Introduction to Globalization
Chapter IPart I
glbn.flv
Objective of SessionTo define globalization and international
business and show how they affect each otherTo discuss the major advantages and
disadvantages of globalizationTo understand why companies engage in
international business
The GlobeContinents: Asia, Africa, N America, S
America, Europe, Oceania,Antartica..en_continents.gif
Continents are landmasses divided by oceans..
Oceans.. Pacific, Atlantic, Indian, Southern (Antarctic), and Arctic Oceans..world-oceans-map.jpg
GlobalizationDerived from the word globalize,
which refers to ‘emergence of an international network of social and economic systems’
One of the earliest known usages of the term as the noun was in 1930 in a publication entitled Towards New Education where it denoted a holistic view of human experience in education
Sociologists Martin Albrow and Elizabeth King define globalization as:…all those processes by which the people of the world are incorporated into a single world society
In ‘The Consequences of Modernity’, Anthony Giddens used following definition
‘The intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice
versa’
Globalization
Definition:‘emergence of interdependent relationships among people from different parts of a world’
Set of relationshipsBetween different nations
Globalization related relations…Aid to a poor countryFashion show paegentFootball matchLeisure tripYour SIP
How Globalized are youGlobalization_ You're living IT_(360p).flv
Global brands in
India
Indian brands
in global
business
Globalization:
Factors contributing to GlobalizationIncreased used of technologyLiberalization of cross-border trade and
resource movementsDevelopment of services that support
international businessGrowing consumer pressuresIncreased global competitionChanging political situationsExpanded cross-national cooperation
The Criticisms of Globalization
Threats to national sovereigntyGrowth and environmental stressGrowing income inequality
Pros and Cons of Globalization_(360p).flv
AdvantagesAccess to multiple marketsCollaborative decision makingCultural awarenessSwift spread of informationTolerance upgradation
Disadvantages of GlobalizationInequality of incomeAmericanizationSocially unequal distribution of world
resourcesCommodification of laborLess accountability for rich countries in name
of developmentSpread of deadly diseasesInhumane use of PoW and child laborHuman trafficking
Thus strong control and monitoring requiredWTOWBIMFUN
WTO: World Trade Organization
WTO replaced GATT as the organization overseeing the multilateral trading system.
Location: Geneva, SwitzerlandEstablished: 1 January 1995 as a new avatar of GATTCreated by: Uruguay Round negotiations (1986-94) Membership: 157 countries on 24 August 2012Secretariat staff: 640Head: Pascal Lamy (Director-General)
Functions:• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing countries• Cooperation with other international organizations
The World Bank is an international financial institution that provides loans to developing countries for capital programs
The World Bank's official goal is the ‘reduction of poverty’.
According to the World Bank's Articles of Agreement (as amended effective 16 February 1989), all of its decisions must be guided by a commitment to promote foreign investment, international trade, and facilitate capital investment
World Bank
IMF The organization's stated objectives are to promote international economic
cooperation, international trade, employment, and exchange rate stability,
by making financial resources available to member countries to meet balance of payments needs
UNThe United Nations is an international organization whose stated aims arefacilitating cooperation in international
law, international security, economic development, social progress, human rights, and achievement of world peace.
The UN was founded in 1945 after World War II to replace the League of Nations, to stop wars between countries,and to provide a platform for dialogue.
It contains multiple subsidiary organizations to carry out its missions.
Definition of International Business
All commercial transactions—including sales, investments, and transportation—that take place between two or more countries
Reasons That Firms Engage in International Business
Expanding salesAcquiring resourcesMinimizing risk
Modes of Operation in International Business
Merchandise exports and importsService exports and imports
Tourism and TransportationService Performance: banking, insurance,
engineering, management, interest and dividend
Asset UseInvestments: FDI(controlling interest) and
FII(non controlling interest)
Types of International Organizations
Collaborative arrangementsStrategic AllianceMultinational Enterprise (MNE)
Collaborative ArrangementsUsed to define:Companies that work as joint ventures,
licensing agreements, management contracts, minority ownership and long term contractual arrangements
New alliance
Strategic AllianceSame as collaborative agreement but often
reserved to refer either to an agreement important to one partner
Or an agreement that does not involve joint ownership
Joint work but identity apart
Multinational Enterprise (MNE)It takes a world wide view..And is willing to consider market and
production locations anywhere in the world.