Dimensions and Stages in Globalization

Dimensions

Another way of thinking about globalisation is to explore how connections between people and
places have lengthened in distance, deepened and become faster over time.

For example:

Lengthened in distance over time (products and services are sourced routinely from distant
places and faraway continents)

Deepened over time (a sense of feeling “globally connected” now extends into many different
areas of modern life, ranging from the imported food and TV programs we consume to our use of
global social media)

Become faster over time (in recent years, people have begun to talk to one another in real-time
using technologies such as Skype)

Globalisation also involves people and places becoming interconnected with one another by
different kinds of global flow. These include:

Capital flows
Every day, enormous flows of money pass through the world’s stock markets. Investment banks,
pension funds and private citizens buy and sell shares and money in different currencies in order
to make profits. In 2013, the daily volume of foreign exchange transactions reached US$5
trillion.

Labour flows
Despite the restrictions imposed by many governments, record migrations have been recorded in
recent years. Soon there will be a quarter of a billion economic migrants in the world. Some
states have a special need for migrant labour. For example, Qatar is reliant on Indian
construction workers.

Product flows
Flows of manufactured goods have multiplied in size in recent years, stimulated by low
production costs in China and even lower-waged economies, such as Bangladesh and Vietnam.
In 2015, global GDP (Gross Domestic Product) fell just short of US$80 trillion in value. Of this,
around one-quarter was generated by trade flows in agricultural and industrial commodities

Service flows
By 2040, India is expected to be the second largest economy in the world and some of its
economic success is attributable to the call centre services which Indian workers provide for
large US and EU companies.
Information flows
The internet has brought real-time communication between distant places, allowing goods and
services to be bought at the click of a button. Facebook had 1.5 billion users by 2015, each
generating countless numbers of “likes” daily. On-demand TV has increased the size of
information flows greatly in recent years.

Stages in Globalization

1. Domestic Company

Market potential is limited to the home country. Production and marketing facilities are located
at home only. Surplus may or may not be exported. There are no overt efforts to develop foreign
markets. It may add new product lines, serve new local markets but whole planning is limited to
national markets only.

Features:

1. Their focus remains with domestic market.

2. Their productions facilities remain based in home country. Their analysis is focused on
the national market.
3. They do not think globally and avoid taking risk in going global.
4. Their top management may have traditional kind of business management competency
and less global expertise.
5. They perceive that there is risk in expanding into global market and thus they try to play
safe and satisfied with whatever gains they are getting in domestic market.

2. International Company

Some ambitious efficient domestic companies after going beyond their domestic marketing
capacities start thinking of expanding their operations in International Markets. The main
strategies for entering international market is:

a) Off-shoring/global outsourcing (seeking cheaper source of raw material or labour)

b) Exporting
c) Licensing
d) Franchising
e) Joint Ventures/Acquisitions
f) Direct Investments

Even though they think of international markets, still they are of ethnocentric or domestic
oriented. These companies adopt the strategy of locating the branches of their companies in other
countries and practice the same domestic operations in foreign markets, including the same
promotion, price, product etc. policies.
Features:
 1. Focus on going beyond,domestic
2. Their management remains ethnocentric with a vision to expand internationally. They
extend their domestic products, domestic prices and other business practices to foreign
countries.
3. They keep their marketing mix constant and extend their operations to new countries.
4. Their management style remains centralized for their home nation and extended top down
to the overseas market country.

3. Multinational Company

After sometime, international companies realize that the domestic model and practices adopted
through extension policies do not serve the purpose. The foreign customers may not prefer the
products that are sold in domestic market. Hence, these companies respond to the needs of
different customers in different countries and produce such goods and services that will satisfy
them.

Features:

1. Companies when they spread their wings to more nations become multinational
companies.
2. Sooner or later they realize that they have to change their marketing mix according to the
foreign market.
3. This can also be termed as multi domestic, in which different strategies are adopted for
different market.
4. The management of such companies remains decentralized and even production may be
in the host country.
5. Performance evaluation is done at different host countries.

4. Global

The global company adopts global strategy for marketing its products. It may produce either in
the home country or in any other single country and market its products throughout the world. It
may also produce the products globally and market them domestically.

Features:

1. Such companies have a global marketing strategy.

2. They either produce in home country or in a single country and focus marketing globally.
3. They adapt to the market conditions according to the foreign market.
4. Their performance evaluation is done worldwide.

5. Transnational Company
Transnational Company operates at the global level by way of utilizing global resources to serve
the global markets. It has geocentric orientation and has integrated network. Its key assets are
dispersed and every sub-unit of the company contributes towards achievement of the company
objectives. It produces best quality raw materials from the cheapest source in the world, process
them in the country wherever it is economical and sells the finished products in those markets
where prices are favourable.

Feature:

1. Transnational companies have a geocentric approach, which means they think globally
and act locally.
2. Transnational companies collect information worldwide and scan it for use beyond
geographical boundaries.
3. The vision of such to grow more in a global way.
4. The R&D, management, product development are shared worldwide.
5. Their human resources procurement and development remains globally.