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University of Sunderland MDIS Tashkent Campus BA (Hons) Business & Financial Management BA (Hons) Business & Marketing Management BA (Hons) Business &

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Presentation on theme: "University of Sunderland MDIS Tashkent Campus BA (Hons) Business & Financial Management BA (Hons) Business & Marketing Management BA (Hons) Business &"— Presentation transcript:

1 University of Sunderland MDIS Tashkent Campus BA (Hons) Business & Financial Management BA (Hons) Business & Marketing Management BA (Hons) Business & Enterprise Management

2 » Explain the nature of Globalization; » Assess the pace and extent of globalization; » Analyze the factors driving and facilitating globalization » Explain the importance of globalization for organizations and countries; » Analyze the factors inhibiting globalization.

3 » Globalization involves the creation of linkages or interconnections between nations. It is usually understood as a process in which barriers (physical, political, economic, cultural) separating different regions of the world are reduced or removed, thereby stimulating exchanges in goods, services, money, and people. Removal of these barriers is called liberalization. » Globalization promotes mutual reliance between countries. Globalization can have many advantages for business such as new markets, a wider choice of suppliers for goods and services, lower prices, cheaper locations for investment, and less costly labour. It can also carry dangers because dependence on foreign suppliers and markets leaves businesses vulnerable to events in foreign economies and markets outside their control.

4 » There are three main economic and financial indicators of globalization, these are: international trade in goods and services the transfer of money capital from one country to another the movement of people across national borders.

5 » It was reported that more than 300 illegal workers had been arrested at 61 Wal-Mart stores in the USA as part of an investigation into contract cleaning crews at the world's largest retailer. The investigation involved allegations that a contractor had recruited illegal immigrants, mainly from Eastern Europe. The company ended up paying millions of dollars in fines in 2005. But the story did not end there. In 2010, a group of migrant workers took Wal-Mart to court for, amongst other things, failing to give them overtime pay, and coercing them into forced labour. They claimed that Wal-Mart employed undocumented workers to evade taxes and government regulations and to avoid having to pay for health benefits. 1. What are the advantages to Wal-Mart of employing illegal migrants to clean its stores? 2. What risks might Wal-Mart face by taking on such workers? 3. Google the class action taken by the migrant workers to find the outcome of the 2010 case. » Source: The Observer, 26 October 2003; Financial Times, 24 October 2003;

6 » Political / Regulatory » Technological » Economic

7 » Free trade area — member states agree to remove tariffs and quotas on goods from other members of the area. Members have the freedom to set the level of tariff imposed on imports of goods from non-members of the area. » Customs union — this is a free trade area but with the addition that members agree to levy a common tariff on imports of goods from non-members. » Common market — this is a customs union but with the addition that member states agree to allow free movement of goods, services, capital, and labour.

8 » Improvements in communications and reductions in transport costs have facilitated the movement of goods, services, capital, and people. » Modern communications technology makes it easier for businesses to control far-flung empires. It further allows people to connect and interact over long distances, and with transport becoming easier and cheaper, goods and people are able to travel long distances quickly and at a relatively low cost (see Golub and Tomasik 2008 for changes in the cost of transporting goods).

9 » The scale of investment needed for (R&D) and production facilities can mean that the size of a single domestic market is insufficient to support that industry. » The production of electronic components requires high levels of investment in both R&D and the manufacturing process, and this drives firms to go global. » This is especially so when product life cycles are shortening, increasing the pressure to recover investment quickly. Competitive pressures on costs also push firms to reduce product lines and to expand globally to seek every possible saving from economies of scale in R&D, manufacturing, and marketing.

10 » Governments pursue policies that can hinder the flow of goods and services and the movement of capital and people across borders. » Tariffs and Subsidies; » Foreign Aid; » Controls on Capital; » Public Procurement; » Border and Immigration Controls; » Protection and Intellectual Property Rights.

11 » Open up markets to businesses that were previously excluded giving them the possibility of higher revenues and growth. » Give business access to cheaper supplies of final products, components, raw materials, orto other factors of production such as labour which lowers their costs and makes them more competitive. » Allow firms to obtain previously denied natural resources.

12 » Environment is likely to become more complex and risky; » Inefficient firms may find that it removes the barriers protecting them from foreign competitors. » Globalization can raise the dependence of plants and firms on foreign markets and suppliers; » Globalization can cause the environment to become more volatile.

13 » Examine the how Dell set up a global supply chain across four continents and penetrate the foreign markets; » How it has adjust its products to different country contexts?

14 » Given that the alliance between Microsoft and Nokia is cross-border, what potential problems might be encountered? » Why is the smartphone important for: mobile handset producers software producers PC manufacturers » Analyse the role played by competition in the tie-up of Nokia and Microsoft. » Outline the benefits and disadvantages of the tie-up between Nokia and Microsoft to each company. » Discuss the implications of the partnership for rivals such as Apple and Google.

15 » What is globalization? » How fast is globalization occurring? » Where is globalization mainly taking place? Why should that be the case? » Identify the main: indicators of globalization drivers of globalization facilitators of globalization 5. What are the important barriers to globalization?

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