1. Globalization

2. “The best definition of globalization”
An English princess with an Egyptian boyfriend crashes in a French tunnel, driving a German car with a Dutch engine, driven by a Belgian who was drunk on Scottish whisky, followed closely by Italian Paparazzi, on Japanese motorcycles; treated by an American doctor, using Brazilian medicines. This is sent to you by an American, using Bill Gates's technology, and you're probably reading this on your computer, that uses Taiwanese chips, and a Korean monitor, assembled by Bangladeshi workers in a Singapore plant, transported by Indian lorry-drivers, hijacked by Indonesians, unloaded by Sicilian longshoremen, and trucked to you by Mexican illegals..... (from the web)
Princess Diana's death

3. What kinds of things cross international borders?
Trade – goods and services.
You can buy a TV from China, car from Japan, clothes from Indonesia or Italy.
You can hire someone from India to write software or answer your telephone
Capital – money, investment
You can put your savings into a bank in Zurich.
You can buy stock in SONY, a Japanese company
People – immigrants, refugees, tourists
Immigrants come to Canada from Asia, Africa, S. America, Europe
You can easily travel to Europe, Asia, S. America
Communication
You can easily call or people around the world
Culture (art, music, cuisine)
You can hear music from Brazil, South Africa, India
Nearby restaurants: Chinese, Thai, Ethiopian, Indian

4. What is Globalization?
Globalization is integration of different societies and economies across the world.
It may be defined as mindset which views entire world as a single market so that corporate strategy is based on the dynamics of global business environment.
Companies having global outlook stop thinking of themselves as national marketers who venture abroad and start thinking of themselves as global marketers.
7-11 Beijing
KFC Kuwait

5. Globalisation - Definition
IMF defines Globalisation as “ the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows , and also through the more rapid and widespread diffusion of technology.”

6. Globalization of World Economy
Globalization is the process of development of the world into a single integrated economic unit.
Transnational Economy is a borderless world economy characterized by free flow of trade and factors of production across national borders
International Economy is characterized by existence of different national economies and economic relations between them being regulated by national governments.

7. Drivers of Globalization
International trade (lower trade barriers and more competition)
Financial flows (FDI, technology transfers /licensing)
Communications (traditional media and the internet)
Technological advances in transportation , electronics and related fields.
Population mobility specially of labour

8. Globalization of business
Doing, planning , expanding business globally
Giving up the distinction between the domestic market and foreign market and developing a global outlook of the business
Locating the production and other physical facilities on a consideration of the global business dynamics , irrespective of national considerations
Based on product development and production planning on global market considerations.
Raw materials are obtained from best source anywhere in the world
Global orientation of organizational structure and management culture

9. Features of current Globalization
New Markets
Growing global markets in services – banking, Insurance and transport
New Financial markets – globally linked, working round the clock with action at a distance in real time.
Mergers and acquisitions
Global consumer markets with global brands

10. Features of current Globalization
New Actors
MNCs integrating their production and marketing , dominating food production
WTO – organization with authority to enforce national government’s compliance with rules
Booming international network of NGOs
Regional blocks gaining importance – EU , ASEAN, NAFTA etc
More policy coordination groups – G – 7, G20, OECD

11. Features of current Globalization
New Rules and Norms
Market economic policies spreading around the world, with greater privatization and liberalization than in earlier decades
Widespread adoption of democracy as a choice of political regime
Growing awareness of human rights and conventions among the people around the world
Conventions and agreements on global environment- ozone , disposal of hazardous waste etc
Multilateral agreements in trade and taking on new agendas as environmental and social conditions

12. Features of current Globalization
New (Faster and cheaper) Tools of communication
Internet and electronic communication linking many people simultaneously
Cellular phones
Fax machines
Faster and cheaper transport by air, rail, road

13. Stages of Globalization - Kenichi Ohmae
Stage one – Export-Orientated Company
A company which expands from its home production base to export markets using dealers, distributors or agents.
Stage two – Overseas Branches
The company starts to set up its own sales, marketing and, perhaps, after-sales services in foreign markets.
Stage three – Relocating Production
The company relocates production to key markets
Stage four – Insiderisation
The company creates complete ‘clone models’ of the parent in overseas markets, enabling a complete local response to local consumers by being able both to analyse consumers and tailor local products to their needs.
Stage five – The Global Company
Ohmae says that at this stage some common core functions ‘consolidate back to the centre’ to provide the business with ‘common shard values’ – the global aspect – whilst maintaining the ability to provide a specific local service. Operation remains ‘dedicated to local management’, but there is global control of areas such as R&D, brand development and so on.

14. Conditions for Globalization

15. Foreign Market Entry Strategies
Exporting
Licensing/ franchising
Contract Manufacturing
Management contract
Assembly operations
Fully owned manufacturing facilities
Joint venturing
Countertrade
Mergers and acquisitions
Strategic alliance
Third country location

16. Exporting is the process of selling of goods and services produced in one country to other countries.
Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance.
Franchising While licensing arrangements are common for manufacturing industries, franchising is common for service industries. The company sells the franchise and limited use of its name for a lump sum and share of profits. Franchisees usually have to abide by strict rules. The advantages are the same as form licensing, i.e. low cost and risk
Joint Venture with companies in the host country are a long favoured mode of entry into new markets. The advantages are that the company can benefit from the partner's local knowledge of business and political systems, culture and language. The costs and risks are shared. And it may be the only politically feasible mode of entry (Bradley, 1977). This is an especially common reason now why companies entering the Chinese market usually use the joint venture mode.

17. The Global Village
We live in a world in which all regions are in contact with one another through the mass media, instantaneous communication, intercontinental travel, and highly integrated economic and political networks.
And it is changing cultures
Mobile phone tower Tanzania

18. Is Globalization Good or Bad?
McDonald’s has become a symbol of globalization
a banner the protestors carried in front of the IMF building in Washington April 2000 read: "worldwide coalition against globalization".

19. Globalization’s impact has, generally, been viewed pessimistically

20. For large parts of Africa, about 200 million people live, on less than $1 a day.
Is Globalization the cause or the cure?

21. Advantages
Free flow of technology helps developing countries to implement new technology
It offers producers a larger market since domestic firms in case of surplus can export
Improved standard of living – reduction in poverty and increase in prosperity
Rapid industrialization and greater specialization help firms to gain competitive advantage.
Increases production and consumption
Increases employment and income
Cultural exchange and demand for variety of products

22. Disadvantages Increased environmental damage
increased poverty, inequality.
erosion of traditional culture
Threat to domestic industry
Corporations are motivated by profit and have little concern for people
economic globalization developments feed into ethnic, religious, and factional tensions that lead to wars and help breed terrorism
Terrorists now globally interconnected and empowered with knowledge, create a whole new category of warfare based, in part, on the disruption of the interconnections which are both created by and necessary for globalization
Unemployment and underemployment of low skilled workers

23. Indian Economy – Step towards Globalization
Before 1991
Deep crisis in 1991
Inflation at 17%
High fiscal deficit
Lost confidence of NRIs and foreign investors
After 1991
Devaluation
Disinvestment
Dismantling of industrial licensing regime
Allow FdI
Non resident indian scheme
Thrwoing open industries reserved for public sector to private participation
Abolition of MRTP act
Removal on quantitative restriction on imports
Reduction of peak customs tariff
Wide ranging financial sector reforms

24. Impact of Globalization on Indian Economy
Favorable impact on overall growth rate of economy . This is a major improvement given that India’s growth rate in 70s was only 3% which was less that Brazil and Indonesia(their GDP being almost twice)
Annual growth rate almost doubled in 80s to 5.9 % and improved India’s global position
India’s position in global economy improved from 8th position to 4th position in 2001
Service sector now contributes to maximum part of GDP with contribution of more than 57% with ranking 18th among leading exporter of services.
Boosting agricultural growth through diversification and development of agro processing
World class infrastructure
Westernization of local culture
Destruction of organic agriculture and depletion of natural resources
Empowering population through universal education and healthcare