G LOBALISATION

Along with decisions about positioning,

mergers, & acquisitions ,decisions about
global moves are among the most
important ones the strategists make.
A firm that is considering doing business
abroad must have a rationale & logic for
how it can compensate for & overcome
the liabilities &disadvantages that arise
from its foreignness.

Globalization is the increasing

interdependence, integration & interaction
among people and corporation in various
locations around the world.
Interdependence is a dynamics of being
mutually responsible to and sharing common
ET of principles with others.

Globalization refers to rapid increase in

the share of economic activity taking
place across national borders.
It goes beyond the international trade
includes the way in which goods/
services are produced /created, delivered
&sold & movement of capital.

Definitions
A typical - but restrictive - definition can be taken
from the International Monetary Fund which stresses
the growing economic interdependence of countries
worldwide through increasing volume and variety of
cross-border transactions in goods and services, free
international capital flows, and more rapid and
widespread diffusion of technology.

This goes beyond the international trade in

goods and includes the way those goods
are produced, the delivery and sale of
services, and the movement of capital.

Threat or opportunity...
Globalization can be a force for good. It has the
potential to generate wealth and improve living
standards. But it isn't doing that well at the moment.
The benefits from increased trade, investment, and
technological innovation are not fairly distributed.
The experience of the international trade union
movement suggests that the reality for the majority of
the world's population is that things are getting worse.
Globalization as we know it is increasing the gap
between rich and poor. This is because the policies
that drive the globalization process are largely
focused on the needs of business.

KEY PLAYERS
They areMultinational firms which carry out
business across the national borders.
The World Trade Organization (WTO)
THROUGH WHICH INTERNATIONAL
TRAD E AGREEMENTS ARE
NEGOTIATED& ENFORCD
The World Bank & International Monetary
Fund (IMF) are means to assist Govt .in
achieving development aims through the
provision of loans, technical assistance.

STAGES IN GLOBALISATIONDomestic company links with dealer &

distributor.
Company does the activities on its own.
Company begins to carryout its own
manufacturing , marketing & sales in the foreign
markets.
Company starts fullfledged operations including
business systems and R&D. At this stage the
managers are expected to perform the tasks
which they were doing in domestic markets to
replicate them in foreign markets.

Conditions for globalization

Business Freedom-No unnecessary Government
restrictions like restriction, restrictions on sourcing
of funds and other factors from abroad. Hence the
liberalization is the 1st step towards facilitating
globalization.
Facilitators-Infrastructure facilitation available at
home country an help entrepreneurs go globally.
Government support Government support available
in the form of policy & procedure reform encourage
globalization

Resources-Resources is an important factor

which decides the ability of affirm to globalize.
They include finance ,technology, brand image,
companys image, managerial expertise etc.
Competitors- This is an important factor which
companys success in global market bank on.
The factors like low costs& price, product quality,
product differentiation, technological superiority.
After sales service, market strengths etc are few
to name.

Reasons For Globalization

Firm operate internationally for a number of
reasons:
They may be seeking to secure better sources of raw materials
& energy.
They may want to obtain access to low cost factors of
production such as labour.
They may be attracted to certain countries because of
subsidies those countries provide.
They may be seeking new markets for their products.
Domestic markets may no longer be able to absorb production
at minimum efficient scale.

Contd
They may be motivated by life style
factors.Domestic markets become
saturated .As they mature , firms look
abroad for new opportunities.
They may be seeking opportunities for
economies of scope & for learning.

So why go Global?
Competition within your national market is
becoming too intense so you decide to push
sales in overseas markets.
Your products within your national markets are
reaching the end of the lifecycle so you wish
to push it into national markets.
Sales and profit are generally declining in
national markets.
You wish to become a global player.

The Difference Between Competing

Internationally & Competing Globally
A company will start to compete
internationally by entering just one or maybe a
select few foreign markets. Competing on a
truly global scale comes later , after a
company has established operations on several
continents & is racing against rivals for global
market leadership.