverty reduction. * **Increase in Transport Services**: * The image shows ships and flight paths across the globe; the text "Transportation: Globalization has led to tremendous increase in transport services across the globe," indicates that globalization has increased transportation services worldwide. * **Global Companies**: The image shows Diageo, a global spirits company acquiring United Spirits, the largest liquor company in India, demonstrating that globalization has led to global companies. # Disadvantages of Globalization The following are the disadvantages of globalization: * **Increased Commodity Price**: * Prices then and now have increase tremendously, showing that globalization has led to increased commodity prices. * **Exploitation of Cheap Labor**: * Workers working day and night to produce goods for very little money, showing that globalization has led to the exploitation of cheap labor. * **Cause of Diseases**: * It is the cause of very serious health problems all over the globe, indicating that globalization has led to health problems. * **Increased Relative Poverty and Inequality**: * The image shows a lavish mall and a group of impoverished people, and the quote "We have everything by globalization, we have nothing by globalization," shows that globalization has led to poverty and inequality. * **Increased Vulnerability and Instability**: * The image shows Starbucks and a local coffee shop, and the quote "The international Coffee chains are causing a serious threat to local coffee shops," shows how globalization can be a threat to local businesses. * **Disparity**: * "The Economic system that has generated tremendous wealth disparity that really seems unfair," shows that globalization has exacerbated the wealth gap. * **Uneven Wealth Distribution**: * The image shows a gold bar representing wealth distributed unevenly, "The rich are getting richer and the poor are getting poorer," shows the negative impact on income disparity. * **Reduced Domestic Markets**: * The image shows a Vodafone advertisement and text "The local players suffer huge losses as they lack the potential to advertise or export their products on a large scale. Therefore the domestic markets shrink," showing that globalization can lead to reduced domestic markets. # How Can Companies Enter Foreign Markets? Companies use various strategies to expand into international markets: * Export - Direct & Indirect * JV - Joint Ventures * Mergers and Acquisitions * Licensing, Franchising * Strategic Alliances * Management Contracts * Contract Manufacturing * FDI - Foreign Direct Investments # Pepsi's Entry into India * Pepsi entered the Indian market in 1988 due to the saturation of the US market and India's large population. * Coca-Cola was previously expelled from India in 1977. * The 1980s were marked by high government interventions making it challenging for Pepsi to launch in India. * A letter from George Fernandes, The General Secretary - Janta Dal, warned Pepsi about facing the same fate as Coca-Cola. * The liberalization of the Indian market allowed Pepsi to successfully enter the market. * Pepsi's marketing strategy in India relied on the 6Ps (product, price, place, promotion, people, politics). # Conclusion * Globalization is a key factor for international business, offering opportunities and challenges. * It allows access to benefit from international division of labor, technology, specialization, cross-cultural exchange, and consumer enjoyment of a wider variety of products at lower prices. * A higher level of thinking and strategizing is required in globalization, leading to businesses evolving in innovative ways. # References: * http://www.globalization101.org/what-is-globalization/ * http://www.eolss.net/sample-chapters/c13/e1-45-03-16.pdf * http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy1/Pepsi%20Entry%20into%20India%20A%20Lesson%20in%20Globalization.htm # Thank You The presentation was created by: * L001- HITAKSHI ARORA * Loo6- YASH BHAKKAD * L007- VARUN BORKAR The image accompanying the "Thank You" slide shows a group of people reaching up to hold a globe, representing the global impact of globalization.