Evolution of Globalization Essay

The term globalization denotes â€Å"globe† as a single market. Product presence in different Markets of the world. Production base across the globe. Human resources from all over the world. International investment Transaction involving IPRs. The advent in ICI(information, communication and technology) Rapid economic liberalization of trade and investment The mobility of people and transactional moves The reach of satellite channels, internet etc. CONCEPT OF GLOBALIZATION IMF defines globalization as â€Å" The growing economical interdependence of countries worldwide through increase in volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and wide spread diffusion of technology† Charles Hill defines globalization â€Å"it is a shift towards more integrated and interdependent world economy† It has two components 1. Globalization of markets 2. Globalization of production Globalization refers to the free cross border movements of goods and services, capital, information and people. It is the process of creating network connections among the actors of multinational distances mediated through a variety of flaws. Westernatization, wallmartization, Americanization, Mcdonalization, disnaffication, coco-colonization FACTORS AFFECTING GLOBALIZATION/ DRIVERS OF GLOBALIZATION establishment of GATT(General Agreement of trade and tariff) and WTO regional integration NAFTA, ASZN, European union, SAARC, OPEZ, European integration declining trade barriers-tarrifs and quotas growth in foreign direct investment advancement in technology emergence of international monetary fund. COMPONENTS OF GLOBALIZATION 1. Globalization of markets 2. Globalization of production 3. Globalization of investment 4. Globalization of technology Globalization of markets: integrating and merging as the world market a s single market. Features: Size of the company Market for non-consumer goods, industrial goods and financial goods. Different strategies required for different markets Reasons for globalization of markets Large scale industrialization and mass production To reduce the risk and to diversify the portfolio. To increase the profit The failure of domestic companies Adverse business environment Globalization of production: Reasons Cheap raw materials, cheap labour and high quality Imposition of restriction on imports Reduce the cost of transportation Globalization of technology: Revolution in telecommunication, information technology and transportation technology ADVANTAGES / DISADVANTAGES OF GLOBALIZATION ADVANTAGES Free flow of capital, tecnology etc Increase in industrialization Spread of production facilities Balance development of world economics Increase in production and consumption Commodities with lower price and high quality Cultural exchange Demand for variety of products Increase in job and income High living standards Balance human development Economic liberalization DISADVANTAGES It kills domestic business Exploit human resources Leads to unemployment and under employment Decline in income Transfer of natural resources National sovereignty at country stake. Leads commercial and political colonization The divide between the rich and the poor The developing and under-developing countries Unemployment and mass layoff Adverse balance of payment Volatile of markets Loss of cultural identity Shift of power to multinationals Effects of globalization The globalization may be defined as the process of integration and convergence of economic, financial, cultural and political system across the world ECONOMIC GLOBALIZATION international trade, investments and capital flaws integration of economics cross border movements of goods and services, technology and capital. FINANCIAL GLOBALIZATION liberalization of capital movement deregulation of financial systems cross border capital flows listing in international changes. CULTURAL GLOBALIZATION It is the convergence ofculure POLITICAL GLOBALIZATION After the world war 2, the convergence of the political system The response strategies to globalization forces for emerging companies DEFENDER The pressure to globalization is low Understands the home market or the strength lies in deep understanding of the market or their competition assets are customized to local market. The company should adopt defensive strategy that focuses on leveraging the local assets in the market segment where internationals are weak eg: Videocon washing machine introduced semi automatic machine EXTENDER where the industrial pressure to globalization is low. They possess competitive skills and assets that can be transferred abroad Companies can focus on expanding to markets similar to home basic using competencies developed at home. Ex: haldiram DODGER where the industry pressure to globalization is very high. To compete in industries with globalization pressure is highly difficult situation for local companies. CONTENDER High pressure to globalize and transferrable abroad and competitive advantage that can be leveraged overseas by upgrading the capabilities and resources.