Globalisation

Globalisation is the growing integration of the worlds economy. This means that
national economies are becoming integrated into one global economy. There is
interdependency between national markets, so changes in one part of the world
affect all the other parts. This also means, that there are interrelationships
between related businesses throughout the world, so businesses do not think
locally any more, they base their decisions on expected changes in the world
economy.
Globalisation is definitely not a new phenomenon. It has always existed since the
world economy started to take shape. So we can say it started with the discovery
of the continents. But the carriers of globalisation are not the sovereign nation-
states but the trans-national enterprises. There are some aspects of globalisation:
The growing importance of international trade: between 1980 and 1990
the volume of interna-tional trade has almost doubled.
The rise of multinational business: There are lashings of multinational
companies which we can see all around the world. The products they sell are
similar in all countries. Examples: Coca-Cola, Ford, IKEA.
The emergence of businesses which think globally about their strategy
There are some factors which contribute to the growth of globalisation:
Technological change: there is a huge development in the information
technology. The Internet and mobile communication provides fast flow of
information, which helps businesses in the growing competition.
Decreasing transport costs: the development of technology allows vehicles,
machines etc. To operate more economically.
Deregulation of business: many companies were privatised, and many of
them started to oper-ate in foreign countries, meaning competition for domestic
businesses.
Liberalisation of trade: protectionism and tariffs etc. are abolished between
many countries
Globalisation has many effects on businesses. Below are some you should know
about:
Growing competition, hypercompetition: many businesses have entered
the global market. Hipercompetition is the term we use to describe competition in
the new global economy.
Deregulation brought competition to many businesses which did not face
competition before
Economies of scale: businesses, who entered the global market are able to
enjoy the benefits of larger scale of operations. So they can reduce unit output
costs through spreading fix costs over a larger volume of output.
Beside globalisation it is necessary to mention regionalism, which might be
interpreted as a side-effect of globalisation. Regionalism is not a new
phenomenon either. But nowadays regionalism is different from the regionalism
of the late 50s and 60s:
The world economy nowadays is more liberalised than in the 50s and 60s
was. Building up a re-gional customs union is not the aim any more.
The current regional groupings are made up of countries of different level
of development an economic potential. The countries which are not so developed
hope to boost their economy through regional co-operation with a more
developed country.
And the USA is more likely to co-operate with neighbour countries
These were the most important things about globalisation. It might be useful to
think over the effects of globalisation on you, your environment or on your
country ect. These are questions youll might have to face on the exams..