globalisation(unit v)

7/31/2019 Globalisation(Unit v)

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Globalisation

Unit- V


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Globalisation

Definitional Dimensions

The term globalisation is often

considered from different angles andthese different perceptions reflect the

different dimensions of globalisation

Definition of globalisation from threeangles economic, sociological and

corporate.


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Economic Definition

Globalisation may be defined as the process

of integrated of economies across the worldthrough cross-border flow of factors,

production and information


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Sociological Definition

Increasing social interaction across the

globe is an important feature of

globalisation. The term village epitomisesthe sociological definition of globalisation.


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Corporate Definition

From a corporate perspective globalisation in its

true sense is a way of corporate life necessitated,

facilitated and nourished by the world economy

and developed by corporate strategies.


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Globalisation of World EconomyGlobalisation of world economy is achieved,

quite obviously by globalising the national

economies

A global or transnational economy is one which

transcends the national borders unhindered by

artificial restrictions like government

restrictions on trade and factor movement


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Cont

According to Drucker, the transnational economy is

characterized by the following features:

1. The transnational economy is shaped mainly by

money flows rather than by trade in goods and

services

2. Transnational economy management has

emerged as the decisive factor of production, land

and labour have increasingly become secondary


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Cont

3. The goal market maximization and not profit

maximisation.

4. Trade which increasingly follows investment

is becoming a function of investment.

5. The decision making power is shifting from

the national state to the region.

6. There is a genuine and almost autonomous

world economy of money, credit and

investment flows.


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Globalisation of Business

Stages of Globalisation

Typically the domestic firm starts its

international business by exporting and Later it

may establish joint ventures or subsidiaries

abroad.

Ohmae identifies five different stages in the

development of a firm into a global corporation


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Five different stages1. The first stage is the arms length service

activity of essentially domestic company

which moves into new market overseas by

linking up with local dealers and distributors

2. Second stage, the company takes over these

activities on its own

3. Third stage, the domestic based company beginto carry out its own manufacturing and

marketing


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Five different stages4. Stage four, the company moves to a full insider

position in these market, supported by a

complete business system including R&D and

engineering.

5. Fifth stage, the company moves towards a

genuinely global made of operation.


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Essential conditions for

Globalisation

Business freedom

Facilities

Government Support

Resources

Competitiveness

Orientation


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Advantages

Profit advantage

Growth opportunities

Domestic market Constraints

Competition

Monopoly power

Strategic Vision


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Implications and Impact

The global dominance of industries by MNCs is

on the increase

Many countries are indiscriminate in liberalising

foreign investment.( Pepsi, coke and junk foods

are allowed even in countries like china)

A number of countries allow high foreign stake

even in industries where that is not reallyrequired


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Cont

Large number of cases of takeover of national

firms by foreign firms.

Replacement of traditional and indigenous

product by modern products.

Common criticism is that technology the MNCs

bring in may not be the one suit to the host

country.

globalisation(unit v)

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