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Globalisation could involve all these things!

Globalisation

WHAT IS GLOBALIZATION?
Globalization is an Umbrella and term defined precisely by IMF is the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows and more rapid and widespread diffusion of technology.

FREE MOVEMENT OF GOODS FREE MOVEMENT OF CAPITAL FREE MOVEMENT OF TECHNOLOGY

GLOBALISATION

FREE MOVEMENT OF SERVICES

PHASES OF GLOBALIZATION
The first era of globalization (1850 1945) was Pax Britannica under gold standard and the second phase (post second World War) is Pax Americana under Bretton Wood System

Final Act

WTO AGREEMENTS
AGREEMENT ESTABLISHING WTO

TRADE IN GOODS GATT 1994 + TWELVE AGREEMENTS

TRADE IN SERVICES

TRADE IN INTELLECTUAL PROPERTY RIGHTS

WHY GLOBALIZATION?
New opportunities to developing countries.
Greater access to developed country markets. Technology transfer lead to improved productivity. Higher living standard.

Features of Current Globalization


New Markets
New Actors

New Rules & Norms


New Tools of Communication

New Markets
Services Financial markets Antitrust laws Global brands

New Actors
Multinational Corporations W.T.O Criminal court NGOs. Regional blocs Policy coordination

New Rules & Norms


Market policies Adoption Human rights Goals & action Global environment New Multilateral Investment

New tools of communication

Internet & electronic Cellular phones Fax machines Cheaper transport Computer-aided design

FOREIGN MARKET ENTRY STRATEGIES


Exporting
Fully Owned Manufacturing Facilities

Counter trade
Strategic Alliance

Third Country Location

FOREIGN MARKET ENTRY STRATEGIES (Cont.)


CONTRACT MANUFACTURING Manufacturing in foreign country
LICENSING/FRANCHISING Company get intellectual property

Multi-national corporations (MNCs)


. . Businesses with a

headquarters in one country but with business operations in a number of others.

No matter where you go in the world, certain businesses will always have a presence.

FOREIGN MARKET ENTRY STRATEGIES (contd.)


MANAGEMENT CONTRACT Managing the business of foreign owner ASSEMBLY OPERATIONS Send parts or components to a foreign plant

FOREIGN MARKET ENTRY STRATEGIES (contd.)


JOINT VENTURING Collaboration between foreign company and host country company. MERGERS AND ACQUISITIONS Mingle with and purchase of a local company.

pictured above is the new 2009 Jaguar XF world's most expensive cars

MERITS OF GLOBALIZATION
AVAILABILITY OF GLOBAL PRODUCTS
FOREIGN INVESTMENT

OPEN ECONOMY

Integration of Economies
.
The increasing reliance of economies on each other

Stock Markets are now accessible from anywhere in the world!

The opportunities to be able to buy and sell in any country in the world

MERITS OF GLOBALIZATION (CONT.)


EMPLOYMENT OPPURTUNITIES SPREAD OF TECHNOLOGY
INCREASE COMPETITION

DEMERITS OF GLOBALIZATION
EFFECT ON LOCAL INDUSTRY
POLITICAL INTERFERENCE

CREATES UNEMPLOYMENT
SOCIAL, ECONOMIC, CULTURAL, LEGAL, POLITICAL THREATS INCOME INEQUALITY

ESSENTIAL CONDITIONS FOR GLOBALISATION


Business freedom Free Trade Zone (FTZ) Facilities Government support Resources (finance, technology, R&D, managerial expert and brand image) Competitiveness (low cost, quality, technology, after sales services & marketing) Orientation

HOW GOVERNMENT INFLUENCE COMPETITIVENESS


Competition Between the countries Challenges Between the countries According to John A young. Government Role.

ROLE OF MNE IN GLOBALIZATION

FEATURES OF MNEs
Worldwide operation. Centralised capital. Sophisticated technology. Professional management. International market. High brand equity.

BENEFITS TO HOME COUNTRY


Wider market. Employment generation.

Higher level of industrial activity.


Benefit of foreign culture.

BENEFITS TO HOST COUNTRY


Investment. Boost to domestic industry. Advanced technology. Professional management. R & D. Increase competition.

RISK TO HOME COUNTRY


Loss of employments.

Retarded development.
Detoriation of countrys culture

RISK TO HOST COUNTRY


Inappropriate technology Kill domestic industry

Retard employment
Deplete local resources Undermine culture

IMPACT OF TECHNOLOGY

OPPORTUNITY OR BURDEN
Introduction. Dependence on technology. Bringing the world closer. Effects. Improving economy. Increased quality life. Emergence of industries. Unpredictability.

TERRORISM:ROLE OF TECHNOLOGY
Negative response to globalisation. Information Technology is the heart of Modern terrorism. Ability to exploit technology. Internet. Cell phones, e-mail, satellite communication.

THANK YOU

THE JOURNEY NEVER ENDS

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