2.

Globalisation
Globalisation

Globalisation is the term used to describe the growing integration of the world’s economy. A worldwide
process that involves the increased mobility of goods, services, capital, labour, information and technology
at a global scale.
It involves:

 expansion and integration of global markets

 enormous economic potentials
 growing number of transnational companies, global brands
 free trade and capital movement
 growing importance of international trade
 better access to information, global information technologies
 global citizenship broadens horizons

Types of globalisation:
-language
-cultural -media
-economic -political
-environmental -social
-information -technological

Anti-globalisation:

They criticize the consequences of globalisation. The movement includes greens, environmentalists, civil
rights fighters, trade unionists and campaigners of many other interest groups.

They are against:  spreading uniform Western culture and

 unfair distribution of wealth English
 exploitation of the Third World (Developing  uniform taste and fashion
Countries)
 economic instability across boarders They want
 difficult to regulate, lack of transparency  the protection of ecological systems
 world bank dominance  biodiversity
 exploitation and destruction of the  local cultures
environment

Localisation:

They don't intend to rule out import or foreign capital completely, but encourage regions to be more self-
sufficient, producing at least the basic commodities they need from local resources. They typically promote
family farming, organic farming.

Protectionism:

The government tries to protect home producers from foreign competition by levying quotas and tariffs on
imported goods.

Free trade allows a country to specialise in goods that they have comparative advantage in thereby
increasing foreign sales (export). It means higher revenues and higher standards of living for the citizens in
the long run. Import provides greater choice of goods and more competitive, diverse market.

Global economic integration

The globalisation of the economy means that all fields of economic life, trade, finance, production,
investment and consumption become integrated or at least interdependent.
The European Union (EU) is one of the major actors in international trade and, as such, is very influential
in the global trading system.
The EU is the world’s largest trading bloc. It is a union of 28 member states, creating a single market of
over 500 million consumers. The EU is the world’s largest exporter of manufactured goods and services,
and the biggest export market for more than 100 countries. It represents almost one-fifth of global trade.
The EU’s member states share a single market, a single external border, and a single trade policy. This
means they can trade freely with one another without paying customs duties or taxes. It also means that in
the global market place, they act as one actor with one voice. As a single, influential actor, the EU is better
placed to shape the rules and norms in the global trading system and influence the standards and
regulations.

The EU’s trade policy has four main themes:

 Creating a global system for fair and open trade
 Creating opportunities for European companies and their workers by increasing opportunities to
trade with the rest of the world;
 Making sure others play by international trade rules;
 Ensuring trade is a force for sustainable development, in actively helping countries and people
around the world to use trade as a tool for development.

The reaction of the EU to anti-globalisation movements:

The EU is now opening its markets to agricultural products from least developed countries and giving them
expanded trade preferences, such as in extending duty and quota free access to all products originating
from these countries, except for arms and ammunition.

The role and importance of the European Union

How the EU was formed:

 after the Second World War, the idea of a united Europe was shaped, economic cooperation began
 the result was the European Economic Community (EEC), created in 1958 (establishing a single
European market, economic cooperation between six countries: Belgium, Germany, France, Italy,
Luxembourg and the Netherlands – more and more joined)
 the economic union became a union of policy areas, from climate, environment and health to
external relations and security, justice and migration
 its name changed from the European Economic Community (EEC) to the European Union (EU)
(1993 Treaty of Maastricht)
 Hungary joined in 2004
The aims and symbols of EU:
 objectives: to increase economic integration,promote economic and social progress in member
states, introduce European citizenship, establish EU law, support unity and defense for EU
countries, ensure freedom of movement (work, travel, live), establish full monetary union (EURO),
setting up customs and immigration agreements
 flag of the EU: contains 12 golden stars, blue sky (the union of European people, European
identity)

How the EU works:

the EU is governed by the principle of representative democracy:
 Legislative branch: Council of the EU, European Parliament (Council of EU: In the
Council, government ministers from each EU country meet to discuss laws and coordinate
policies. The ministers have the authority to commit their governments to the actions agreed on in
the meetings./European Parliament: The European Parliament is the EU's law-making body. It
is directly elected by EU voters every 5 years. The last elections were in May 2014. It has three
roles: legislative, supervisory and budgetary.)
 Executive branch: European Commission (European Commission: In the Council, government
ministers from each EU country meet to discuss, amend and adopt laws, and coordinate policies.
The ministers have the authority to commit their governments to the actions agreed on in the
meetings.)
 Judicial branch: Court of Justice
 European Council: the European Council brings together EU leaders to set the EU's political
agenda. It represents the highest level of political cooperation between EU countries.
 Other institutions: European Central Bank, European Court of Auditors

Economic relationships of Hungary (with Britain and the USA)

Britain
 Brexit it is the prospective withdrawal of the United Kingdom (UK) from the European
Union (EU). In a referendum on 23 June 2016, 51.9% of the participating UK electorate voted to
leave the EU.
 the best outcome for Hungary would be if the United Kingdom kept as many advantages as it could
from the openness provided by a common market, among them the close Hungarian-British
economic relations. It is equally important not to restrict the rights of Hungarians living in Great
Britain. The free movement of goods and services and to maintain conditions for a common market.
According to Hungarian politicians, the European Council must formulate strategic and political
guidelines during the exit talks, but Hungary is counting on the expertise and cooperation of the
Commission and the common representation of the interest of the EU and member states.
In 2016 that 95,000 Hungarians were working in the UK.
UK-Hungary bilateral trade in goods and services was £1,849 million in 2015. Hungary is the UK’s third
largest export market in CEE. 1.9% of Hungary’s imports are from the UK.
The top 3 UK exports to Hungary are:
medicinal and pharmaceutical products valued at £20 million
electrical machinery, apparatus and appliances valued at £8.6 million
power generating machinery and equipment valued at £7.6 million
Total direct investment by British companies since 1990 has been about £2.1 billion.

USA

The United States is one of Hungary’s most significant overseas trading partners, both in terms of trade
volume and real Gross Domestic Product (GDP).Top Hungarian export industries include: computers
electronics, heavy machinery and automotives. Top US exports to Hungary include circuit boards and
pharmaceutical products.

The following US-based companies have made major direct investments in Hungary: GE, Alcoa, AES,
Coca-Cola, O-l (Owens Illinois), General Motors, Guardian Industries, IBM, Lear Corporation, Pepsi Co,
Sara Lee, Procter & Gamble, Visteon, Ford, Citibank, Emmis International, Emerson, Zoltek, PACCAR,
Celanese, Exxon Mobil, EDS, Sykes, Jabil Circuit, McDonald’s, Burger King, National Instruments, HP,
Cisco, Microsoft, Oracle, Johnson & Johnson, Pfizer, Lilly, Monsanto, Dow Chemical, to name a few.
The highest concentration of investment is found in the telecommunication, IT and automotive industries
as well as in regional service centres.

Multinational companies:

a multinational company is an organisation which owns and controls production or service facilities outside
the country in which it is based.
 they can increase the GNP of countries
 create new jobs
 create competition for domestic firms
 introduce new technology

Intercultural differences in business life

Nowadays differences between cultures (intercultural differences) are inevitable due to new
forms of communication, the Internet and globalisation.

We can get in touch with any part of the world in just a few seconds therefore we need a
common code in order to communicate. There are obstacles of communication e.g. learnt
non-verbal signs, different socialisation or metacommunicative references. People from
different cultures do not necessarily understand expressions built in a nation’s culture and
habits.

Stereotyping, prejudice and ethnocentrism can hinder intercultural communication.

Ethnocentrism is a system of attitudes and concepts which focuses on one particular culture
and overvalues its national features therefore it undervalues other nations’ or ethnicities’
culture. Its tools are e.g. negative prejudice towards other nations and positive attitude
towards its own community.

In order to avoid the obstacles of intercultural communication/ethnocentrism:

 avoiding assumptions about other people as we cannot assume that others use the
same symbols/language/values/beliefs as we do
 avoiding making judgements about others as the fact that they think and act
differently does not mean that they think or act badly
  being aware of our differences as we have to take into consideration the differences
in order to handle them with respect

The areas of cultural differences:

 cultural context (the signal system of social and physical environment and its
influence)
 legal and ethical environment (legal system and what is accepted ethically)
 social features (e.g. who can be friends)
 non-verbal communication (e.g. gestures)
 the handling of age (e.g. how respected elderly people are)
 the handling of genders
 religions
 the significance of human abilities

For example in South Korea and Taiwan, people use less verbal communication and more
non-verbal signs. A Chinese speaker expects other to understand indirect messages and
metaphors. Children have to learn gestures and tone differences to express and understand
meaning.

Organisational culture

Products, services, human relationships, common values, traditions and beliefs of a

company all belong to organisational culture.

Organisational culture is the relation of the organisation as a whole to

- itself
- its past, present and future
- its environment
- the tasks
- groups and people within the organisation

Organisational culture = value

Organisational culture means value which determines relationships within an

organisation. Its formulation is a long learning process during which the organisation
adapts its own and others’ experiences into its value system. There can be a balance
or a difference between the presented value system of the management and the value
system of its actions. This determines the authenticity of the value system.

The value system is based on the following:

- quality
 - innovation
- informality
- client centredness
- respect of the human factor

An organisation has its own traditions, rituals, references, language and symbols. Before
globalisation organisations were in connection with the national culture. Since globalisation
it has changed a lot, but a nation’s culture can be still recognised in an organisation’s
culture.

Before acting in a foreign culture (e.g. having a meeting, writing a business letter, buying a
present etc.) you have to

- ask an expert of that culture

- look into the culture yourself
- listen

Different cultures have different levels of tolerance towards other cultures. Those cultures
that prefer verbal communication are more tolerant. If you learn the language you can
communicate successfully. In those cultures where non-verbal communication is key,
people perform more actions instinctively, which can be difficult/impossible to imitate,
language is not a key towards successful communication, behaviour is more important.

Business messages:
- plan your message
- determine your purpose, the target audience
- collect the necessary information
- choose the appropriate channel
- organise the collected information
- determine the main thoughts and length
- decide if you need direct or indirect approach
- take into consideration the beliefs and cultural environment of your recipient
- be polite, do not use ambiguous composition
- take into consideration the relationship between your companies
- represent your company, and its image
- use appropriate style
- be coherent
- check the content and clarity
- check the appearance of the message
- check for mistakes, have others check your message

If you would like to attract customers of another country:

- set your purpose (what change would you like to achieve? what should the
target audience do)
- determine the target audience (who, how many people, geographical
location, cultural features, habits, socialisation, composition, similarities and
differences, age, gender, knowledge, beliefs, expectations)
 - collect information (points of view of target audience, polls, studies, statistics,
databases)
- check your information
- structure your message

The success of the business largely depends on how well you assess the target
audience’s attitudes and beliefs.