Globalization - LESSON 1 PDF

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Summary

The document discusses the concept of globalization, its various types, and factors that drive it. It also examines the effects of globalization on different aspects, such as economic development, cultural exchange, and international cooperation.

Full Transcript

# 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.

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