Globalization : Drivers and

Outcomes

Sredharran Sampath
CEO – Aspire Training Consultancy FZE, Fujairah Creative City,
Fujairah, UAE
www.weaspireuae.com

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What is Globalisation?
❑ The growing interdependence between national economies is
reflected in a trend towards global markets, global production, global
competition and global communication.
❑ Globalisation involves the evolving interconnectedness of the world,
reflected in the expanded flows of information, technology, capital,
goods, services and people.
❑ Globalization includes, and goes beyond, simple internationalization
of markets.
a process by which national and regional economies, societies, and
cultures have become integrated through the global network of trade,
communication, immigration and transportation

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Proponents of Globalisation claim positive
effects - - - -
• promotes global economic growth,
• creates jobs,
• makes companies more competitive,
• expands consumer choice
• lowers product prices.
• the basis for disseminating technical knowledge and
education
• improves global communication and transport,
• creates new markets for firms and countries,
• generates innovation and enhanced product quality,
• fosters democratic ideals and cultural exchange and
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international understanding
Critics of Globalisation claim negative
effects - - -income
❑ generates - inequalities,
❑ destroys local industries,
❑ creates greater dependency of developing economies on developed
ones, with adverse effects on small business
❑ Local level negative effects include
increased prices of consumer goods and services,
increased price of land and housing beyond local affordability,
increased demands on public services and facilities.
❑ Some critics advance stronger claims that the effects of globalisation,
through the operation of TNCs, include
❑ displacement of indigenous peoples from lands,
❑ human rights abuses,
❑ unfair labour and wages,
❑ commodification of cultures,
4 ❑ environmental degradation
So - - - who is right?
• Generalisations are hazardous
• The effects of globalisation differ case by case and by
context.
• This is particularly true for the two- way link between the
tourism industry and globalisation.

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Domestic Business
• Domestic Business
• aimed at home market
• firm faces 1 set of economics, politics & markets

• Export Marketing
• manufactures products in the domestic market
• sells products outside of the domestic market
Deciding to go International
• Diversity of Tastes
• increased immigration
• fragmentation of the middle class

• Increasing Opportunities Overseas

• trade over $1 trillion mark

• A Domestic Market?
• ideology of free trade

• Globalization of Brand Names

Importance of International Business
• International expansion helps firm:
• Keep pace with competition
• Reach a larger market
• Reap higher profits
• Prolong the lifecycle of their products
International Philosophy
Human Marketing
Resources &
Sales

Management
internationalization
Corporation &
Business Lines
philosophy affects
all functional areas
of the corporation.
Manufacturing Finance
& Distribution
 The International Business Task
Foreign Environment
(Uncontrollables)
7. Structure of 1. Competition
Distribution Domestic environment Environmental
(Uncontrollables) uncontrollables
country market A
(Controllables) 1. Competition
Price Product 2. Technology
5. Political- Target Environmental
Market 7
6. Geography and Legal uncontrollables
Infrastructure Promotion Place or 2 .Technology country
Distribution market B
4.
Culture Environmental
3. Economy
uncontrollables
5. Political- 3. Economy country
Legal market C
4. Culture
 Self-Reference Criterion (SRC)
and Ethnocentrism:Major Obstacles

• SRC is an unconscious reference to one’s own cultural values,

experiences, and knowledge as a basis for decisions
• Ethnocentrism refers to the notion that one’s own culture or
company knows best how to do things
• Both the SRC and ethnocentrism impede the ability to assess a
foreign market in its true light
• Reactions to meanings, values, symbols, and behavior relevant
to our own culture are different from those of foreign
• Relying on one’s SRC could produce an unsuccessful marketing
program
 Avoiding the Self Reference Criterion
To avoid the SRC, the following steps are suggested:

1: Define the business problem or goal in home-country cultural

traits, habits, or norms
2: Define the business problem or goal in foreign-country
cultural traits, habits, or norms. Make no value judgments
3: Isolate the SRC Influence in the problem and examine it
carefully to see how it complicates the problem
4: Redefine the problem without the SRC influence and solve for
the optimum business goal situation*
 Developing a Global Awareness
To be globally aware is to have:

1. Tolerant of Cultural Differences, and

2. Knowledgeable of:
(a) Culture, (b) History, (c) World Market Potential,
(d) Global Economic, Social and Political Trends
 Strategic Orientation: EPRG Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
1. Ethnocentric or Domestic Business Extension Concept:
Home country marketing practices will succeed elsewhere
without adaptation; however, international marketing is
viewed as secondary to domestic operations

2. Polycentric or Multi-Domestic Business Concept:

Opposite of ethnocentrism
Management of these multinational firms place importance
on international operations as a source for profits
Management believes that each country is unique and
allows each to develop own marketing strategies locally
 Strategic Orientation: EPRG Schema
Generally, four distinctive approaches dominate strategic thinking in
international marketing:
3. Regiocentric:
Sees the world as one market and develops a standardized
marketing strategy for the entire world

4. Geocentric:
Regiocentric and Geocentric are synonymous with a Global
Marketing Orientation where a uniform, standardized
marketing strategy is used for several countries, countries in
a region, or the entire world
Ethnocentric Orientation
• Guided by domestic market extension concept:
• Domestic strategies, techniques, and personnel are
perceived as superior
• International customers are considered as
secondary
• International markets are regarded primarily as
outlets for surplus domestic production
• International marketing plans are developed
in-house by the international division
Polycentric Orientation
• Guided by the multidomestic market concept:
• Focuses on the importance and uniqueness of each
international market
• Likely to establish businesses in each target
country
• Fully decentralized, minimal coordination with
headquarters
• Marketing strategies are specific to each country
• Result: No economies of scale, duplicated
functions, higher final product costs
Regiocentric Orientation
• Guided by the global marketing concept:
• World regions that share economic, political,
and/or cultural traits are perceived as distinct
markets
• Divisions are organized based on location
• Regional offices coordinate marketing activities
Geocentric Orientation
• Guided by the global marketing concept:
• The world is perceived as a total market with
identifiable, homogenous segments
• Targeted marketing strategies aimed at market
segments, rather than geographic locations
• Achieve position as low-cost manufacturer and
marketer of product line
• Provides standardized product or service
throughout the world
 Strategic Orientation: EPRG Schema
Orientation EPRG Schema

Domestic Business (Ethnocentric)

Extension

Multi-Domestic (Polycentric)
Marketing

Global Business (Regio/Geocentric)

Drivers of International Expansion
• Competition
• Regional Economic and
Political Integration
• Technology
• Improvements in Transportation
and Telecommunication
• Economic Growth
• Transition to Market Economy
• Converging Consumer Needs
Drivers of International
Expansion, continued
COMPETITION
• McCann Erickson, the
advertising agency,
follows longtime client,
Coke, to all countries
where company is
present
Drivers of International
Expansion, continued
REGIONAL, ECONOMIC and POLITICAL
INTEGRATION
• Regional agreements such as
NAFTA, MERCOSUR, and the
European Union lower and
eliminate barriers and promote
trade within common markets.
• Subsidiaries are established in
specific markets to take
advantage of free trade within
the region.
Firm-Specific Drivers
Product Life Cycle Considerations: opportunity to
prolong product lifecycle by entering growth markets.

Intro Growth Maturity Decline

Sales
Sales

Profits
Firm-Specific Drivers, continued
High New Product Development Costs:
• Firm must look beyond home-country market to recover investment
costs
Firm-Specific Drivers, continued
Standardization, Scale Economies, Cheap Labor
Price competition during maturity drives firm to new
international markets

Intro Growth Maturity Decline

Sales Sales

Profits
Time
Firm-Specific Drivers, continued
Experience Transfers
Experience in one country serves as basis for strategies
in new international markets.
Obstacles to Internationalization
• Self-reference Criterion
• Conscious and unconscious reference to own national
culture while operating in the host country
• To counter the impact of the self-reference criterion, the
corporation must select appropriate personnel for
international assignments and engage in sensitivity
training
• Government Barriers
• Restrictions placed on foreign corporations by imposing
tariffs, import quotas, and other limitations, such as
restrictive import license awards
Obstacles to Internationalization, continued
• Barriers Imposed by International Competition
• Blocked channels of distribution
• Exclusive retailer agreements
• Price reductions at the time of market entry
• Advertising blitzes
5 Drivers of Globalisation
•Economic
•Technological
•Demographic
•Social
•Political

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Economic Drivers
❑ Globalisation drives the integration of national economic systems,
including
• greater trade in goods and services,
• the creation of trading blocks, with the ability to move goods and
services freely across borders,
• substantial, and increasing, volumes of world trade.
❑ The centre of gravity of the world economy is shifting from west to
east and north to south.
❑ Rapid income growth within emerging economies is creating new
markets and new sources of competition. Newly emerging economies,
particularly China and India, are driving this growth in trade.

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Economic Drivers
• Easier access to foreign capital and increased FDI provides the
foundation for import substitution and export promotion to generate
competitive markets.
• Globalisation induced economic growth is a source of tax revenue for
development financing. TNCs can help developing countries to
improve their balance of payments with critical financial infrastructure
for economic and social development
• more integrated and interrelated world labour market.
❑ Does globalisation reduce global economic inequalities?
While jobs are created in developing countries, globalisation is
claimed to cause unemployment in industrialized countries as
businesses outsource work to developing countries where the cost of
labour is low.
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Technology Drivers
• The globalizing economy and technological change inevitably require a
more highly skilled labour force.
• Developments in information and communications technology (ICT)
and transportation have accelerated the pace of globalisation,
lowering operating costs and making it more economically feasible for
a firm to locate in different countries.
• technology makes it possible to produce customised services on a
large scale at cost competitive prices (mass customisation).
• Technological spillovers are particularly important for developing
countries providing opportunities for them to narrow the productivity
gap with the developed economies.

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Technology Drivers
• The Internet and related social media has been a vital
development across all industries as consumers use it to
gather information on destination, products and services.
• Rise of social media. Internet services such as Facebook,
Twitter, YouTube and Skype, e cross-cultural
communication.
• Technological advances in the transport sector, particularly
aviation, enable the continued rise in mobility as people are
able to move greater distances, more comfortably and in
faster time.

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Demographic Drivers
• Major demographic shifts have profound effects on most social
institutions.
• important drivers involve the related areas of population growth
and age structure change, driven by differential fertility rates and
improved health care
• A high standard of public health in developed countries has
contributed to increased longevity. With increasing longevity, the
growing world population is ageing, especially in rapidly
expanding urban areas
• Population is ageing in developed countries but getting younger
in developing countries.
• Population growth in the context of globalisation has generated
a worldwide trend toward urbanisation. By 2020, more than 60%
of global population will live in cities The number of very large
cities, megalopolises of more than 10 million people, will
increase to about 30 by 2020
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Social Drivers
• Parallel to changes in demography are changes in people’s values
and needs, aspirations and expectations.
• As incomes rise in most countries in the world, so people’s values,
aspirations, motivations and behaviour do too.
❑ Worldwide, people possess:
• an increased sense of deservingness with emphasis on quality.
• Individualism
• Money rich time poor
• Experimental
• Hedonistic
• Feeling of deservingness
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• Social and environmental consciousness - - -
Social Drivers
❑ Globalisation has produced a generation that is more international in
its outlook than any before.
This is demonstrated in membership of international organisations,
studying abroad, taking part in human rights campaigns and so on.
❑ the migration and movement of people – either from rural to urban
environments within countries or migration related between
countries is a prominent feature of the globalization process.
provides better opportunities for people all round the world to gain
access to jobs.

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Political Drivers
• increasing liberalization of trade and capital markets.
• International bodies such as the World Trade Organisation (WTO) and
the International Monetary Fund (IMF) have facilitated globalisation
by respectively reducing trade barriers (such as tariffs and subsidies)
and the deregulation of world financial markets.
• The Organisation for Economic Cooperation and Development (OECD)
and the World Bank support continued liberalisation of trade through
their lending and debt relief policies.

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Political Drivers
• ongoing political pressure for higher living standards in developing
societies with a growing global middle class creating a cycle of rising
aspirations.
• A rapid expansion of the private sector in many emerging market
economies,spurs economic growth by generating competitive
pressures to use resources more efficiently
• development of generic consumer protection frameworks in many
countries providing certainty to all businesses and consumers as to
their rights, expectations, responsibilities and obligations across all
industries

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These Drivers Affect Tourism Development
• The above highlights only some of the relevant drivers of globalisation
• Each of the drivers has tourism relevance and no single driver or trend
will dominate.
• Each influences the others and will have varying impacts in tourism
destination different regions, countries, industry sectors and tourist
behaviour.
• The drivers are not necessarily mutually reinforcing; in some cases
they will work at cross-purposes.
• Taken together they set the context in which the global tourism
industry will develop in a context of continued globalisation.
• The trend towards increased globalisation will boost tourism, as
people are increasingly ‘international’ and ‘cosmopolitan’ in their
outlook.
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Effects of Globalisation on Tourism Supply and
Demand
• Economic Growth
income inequality,
economic dependency
consolidation
tourism expenditure leakages
destruction of local industry,

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Economic Growth
• Globalisation is considered to increase the economic prosperity of
countries, as rising trade and investment flows generate additional
world GDP.
• In particular, strong income growth in developing economies such as
BRIC (Brazil, Russia, India, China) is expected to drive the increase in
international tourism worldwide as the ‘new wealthy’ seek new
experiences.
• The UNWTO projects tourism to grow at 4.1% annually at least to
2020, fuelled primarily by economic growth internationally.
• By 2030, it is forecast that destinations in today’s emerging economies
will account for 57 percent of international tourist arrivals compared
to 47 percent in 2011
• As rising income is the most powerful generator of tourism flows to
the extent that globalisation generates a dynamic world economy, it
also creates the economic basis for continued growth in domestic and
international tourism worldwide.
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• The circle may be virtuous.
The other side - - -
• Critics have argued that globalisation has effects that greatly reduce
the economic impacts of tourism growth.
income inequality,
economic dependency
consolidation
tourism expenditure leakages
destruction of local industry

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Income inequality
• A particular advantage claimed for globalization is that it fosters the
generation of employment, increasing the standard of living of people
worldwide, and also alleviating poverty.
• Over time, as nations become wealthier and more efficient, the
benefits of trade will ‘trickle down’, reducing poverty levels.
• Even so, a causal relationship between inbound tourism and economic
growth may not necessarily lead to higher living standards in
developing countries, as these are also dependent on the distribution
of income and the quality of services such as health care and
education.
• Some studies suggest caution when generalizing the effects of tourism
growth on poverty within a country.

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 Dependency
❑ Most developing economies are highly vulnerable to any economic
disruptions that occur in the developed countries that purchase their
products.
❑ Two types of risks from overspecialisation relate to tourism.
a dependency on tourism in general as an export market. The global
financial crisis has demonstrated the risks involved in tourism
dependency arising from sudden unfavourable changes in demand
from world markets
too much reliance on tourism from particular origin markets or too
much reliance on a particular tourism product (e.g. hunting, spa
tourism, gambling).
❑ Given the discretionary nature of tourism expenditure, the industry is
extremely sensitive to crises of every type (economic, environmental,
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political).
Dependency
• Both of the above types of risk are compounded by the reality
that TNCs are increasingly 'footloose', with ability to move and
change at very short notice creating uncertainty for the host
destination.

• TNC’s can switch their investments between territories in search

of the most favourable regulatory regimes with adverse
consequences for the local tourism industry.

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Dependency
❑ In many developing countries, local economic activities and
resources are used less for the benefit and development of
communities and increasingly for export and the enjoyment of others
(i.e., consumers from other areas of the world). This occurs in tourism
when the domestic market is neglected.
❑ To avoid overdependence on the international tourism market and
related problems, countries can explore tapping the potential of
domestic tourism
domestic tourism can effectively absorb the excessive supply
resulting from any slumps and seasonality of inbound tourism.
This also helps redistribute the national income, thus reducing
interregional gaps in the level of economic development and
contributing to social equality.
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Consolidation
• For many tourism firms, survival in the global marketplace
requires merging with or taking over companies that deliver
different components of the whole product.
• The growth of TNCs, and the rise in the significance of global
brands, has been central to the emergence of globalisation in
the tourism industry.
• The high concentration in some tourism sectors creates market
power and the potential for abuse by large international firms as
evidenced by exclusionary agreements, price fixing, market
sharing among dominant operators or boycott and refusal to deal
with operators in developing countries.
• These anti-competitive agreements and conduct can impose
substantial costs particularly on developing economies
eliminating many of the benefits of globalisation
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 Leakages
• Expenditure patterns of international tourists has a higher import
content than the expenditure of domestic tourists.
• The resulting higher leakages imply a loss of foreign exchange and a
loss of economic benefits outside of the community back to foreign
owners.
• The weaker industrial bases of developing countries implies that most
products demanded by tourists cannot be manufactured
domestically.
• Weak links between tourism and other sectors in a destination
implies a weak ‘multiplier effect’ from tourism expansion
• Leakages also include export of profits by TNCs’ to foreign locations
by way of repatriation of profits to their 'home country',

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De-industrialisation
❑ Globalisation can also erode an economy's manufacturing base.
Local businesses, particularly in developing countries, face much
greater competition due to globalisation.
This can put local tourism SMEs at a disadvantage as they do not have
resources to compete at global scale.
Local stakeholders may also be pushed out or sell out
local prices for commodities and services rise, as do taxes.
The crowding out effects of export oriented tourism growth, resulting
in the decline of local (non- tourism) industries, are well recognised.

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Employment Opportunities: Positive
• Globalization can be a catalyst to the creation of jobs that require
higher skill sets.
• Globalisation generates greater labour mobility as the internet
provides greater opportunities to gain jobs internationally.
• The implications of this for tourism employment include an increased
demand for people with language skills, and with the skills to work in
different cultural environments.
• Tourism can also be a good employer of women and disadvantaged
groups and can upgrade their economic status.
• The jobs created by tourism can act as a very important motivation to
reduce emigration from rural areas. Local people can improve their
earnings prospects through tourism-related professional training.

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Employment Opportunities: negative
• competition from other sectors is causing a diminishing labour pool of
tourism staff of the right quality.
• the jobs created may be low-skilled with the TNC employing
expatriate workers for the more senior and skilled roles.
• TNCs can operate as local monopsonies of labour, and push wages
lower than the free market equilibrium.
• Local employment can be low level or unskilled, seasonal, low wage,
part time with little opportunity for advancement and development of
business and organizational skills.
• the tourism-related informal sector may contract as the
tourism-related formal sector expands

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Spread of Technical Knowledge
• Access to information technology provides awareness of other
countries and their tourism offers.
• The tourism industry globally uses social media platforms such as
Facebook, Twitter, YouTube and travel blogs such as TripAdviser,
much more intensively, both on the demand and supply side
• These new technologies have facilitated greater information flows
between travellers.
• interactive access to product offering via the Internet gives tourists
unprecedented control over how they spend their time and money

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Spread of Technical Knowledge
• Travel and tourism companies and organisations increasingly
integrate ICT into their sales and marketing activities.
• The Internet allows marketing activity to be undertaken on a
more level playing field whereby small businesses can connect
directly to consumers and compete for market share on an even
footing with larger firms
• New technologies globally also compete with tourism by
delivering new forms of entertainment in or near the consumer’s
home.
• The new technologies with sophisticated database management
systems have transformed travel and tourism into a more
flexible, customised, individual-oriented activity responding to
individual preferences
• Technology changes thus enable an increasing proportion of
tourism organizations to achieve the dual goals of reducing
operating costs and increase their ability to add value for their
55 customers.
Spread of Technical Knowledge
• In the transportation sector, new technology is improving
the speed and reducing the real cost of travel.
• However, developing countries do not have a proper
infrastructure in place to leverage technological benefits
(TTCI)
• Is there ‘too much’ technology?. A consideration for the
tourism sector will be whether it can deliver authentic
experiences that aren’t crowded by technology.

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New Markets
❑ two main causes of the development of new markets in
tourism, both of which are associated with globalisation.
demographic variables
new consumer values.

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Demographics: Population Change
• Population growth generates substantial expansion in overseas travel.
• Mass tourism is one of the visible manifestations of globalization.
• In 2000 the rate of international journeys was 11.5 per 100 people. At
this rate population increase alone would see a 20% rise in
international travel. However increases in wealth, particularly in
developing countries, are expected to see the rate of journeys grow to
20 per 100.
• Population growth is much higher in developing countries.
• The changing distribution of the population implies the importance of
Asian tourists to all markets.
• emerging economies expected to experience faster growth in tourist
arrivals
• By 2030, it is forecast that destinations in today’s emerging economies
will account for 57 percent of international tourist arrivals compared
to 47 percent in 2011.
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Demographics: Urbanisation
• The world is experiencing a shift from rural to urban communities.
• This trend is a positive development for tourism, since urban dwellers
have a greater propensity to travel than those living in rural areas.
• The growing urban congestion in both the industrialised and
developing economies leads to the increasingly felt need to engage in
discretionary tourism to escape and/or to indulge.
• As the world’s population grows and becomes increasingly urbanised,
tourists will be drawn to nature-based experiences.

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Migration
• Migration levels worldwide have increased substantially
due to globalisation.
• Migration and tourism are clearly interlinked.
• Both Migration- Led Tourism (MLT) and Tourism- Led
Migration (TLM) make important economic and social
contributions to countries ranging from cultural
exchange to providing labour for tourism related
industries.

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Age Re-structuring
• Increased life expectancy means larger numbers of older tourists from
existing markets in developed countries.
• Increased longevity increases the period over which people are active
travellers and tourists.
• Older persons are attractive as tourists because they have the financial
means, and time to devote to travel experiences.
• Tourism industry will increasingly have to take account of the needs
and preferences of older travellers by way of product design and
marketing.
• At the same time, tourists from developing countries will be younger
with very distinctive needs from the older tourists from more
traditional source markets. Concurrent to income growth in the
developing world youth travel is experiencing rapid growth.
• The challenge for tourism industry is to address both the needs of
younger less experienced tourists in developing markets and the needs
of experienced tourists in developed markets.
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Changing Social Structures
• Changing social structures associated with globalisation affect
tourism flows.
• Household types are diversifying away from the traditional
‘nuclear’ family in developed economies.Family structures are
shifting from more ‘horizontal’ with fewer generations to more
‘vertical’ structures with more generations included
• tourism will need to adapt itself to provide a more varied offer.
• Marketing and communications will have to address new needs
and wants that result from these emerging family and household
structures, with staff trained accordingly.
• Meanwhile, the growth of the singles market suggests strong
opportunities for educational and ‘interest-based’ tourism.

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Work Patterns and Gender
❑ Work patterns are changing which is also associated with
globalisation.
Changing work patterns will allow for more flexibility of travel
plans.
The distinction between work and leisure will continue to blur
❑ Society is also becoming more feminised, with the traditional
distinction between the roles of men and women becoming more
blurred.
Women have increasing influence on all the key consumption
decisions, including tourism opportunities and destination choice.

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In Sum: Importance of Demographic
Changes
• Demographics will have a dramatic impact upon tourism in the
coming decades.
• It will impact upon the types of tourists that will travel, where they
originate from, where they travel to, the types of accommodation
they require, length of stay, and the activities they engage in
while away.

• The changes clearly have implications for business

management, marketing and new product development in
tourism

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New Consumer Values: Money-rich,
time-poor:
• In developed countries, the growth of ‘money rich-time poor’ people
implies a high demand for short time holidays.
• The greater pressure on ‘time’ and rising ‘stress’ levels leads to
growing emphasis on the means of ‘escape’ through holidays.
• Greater flexibility in working hours can provide benefits to employees
in terms of greater freedom to choose when to go on holiday.
• This balancing between time and money is a critical issue for the
tourism industry to offer the right balance of activities and relaxation
to maximise the ‘benefit’ of the experience.
•

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New Consumer Values: Individualism:
• People increasingly tailor holidays to meet their particular
requirements.
• As travellers become more experienced, they want customised
services, rejecting the impersonal, non-interactive system of ‘mass
tourism’.
• Tourists seek the unusual and the authentic experience rather than
the shared, off-the-shelf holiday package
• The experiences sought are those ‘authentic’ to the destination
and its people, personalised and often involve social interaction
and emotional connection.

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New Consumer Values: Participation
• As incomes grow, people shift their discretionary expenditure towards
experiences as opposed to products.
• One result of the experience economy and tourism has been a
fragmentation of the tourist market into subsets of unique
experiences.
• With tourists desirous of involvement as participators not spectators,
seeking a variety of optional experiences,
• At the same time, tourists are demanding assurances of safe products
and services prior to purchase.

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New Consumer Values: Self-improvement
• individuals are becoming more interested in self-improvement as
part of the tourism experience, emphasising health, well-being,
education, skill development and cultural appreciation.
• people are increasingly concerned about their health and well-being.
Greater value is being placed on de-stressing and selfmedicating
• People are increasingly interested in discovering, experiencing,
participating in, learning about and more intimately being included in
the everyday life of the destinations they visit.
• As more material needs are satisfied tourists seek newer, richer,
deeper, experiences. Tourists, have an increased social and
environmental consciousness, seeking ‘authentic’ tourism
experiences.

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Seeking Quality
• Standards in hospitality management and hotel sector are now
judged by global comparisons, even at the more localised level.
• The tourist marketing battle has shifted from competitive pricing
towards service improvement.
• TNCs that have been able to establish and sustain a consistent
brand image and control quality typically outperform competitors
unable to do so.
• As domestic businesses have to combat foreign competition,
they are compelled to raise their standards and customer
satisfaction levels in order to survive in the market.

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In Sum: New Consumer Values
• The new consumer values have important implications for
tourism on both the demand and supply side.
• Rising affluence, greater internationalism, an appetite for risk
taking, more sophisticated marketing, the feeling of greater
time pressures, and improved access to technology all
contribute to a fragmentation of tastes in both developed and
emerging markets.
• Firms must adopt individual strategies for individual markets
and customers, in order to become increasingly competitive in
the market place.
• This will require more detailed analyses of demographic
trends and value shifts, how these are impacting on tourism
demand
• Those tourism organisations that ignore this massive
demographic and values shifts and their global impact are
likely to experience strategic drift and cease operations.
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International Agreements
• Globalization results in easier access across borders, which for the
tourism industry implies more foreign tourists as well as increased
global competition from international tourist destinations.

• The continued deregulation and liberalisation of air transport and

‘open skies’ policy supports the growth of trade and tourism.
• However, it has been argued that international institutions aid and
abet some negative effects of globalisation
• Under GATS, protection to the local tourism industry would be
construed as unfair practice and would thus have to be eliminated.
• Regulations such as those found in the TRIMS agreement which restrict
a country's rights to require companies to purchase local materials, the
"most favoured nations" provisions which make it illegal for countries
to reward companies who hire locals or have good environmental
practices, and the liberalization of trade in services of GATS which
would allow foreign companies to merge or take over local companies.
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International Agreements
• Tourism is now being pursued as a serious development strategy
for the less developed world. Under IMF-World Bank
prescriptions, tourism is classified as an export strategy.
• The International Monetary Fund (IMF) has included tourism as
part of its Structural Adjustment Programmes (SAPs).
• The SAPs, which are preconditions for the approval of financial
assistance require the indebted country to: be integrated into
the global economy; deregulate and liberalise its economy; shift
from an agriculture-based to a manufacturing and service
industry-based economy; and liberalise its financial sector.
• All such initiatives reinforce the importance of globalisation to
tourism industry development.
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Environmental Effects
• On one view, globalisation has enhanced our understanding of the
importance of environmental protection benefitting all tourism stakeholders.
Tourism can foster conservation and preservation of natural resources,
encouraging community revitalisation and beautification, raising revenues to
help maintain quality of natural and heritage attractions
• The rise of the socially conscious and environmentally conscious consumer
leads to new patterns of tourist behaviour, as exemplified by the
development of alternative tourism, in opposition to mass tourism
• Many global environmental problems involving cross-boundary pollution, e.g.
over-fishing in the oceans, climate change, are being solved by discussions
and conventions.
• Globalization enhances the ability of countries to work together to overcome
natural disasters and global challenges, such as global warming and whaling.
• Another phenomenon that the globalization of ideas brings about is
improving environmental awareness and the popularization of the concept of
sustainable development

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 Environmental Effects
• As a counterargument, all countries face intensified environmental
problems as a result of population growth, economic development
and rapid urbanisation.
• Trade growth has also accelerated the depletion of non-renewable
resources, such as oil. Increased consumption leads to an increase in
the production of goods, which in turn puts stress on the environment
via its carbon footprint.
• Tourism transport, especially aviation, is a high emitter of greenhouse
gases, and contributor to global warming. Human, animal and plant
diseases spread more quickly through increased movement of goods
and people around the globe.
• The main environmental trends such as climate change, depletion of
natural resources and loss of biodiversity, are all associated with
globalisation.
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Social Effects: Positive
• The globalisation of social networks, whether through
multinational companies, higher education, or international civil
society, can be expected to drive further growth of tourism and
travel.
• Inter alia, tourism can lead to removal of social or national
prejudices, promote mutual understanding between hosts and
guests, encourage civic involvement and local pride in a
destination, improve the quality of life of locals including the
vitality of local communities, and increases availability of
recreation facilities and opportunities.
• Globalisation forges cross-cultural contacts, helping to promote
cultural understanding and tolerance, as well as the spread of
democratic ideals.
• Globalization has helped to create internationally sanctioned
agreements which attempt to ensure that people are not
discriminated against on the basis of country, caste, creed or sex.
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Social Effects: Negative
• On a contrary view, since the cultures of those countries that
have more economic power are likely to be more dominant than
others, it is no surprise that global tourism threatens indigenous
knowledge, social structures and relationships.
❑ In many developing countries, tourism's effects on indigenous
peoples have been profound:
• widescale eviction from their lands,
• economic dislocation,
• breakdown of traditional values
• degradation of cultural sites when historic sites and buildings
demolished to make way for tourist facilities.
• commodification of culture
❑ Clearly the reality differs case by case.

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Reason for optimism?
• On a brighter note, populations are responding to the globalization of
economies, markets, systems and cultures by exploring their own
identities
• This tension between ‘modernity’ and ‘identity’ is leading to the
increasing questioning by local communities of the form and scale of
tourism development and type of destination marketing in those
societies.
• Increased community involvement in tourism planning and
development results in a growing dispersion of tourism away from
mass tourism dominated by TNCs, into diverse niche markets.
• From this perspective, globalisation appears to pull in two ways, both
towards the creation of TNCs by the extension of operations through
take-overs, the formation of strategic alliances or franchising
agreements, and, in terms of consumption, towards more localised or
regional ‘branding’ and niche marketing.
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In Sum - - -- -
• We cannot generalise too broadly on globalisation’s impacts and the
subsequent effects on economies, communities and natural
environments.
• Globalisation has positive and negative effects.
• More case studies are required to identify the effects in particular
locations.
• As the drivers of globalisation show no signs of a slowdown, the
challenges facing global business are formidable.
• Since the same forces that drove mass tourism are sewing the seeds of
its demise, it is very likely that a complete change of paradigm, is
required if business globally is to develop in a sustainable way
• Some critics argue that the growing incidence of crises, environmental,
political and economic, encourages a counter trend to the
globalisation process, with possible significant implications for the
future of the global travel system.

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 Thank You

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