topic2 globalization

8/6/2019 Topic2 Globalization

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Topic 2Topic 2

GlobalizationGlobalization


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Peter Drucker In his book Management Challengesfor the 21 st century cautions:

All institutions have to make globalcompetitiveness a strategic goal. Noinstitution, whether a business, a university ora hospital can hope to survive, let alone to

succeed, unless it measures up to thestandards set by the leaders in its field, anyplace in the world.

Introduction of GlobalizationIntroduction of Globalization


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Definition of Globalization:Definition of Globalization:y The IMF (Int ernational Mon etary Fund) d efines

globalization a s t he growing int erdepe ndence of t he countri es worldwid e throug h incr easing volum e and vari etyof cro ss board er tran saction s in t he good s and servic es andof int ernational ca pital flow s, and al so throug h the mor e ra pid and wid esp r ead diffu sion of t echnology.

y Globalization i s the proc ess of incr easing t he conn ectivity

and int erdepe ndence of t he worlds mark ets and bu sinesses .


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M eaning of Globalizationy Globalization i s a mind set which views the entir e

world a s a singl e mark et so that the cor porat e strat egyis based on t he dynamic s of globalization.y Globalization i s a term u sed to d escrib e the proc ess

of r emoval of r estriction s on for eign trad e, inv estmentinnovation s in communication s and tran sportsystems. The chang es have encourag ed nation s tor educ e the high level of protection b etween countri es and to ado pt polici es to lib eraliz e their economi es inord er to volum e to trad e.

y Peo ple ar e link ed tog ether economically and socially by trad e, inv estments and gov ernanc e.

y Dismantling of trad e barri er s between nation s and t he integration of t he nation s economi es throug h financialflow, trad e in good s and servic es, and cor porat e

inv estments between nation s.


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Dimensions of GlobalizationDimensions of Globalization

Globalization can be considered at twoGlobalization can be considered at two

levels:levels:

1. Globalization of the m arkets2 . Globalization of the business or firm


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1. Globalization of the markets

Globalization of markets refers to the fact that inmany industries historically distinct and separatenational markets are merging into one huge globalmarketplace.

Globalization is a process of development of theworld into a single integrated economic unit i.e. A Global or Transnational econo my . The worldeconomy has been emerging as a global ortransnational economy.

A global or transnational economy is one which gobeyond the limits of national boarders without anyobstacles of artificial restrictions like Govt.regulations on trade and factor economic unit.


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y The globalization of production refersto the tendenc y a m ong m an y fir m s tosource goods and services fro m different locations around the globe inan atte m pt to take advantage of

national differences in the cost andqualit y of factors of production. (labor,energ y, land and capital)

2. Globalization of production :


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Driving Forces of GlobalizationDriving Forces of Globalization

y Liberalizationy M ulti National Corporationsy Technology Innovationy Transportation & Communication advancementy Competitiony Rising wantsy World Economic Trendsy Regional Integrationy World Economic Trends


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Globalisation couldinvolve all thesethings!


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Aspects of globalizationAspects of globalizationy Globalization has various aspects which affect the

world in several different waysy Industrial - emergence of worldwide production

markets and broader access to a range of foreignproducts for consumers and companies.Particularly movement of material and goodsbetween and within national boundaries.

y International trade in manufactured goodsincreased more than 100 times (from $95 billionto $12 trillion) in the 50 years since 1955. [15]China's trade with Africa rose sevenfold during2000 -07 alone. [16][17]


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y F inancial - emergence of worldwide financialmarkets and better access to external financingfor borrowers.

y By the early part of the 21st century more than$1.5 trillion in national currencies were tradeddaily to support the expanded levels of trade andinvestment. [18]

y As these worldwide structures grew morequickly than any transnational regulatory regime,the instability of the global financial infrastructuredramatically increased, as evidenced by theFinancial crisis of 20072010 .[19]


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y Economic - realization of a global common market,based on the freedom of exchange of goods andcapital.[23]

y The interconnectedness of these markets, however,meant that an economic collapse in one area couldimpact other areas. [citation needed ]

y With globalization, companies can produce goods andservices in the lowest cost location. This may cause

jobs to be moved to locations that have the lowestwages, least worker protection and lowest healthbenefits.

y For Industrial activities this may cause production tomove to areas with the least pollution regulations orworker safety regulations.


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y H ealth Policy - O n the global scale, health becomes a commodity. Indeveloping nations under the demands of Structural AdjustmentPrograms, health systems are fragmented and privatized. Globalhealth policy makers have shifted during the 1990s from UnitedNations players to financial institutions.

y The result of this power transition is an increase in privatization inthe health sector. This privatization fragments health policy bycrowding it with many players with many private interests. Thesefragmented policy players emphasize partnerships and specificinterventions to combat specific problems (as opposed tocomprehensive health strategies). Influenced by global trade andglobal economy, health policy is directed by technological advancesand innovative medical trade.

y Global priorities, in this situation, are sometimes at odds withnational priorities where increased health infrastructure and basicprimary care are of more value to the public than privatized carefor the wealthy. [26]


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y Political - some use "globalization" to mean the creation of aworld government which regulates the relationships amonggovernments and guarantees the rights arising from socialand economic globalization. [27

y ] Politically, the United States has enjoyed a position of power

among the world powers, in part because of its strong andwealthy economy. With the influence of globalization andwith the help of The United States own economy, thePeople's Republic of China has experienced sometremendous growth within the past decade.

y If China continues to grow at the rate projected by the

trends, then it is very likely that in the next twenty years,there will be a major reallocation of power among the worldleaders. China will have enough wealth, industry, andtechnology to rival the United States for the position of leading world power. [28]


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IM PACTIM PACTy Indias growt h rate in t he 1970s was very low at 3% and

GDP growt h in countri es lik e Brazil , Indon esia, Kor ea, and M exico wa s mor e than twic e that of India.

y Thoug h Indias averag e annual growt h rate almo stdoubl ed in t he eighties to 5.9% , it wa s still low er thanthe growt h rate in C hina , Kor ea and Indon esia. The pick u p in GDP growt h has hel ped im prov e Indias global position.

y Indias position in t he global economy has im prov edfrom t he 8 th position in 1991 to 4 th place in 2001; w henGDP i s calculat ed on a purc hasing power parity ba sis.


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POSI TIVE IMPAC T OFPOSI TIVE IMPAC T OFGLOBALIZA TIONGLOBALIZA TION

y Good s and peo ple ar e tran sported wit h mor e easiness andspee d

y Fr ee trad e between countri es incr easesy Global ma ss media conn ects all t he pe o ple in the worldy As the cultural barri er s r educ e, the global villag e dr eam

becom es mor e r ealistic t her e is a pro pagation of d emocraticideals

y

The interdepe ndence of the nation- states incr easesy Out sourcingy Acc ess to the latest technologyy Promotion of healthy com petitiony Im prov ement in human rig hts


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L arge Nu m ber of Multinationals Have Moved to India PostL arge Nu m ber of Multinationals Have Moved to India PostGlobalization (Strateg y 100% Equit y, Collaboration, Franchise,Globalization (Strateg y 100% Equit y, Collaboration, Franchise,Im porting, Manufacturing)Im porting, Manufacturing)

y Beverages (Cok e, Peps i)y Fast Food s (McDonald s, Pizza Hut , KFC)y Coff ee (Bari sta, Caf Coff ee Day)y S ports Wear & Good s (Nik e, Adida s)y A ppar els & Garm ents (Levis, R eid & Taylor)y

Cosmetics (R evlon , Oriflamm e, Mayb ellene)y Two/Four W hee ler s (Honda , Toyota , Suzuki , Hyundai , GeneralMotor s, Ford , Mercedes)

y Com puter s (Del, HP, IBM , Sam sung , Sony, Com paq)y White Good s (LG , Sam sung , GE)y Con structiony

Engin eering Com paniesy Pharmac eutical s (US , Euro pe, Britain)y Mu sic (Sony , BMG , Warn er)y Ent ertainm ent C hann els (Star , National G eogra phic, Discovery,

Sony)y Sourcing (IKEA , Adida s, Nik e, many ot her s)


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y Globalization of t he Indian Indu stry took place in it s variou s sector s such as steel, pharmac eutical , petrol eum , chemical , textile, cement, r etail , and BPO.

y The variou s beneficial eff ects of globalization in IndianIndu stry ar e that it broug ht in huge amount s of for eigninv estments into t he indu stry espe cially in t he BPO , pharmac eutical , petrol eum, and manufacturing indu stries. As huge amount s of for eign dir ect inv estments wer e coming tothe Indian Indu stry, they boo sted the Indian economy quit e significantly.

y This hel ped r educ e the level of un em ploym ent and poverty inthe country. Al so the benefit of t he Eff ects of Globalization onIndian Indu stry ar e that the for eign com panies broug ht inhighly advanc ed technology wit h them and t his hel ped tomak e the Indian Indu stry mor e technologically advanc ed.


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y

It incr eased com petition in t he Indian mark et between the for eign com panies and dom estic com panies. Wit h the for eigngood s being b etter than t he Indian good s, the con sumer pr ef err ed to buy t he for eign good s.

y This r educ ed the amount of profit of t he Indian Indu strycom pani es.

y The eff ects of globalization on Indian Indu stry have prov ed to be positive as well a s negativ e. The gov ernm ent of India mu sttry to mak e such economic polici es with r egard to IndianIndu stry' s Globalization t hat ar e beneficial and not harmful.


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Negativ e Eff ects of Globalization Negativ e Eff ects of Globalization ::

y Incr ease in un em ploym ent in local labor mark ety Exploitation of labor y Job in securityy Thr eat of t errori smy Incr ease in po pulationy Uneven di stribution of incom ey Bad a spe cts of for eign cultur esy For eign acqui sition sy Incr ease in pricesy Influ ence on local political d ecision s and affair s.

topic2 globalization

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