BUSINESS GLOBALISATION

Submitted By:-Abhishek SharmaRoll No. :- 3252B.com(Prof.)

What is Globalisation?

Globalised World - What does it mean?

Does it mean the fast movement of people which results in greater interaction?

Does it mean that because of IT revolution people can be in touch with each other in any part of the world?

Does it mean trade and economy of each country is open in Non-Intrusive way so that all varieties are available to consumer of his choice?

Does it mean that mankind has achieved emancipation to a level of where we can say it means a social, economic and political globalisation?

Globalisation is a process where an increased proportion of economic, social and cultural activity is carried out across national borders. The process of globalisation has significant economic, business and social implications.

International Monetary Fund said, “The process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies”

OCED“The geographic dispersion of industrial and service activities, for example research and development, sourcing of inputs, production and distribution, and the cross-border networking of companies, for example through joint ventures and the sharing of assets”

Globalisation is perhaps best thought of as a process that results in some significant changes for markets and businesses to address: for example

• An expansion of trade in goods and services between countries• An increase in transfers of financial capital across national boundaries including foreign direct investment (FDI) by multi-national companies and the investments by sovereign wealth funds

• The internationalisation of products and services and the development of global brands

• Shifts in production and consumption – e.g. the expansion of outsourcing and offshoring of production and support services

• Increased levels of labour migration

Introduction of Globalisation In India

India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilateral organisations.

Major measures initiated as a part of the liberalisation and globalisation strategy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of the monopolies and the restrictive trade practices act, start of the privatisation programme, reduction in tariff rates and change over to market determined exchange rates.

Impact in India:-The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantled by march 2002, including almost all quantitative restrictions.

Globalization offers businesses access to large new markets and new labor forces.

A positive relationship between a business and society helps the business grow and makes it more profitable. Globalization occurs when a business, which has a headquarters in one country, sells products or opens stores in another country, expanding its market and investing in foreign economies. Globalization has changed with the invention of the Internet, and now businesses are becoming more sensitive to the benefits of relationships between them and societies

Benefits of Business Globalisation:-

Accessibility of Necessities:-Business globalization opens new markets around the world, allowing a business to sell products to many different countries. Amongst these products are valuable, necessary resources, such as medicines and food. The opening of these markets allows multiple societies to benefit from each medical advance.

Spread Business Practices :-Globalization creates an environment of global awareness, where companies can be held responsible for unethical business practices in foreign countries. The result is a heightened awareness about the necessity to provide consistent business practices in different countries. As businesses expand investments to other countries, they create job opportunities and new markets in these countries. Similarly, they also spread their business practices.

Objection to Outsourcing :-The rising concern over outsourcing, and the potential domestic jobs lost, creates a hostile relationship between domestic society and businesses, which outsource some of their labor force. The impression is that foreign labor forces are luring domestic businesses to open chains elsewhere at a time when domestic unemployment is high. Whether this claim is true, the impact of this is an increasingly hostile relationship and feelings of resentment.

Internet Globalization:-Businesses began globalizing more than a century ago, but the recent invention of the Internet changed the environment of this globalization. Today, businesses have a heightened impetus to utilize good business practices elsewhere in the world, as businesses are held responsible to the increase in communication between societies. As an example, if the Indian department chain chose to pay employees a shockingly low wage, the business runs the risk of Internet exposure due to the increased opportunities of employees from each chain talking to each other and the availability of the Internet to make this claim public.

Business & Government Relation

The relationship between government and business is complex, with

both positive and negative aspects in terms of what can be called the

"public good." To make things even more complex, notions of the

public good change depending on a person's ideology.

An accurate and complete understanding of Business and Government relationship necessitates an examination of the three main theories of political economy:- 

The Free MarketThe first theory of political economy revolves closely around the idea of "laissez faire" capitalism. Translated effectively as "let it be," this system proposes that there be little or no formal relationship between business and government.

SocialismIn response to inequalities inherent in a system of open competition, socialism proposes action to ensure economic equality for the entire population.. According to socialism, the public good is seen in terms of economic equality and of checking the exploitative power of business. Therefore, the only remedy would be for the government, on behalf of the people, to take control of business and direct what goods would be produced at what prices.

The Third ApproachBusiness fully controlled by government would inherently lead to inefficiency and a lowering of the standard of living, and a purely free market system would tend to undermine itself in the long run, and lead to an unstable social situation due to inequalities and contradictions. It was the role of the government to push the private sector into socially desired outcomes, but to leave it alone in terms of how those outcomes should be accomplished.

Keynes and the DepressionMany of Keynes's ideas featured prominently in the policies of the Roosevelt administration during the Depression of the 1930s. Government infrastructure projects and the "New Deal," for example, were seen as measures the government could take in order to stabilize the economy and promote new growth when systemic issues could not be resolved by the free market alone.

The Current RelationshipCurrently, most developed countries use a variation of Keynes's policies, allowing a large degree of private business while maintaining strict regulation of certain aspects of the economy through the government. Today's relationship between government and business is thus neither lassez faire nor socialist, but rather a combination of both, essentially what is called a "mixed economy."

Is Business and Government relation beneficial?

Government entities purchase goods and services from the private sector, but they also form partnerships with businesses. The government provides financial stability to the project while the business provides its expertise, technology and other assets such as land or manufacturing capacity.

Financial CapacityThe enormous taxing authority of the federal government, as well as the states, allows these entities to allocate funds in the many millions and even billions of dollars to projects and partnerships. Putting together financing packages this large is difficult for the private sector to do alone.

Funding Projects for the Public GoodWithout government involvement in the form of directly financing a project or providing loan guarantees or other assistance, certain projects that have a positive impact on society would not get done -- or at the very least, they would get done more slowly.

PrestigeFor a business, participating in a high-profile partnership with the government can add prestige and visibility, making it easier to obtain private-sector clients in the future. Being able to include the federal, state or local government on a client list is a valuable marketing tool.

Low Financial RiskDepending on one customer for the majority of a company's revenue is considered risky by most business owners. If the customer runs into financial difficulty, payments due to the company could be at risk. When partnering with the government, this risk is lessened because governments have ongoing revenues from taxes collected and also have borrowing capacity to meet their obligations.

Some Drawbacks:-

Slow Pace of BureaucracyThe approval process from the business's standpoint can be extremely slow, involving multiple meetings and presentations over a protracted period of time. Government entities have formal bidding processes that require the submission of detailed proposals that are reviewed by multiple departments. For private companies used to acting quickly, building a relationship with a government entity can seem like an extremely slow process.

Government Chooses Who WinsCritics of business and government partnerships say that they sometimes circumvent the free enterprise system and allow the government to choose which companies are the winners in the funding process, rather than the company having to be vetted by the professional investment community.

Political Shifts Can Negate PartnershipsThe leadership in the federal, state and local government can change with each election. The new leaders might not be inclined to proceed with government and business partnerships established by their predecessors. In some cases, the terms of previous deals might be renegotiated because of budgetary concerns within the government entity.