By :

Prof. Amit Kumar

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Global Business Management

Course: International Business Management

1. Globalization
2. Global Trade & Theory 3. Global Technological Environment 4. Global Economic Environment 5. Global Political-Legal Environment 6. Foreign Direct Investments 7. Regional Economic Integration 8. Strategy and Structure of International Business

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Global Business Management

Globalization

07/06/10 IILM-GSM

Global Business Management

Globalization

Contents
What is Globalization? Globalization of Markets Phases of Market Globalization Drivers of Market Globalization Internationalization of Firms Value Chain Globalization of Production Emergence of Global Economy Ripple Effect of Globalization Routes of Globalization Case-Study: Arrow & Apparel Industry

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Global Business Management

Globalization

What is Globalization?
A fundamental shift is occurring in the world economy.

National Economy

A Shift From

Integrated Global Economy

Process by which this shift occurs is commonly referred as Globalization.

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Global Business Management

Globalization

Facets of Globalization

Globalization has several facets, including Globalization of markets & Globalization of production.

Globalization Of Markets

Globalization Of Production

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Global Business Management

Globalization

Globalization of Markets
The Globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace. The falling barriers to cross-border trade have made it easies to sell internationally.

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Global Business Management

Globalization

Phases of Market Globalization

Since the 1800, we can identify four distinct phases in the evolution of market globalization.
Phase of Globalization Period Triggers Radical advances in information, communication, manufacturing; privatization of MNEs and economic reforms emerging country Key Characteristics Unprecedented rate of growth in global trade of products, services and capital; focus on emerging markets for export, FDI and sourcing activities; participation in international business of SMEs
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Fourth Phase

1980s to present

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Global Business Management

Globalization

Death of Distance
In their own way, globalization and technological advances are resulting in the death of distance.
In this time Period Fastest transportation was via.. Human-powered ships & horse-drawn carriages Steamships Steam Locomotive Trains Motor Vehicles Propeller airplane Jet aircraft
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At a speed of. 10 miles per hour 36 miles per hour 65 miles per hour 75 miles per hour 300-400 miles per hour 500-700 miles per hour
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1500 to 1840s 1850 to 1900 Early 1900s to Today

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Global Business Management

Globalization

Drivers of Market Globalization The term drivers refers to the global forces that have
fueled the process of globalization. These global factors have acted as catalyst that have contributed to the growth of international business.

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Declining Trade and Investment Barriers Technological Change Emergence of Global Institutions Integration of World Financial Markets
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Global Business Management

Globalization

Internationalization of Firms Value Chain

Stages in the Firms Value Chain
R&D Procurement (Sourcing) Manufacturing Marketing Distribution Sales & Services

Each value-adding activity is subject to internationalization; that is, it can be performed abroad instead of at home.
The most typical reasons for locating value-chain activities in particular countries are to reduce the costs of R&D and production or to gain closer access to customers.
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Global Business Management

Globalization

Globalization of Production
GOP refers to the sourcing of goods & services from locations around the globe to take advantage of national differences in the cost and quality of factor of production (such as labor, energy, land and capital).

By doing this, companies hope to lower their overall cost structure and improve the quality or functionality of their product offerings, thereby allowing them to compete more effectively.

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Global Business Management

Globalization

Ripple Effects of Globalization

Effects of globalization are varied, ranging from cultural degradation to the fear of loss of sovereignty. We focus on the effects of internationalization on management, Jobs, wages, child labor, women and lastly, developing countries.
Management Developing Countries Jobs

GLOBALIZATION Child Labor Women at the Workplace

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Wages

Global Business Management

Globalization

Routes of Globalization
High

The usual routes of globalizations are exports and imports, use of assets, performance of services..
Direct Investment

Use of Assets Tourism & Transportation

Performance of Services

Foreign Investment
Low Low
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Exports & Imports Presence in Foreign Markets

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High
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