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Unit 6 : Globalisation
Lecture 1
Globalization Drivers
What is Globalization?
The IMF defines Globalization 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.
Where and how Globalization has
impacted following domains?
Agriculture: Raw material?
Production? Consumer?
Sports: IPL?
Shopping: Amazon, AliBaba
Medium
Speed
1500 to
1840
1850 to
1900
1900 to
now
Human/Horse
powered
Steam locomotives
Oil based
10-15 kmph
Globalization of Business
Globalization is a mind-set which views
the entire world as a single market
Globalization encompasses
Doing or planning to expand
business globally.
Locating facilities irrespective of
national considerations.
Obtained from the best source
anywhere in the world.
History of Modern
Globalization
Signs of Globalization can be found in
ancient history as well. Silk route?
Huan-Tsang? South Indians in
South-east? Territorial attacks?
Modern Globalization
The period 1870 to 1913 : a
growing trend, Raw material, East
India Company
The late 1980s: More momentum
from the political and economic
changes. Capitalism, fall of
Communism
In India, 1991 is when Dr
Manmohan Singh under leadership
of Dr Narasimha Rao, gave boost
to Globabalization. What did they
do?
50-70 kmph
100-500+ kmph
Globalization of World
Economy
Drivers of Globalization
International trade (lower trade
barriers and more competition)
Financial flows (foreign direct
investment, and debt)
Information and
Communications Technology
(ICT)
Profound advances in computers,
digital technologies, telephony, and
the Internet.
To optimize their performance,
managing operations around the
world.
ICTs opened the global
marketplace to firms that
historically lacked the resources to
internationalize.
Manufacturing and
Transportation Technologies
Manufacturing @ low cost, via
computer-aided-design of products
(CAD), robotics, and IT-managed
production lines.
Fuel-efficient jumbo jets, giant
ocean-going freighters, and
containerized shipping.
The cost of international
transportation has declined
substantially.
Managlyan per km cost?
Lecture 2
Issue Related With Globalization
Consequences of Market
Globalization
Societal
Contagion: Rapid spread of
financial or monetary crises from
one country to another
Loss of national sovereignty (which
language survives?)
Offshoring and the flight of jobs
Effect on the poor
Effect on the natural environment
Effect on national culture
Firm-level
Countless opportunities for
internationalizing firms
New risks and intense rivalry from
foreign competitors
More demanding buyers who source
from suppliers worldwide
Greater emphasis on proactive
internationalization
Consequences of Market
Globalization
Integration and
interdependence of national
economies: Lowering trade and
investment barriers.
Rise of regional economic
integration blocs: Free trade
areas: EU, ASEAN
Growth of global investment
and financial flows : FDI,
currency trading, and global capital
markets.
Convergence of buyer lifestyles
and preferences: Emphasis on
lifestyles found in the U.S., Europe,
or elsewhere. Firms market
standardized products.
Consequences of Market
Globalization
Globalization of production:
Low labor-cost locations such as
Mexico and Eastern Europe.
Globalization of services:
Banking, hospitality, retailing,
business processes, Back office,
Banglore-ed!!
Worldwide reduction of
barriers to trade and
investment: Partly facilitated by
the World Trade Organization
(WTO). Subsidies American/Indian farmers
Market liberalization and
adoption of free markets:
Opening of China and the former
Soviet Union, roughly 1/3 of the
worlds free trade.
Employment
Offshoring and the Flight of Jobs.
Jobs are lost as firms shift services
abroad, in order to cut costs and
obtain other advantages.
Firms benefit, communities and
industries are disrupted.
Effect on the Poor. In poor
countries, while Globalization
usually creates jobs and raises
wages, it also tends to disrupt local
job markets.
MNCs may pay low wages, and
many exploit workers or employ
child labor. Sweat Shops? Apples
case?
Globalizations benefits are not
evenly distributed.
India is alleged to have stolen
(Banglored) US jobs. Who is
stealing ours? Per hour rate?
Obstacles to Globalization
Government policy and procedures:
Our policy and procedures most
complex, confusing. Vodaphone
case?
Ease of doing business.
Permissions? Maharashtra?
Ethics-Trusting, the commitment.
Indians?
High Cost: High cost of raw
materials, finance, poor
infrastructural facilities like port
etc., Waiting at Tolls for trucks?
Poor Infrastructure: Golden
Quadrilateral? Low cost airlines?
Private Railways
Obstacles to Globalization
Obsolescence: The technology
employed, mode and style of
operations etc.
Resistance to Change: Against
modernization. Strikes, Swadeshi?
Poor Quality Image: Chinese
products? Indian? German?
Delivery Problems: To keep up
delivery schedules. IT Project
management.
Obstacles to Globalization
Small Size: Not able to compete
with the giants of other countries.
Even the Big Indian companies are
small compared to the
multinational giants.
Lack of Experience, cartels
Limited R&D and Marketing
Research. How many Univs get
funding? why not?
Growing Competition: The
competition is growing from
everywhere. English speaking?
Trade Barriers: anti-dumping,
Alphanso in Europe
Factors Favouring
Globalization: India
Human Resources: Largest pool of
scientific and technical manpower.
Cheap.
Wide Base: Can support a variety
of business.
Growing Entrepreneurship:
Planning to go international in a
big way. Tata.
Growing Domestic Market: More
purchasing power, expanding
middle class
Niche Markets: Opportunities
abroad present in the form of
Lecture 3
Job Migration (Include?) By
Globalization
As one of
the
four
freedoms
of the EU,
each European citizen
may take up
and pursue
employment in the
territory
of another
member
state
The EU is
made up of
27
states
(nearly half
a
billion
people)
Members
include Germany, the
UK, France,
Poland and
Estonia
Anyone
can
work
and
live
anywhere!
Cultural Hybridism
When two cultures meet (e.g. as a
result of migration or globalising
forces) it is not necessarily true
that one set of cultural preferences,
beliefs and practices will always
overwrite and replace the other
(this has sometimes been called
McDonaldsisation)
Instead, a new culture can develop
which is a mixture or hybrid form
of the originals
The process of change is called
glocalisation
Think...
Scale (internal or international?)
Consequences (for whom? what
type?)
Complexity (there are elites to
consider, as well as poor migrants)
Critical thinking (do we see
exporting or re-writing and
re-imagining of cultures?)
An unfair world (when the rich can
move about more easily)
Citizenship (are we global citizens
or Foreign Nationals?)
Lecture 4
Web-based enablers for
Engineering and Management
Motivation
http://www.guardian.co.uk/international/story/0,,2110439,00.html)
Gains
Lecture 5
Knowledge Management
Preservation of know-how critical
to knowledge-intensive companies
Dissemination
Wide-spread applications to add
value
Supply chains of knowledge agents
and centers
Customer Focus
Enterprise Integration
Supply Strategy
Knowledge Management
Changes in Organizational Settings
Population Diversity
Migration of Jobs
Customer Focus
Process (speed, transparency,
self-help)
Customer service
(quality/reliability - Service Profit
Chain Model)
Population Diversity
U.S. Census Bureau Prediction
(2004)
Enterprise Resource
Integration
Integrated Communications
Systems -Information sharing
Wireless Applications
Leveraged legacy systems
Supply Strategy
Work Outsource: Production,
back-office work, logistics,
after-sales customer service,
procurement, inventory
management, new product design,
and others
Engineering Graduates
U.S. Census Bureau Prediction
(2004)
Knowledge Economy
Companies
Flat organization with small core
and extensive alliance/partnership
networks, with fussy company
boundaries
Idea-intensive, with digitalizable
and commodity-like goods (data,
software, entertainment, cars,
computers, jeans etc.)
Focusing on time to market, cost
reduction through technologies
supplied by alliance
High market value to book value
ratios
Functional Integration of
Knowledge Economy
Companies
Cisco Systems -Performs all
administrative functions over the
Internet, owns only 2 of 34 plants,
handles only 10% of orders by
hands
Dell Computers - Has inventory for
6 days only
General Motors - Build-to-Order
system for cars in 10 to 12 days in
the future
GE
Jack Welsh/Jeff Immelt Continuous mobility
No back office- Digitize or
outsource those parts of businesses
not touching the customers
Characteristics of Modern
Companies
Solicit real-time customer feedback
(IoT)
Target market segment of one
(mass customized
products/services)
Induce customer loyalty with
personalization of customer
relationship
Adjust to diff employee
composition (temp/outsourced)
Organize team structures to remain
flexible
Assure instant Information flow
and efficient transactions
Do performance evaluation
constantly
Use advanced tools (resources
planning, enterprise integration,
supply chain management,
customer relations management,
web-based transactions,) to reduce
staff and improve efficiency
Pursue globalization pro-actively
References
Where did I get some of this
info from?
http://en.wikiversity.org/wiki/Princi
Introduction to Marketing,
Norlina Ali
Examples of Research in
Marketing (2015). Marketing
Research Tutorial
Basic Economic concepts
http://www.conejousd.org/
Riesenberger
Globalization http://business INTERNATIONAL
environment.blogspot.in/2009/02/globalizationMIGRATION IN A
trends-in-indian-economy.html
GLOBALIZING WORLD ,
International Business: The
David Greenaway and Douglas
New Realities, 3rd Edition, by
Nelson
Cavusgil, Knight and
Copyleft