Globalisation means doing business at global level
without any regards to national or state boundaries. It is a process of economic integration with global economy . Globalisation is facilitated by technological improvement,competition,economic growth interdependence between nations and willingness to integrate.
Levels of globalisation
Globalisation of a particular company
Globalisation of a particular industry Globalisation of a particular country level
Globalisation at world level.
Globalisation of a particular company
Large corporations expand business. IBM.goods & technology know-how across different units Ex.earn revenue and
increase asset base across the world.MICROSOFT etc.HP.
.GE.there will be flow of capital.
HCL etc dominated the world market. In case of software -some of the Indian co’s TCS.Globalisation of a particular industry
The entire industry is dominated by set of companies
and become a global player .
.INFOSYS. In case of electronics GE.SIEMENS & PHILIPS are the companies which have dominated the business globally.WIPRO. Ex.SATYAM .
Ex.for this reason Singapore sea port is very well develpoed
.Singapore as a country thrives as market intermediary without much manufacturing setup.Globalisation of a particular country level
Some of the countries specialize in foreign trade and
thrive based on their factor of endowment and export potential.
. Service business is taking global shape in order to revive economies of the developed countries.
As a result of economic interdependence goods. Developed countries in order to improve operating margin .Globalisation at world level.
services and capital are flowing across the border .reduce cost of products and to become competitive player started outsourcing some of their work by taking advantage of labour arbitrage.
. The money saved could be utilized for other economic activities.
Co’s can improve operating profits and come out with
high quality products at lesser costs. Hence developed countries were able to come out of recession
export is viewed as an extension of home market and handled as separate division at best within marketing department. The maintenance of domestic approach towards international business is called ethnocentric approach
.design.Stages of globalisation ethnocentric Approach
Ethnocentric feels home country is very much
suitable. Excess capacity or inventory is exported outside India .It seems similarly in foreign : domestic company formulates policy on product.HR and marketing .
product and strategy is done by the head of the host country. Polycentric approach of the subsidiary focuses on the conditions of the host country. Policy of host country decisions regarding design.Polycentric approach
Polycentric approach feels each host country as unique
this may be referred as ethnocentric organisation matured for next stage of expansion. Company appoints key personal from the host country that in turn will recruit for the vacancy to him.
company decides to export to nearby country or to any country.
Regiocentric sees similarities & dissimilarities in a
world. At this stage foreign subsidiary considers regional approach for formulating strategy & policies.Companies operate in a country for some time.which share similar economy & culture . When host country requirements are met.
but with different marketing strategies.
However the same product designed under polycentric
approach is used in other countries of the region..
marketing and corporate office co-ordinates functioning of subsidiaries.Geocentric approach
Geocentric approach sees similarity and differences in
home and host countries. Company selects people of entire world wherever its subsidiary functions as independent.HR.
.autonomous body in formulating policies.entire world is a single country for the company with multiple subsidiaries.operations.strategy.product design. In geocentric approach.
Factors influencing globalisation
Economy Resources & market
Political Industrial organisation technology
Flow of capital Speed of production
Increased standard of living
Flow of technology Increase in consumption attitude
Rich-poor gap Depletion of natural resources
Barriers to globalisation
Quotas Voluntary Export Restraint
Standards Local Content Requirements
Concepts of globalisation
companies that maintain significant operations in two or more countries simultaneously but CONTROL is vested with home country.
a company that maintains significant operations in more than one country simultaneously decentralizes decision making in each operation to the local country.
Global village The concept of a boundary less world. Borderless organization A management structure in which internal arrangements that impose artificial geographic barriers are broken down
. the production and marketing of goods and services worldwide.
employment and income level increases
consequent to operation of the MNC in the host country Ancillary industries grow resulting in industrial and economic development.MNC Advantages
Investment. managerial techniques and practices of MNC. Host country gets best & sophisticated management techniques from the managerial practices of MNC’s
. Gets latest technology.
Market supplier and intermediaries of the host
country get stimulation of increased business from MNC’s operations.
. Host country can take advantage of the foreign culture brought in by the MNC’s Domestic country’s import will reduce & export gets boost due to the goods produced by MNC. It creates competitiveness & helps to enhance it.this will create better favourable balance of trade.
Ministry of industry & development.
.Control over MNC’s activities
Department of co affairs. RBI
Ministry of finance.
Scanning or information acquisition Vision & aspiration
Operating style Adaptation Extensions HR policy purchasing
Stages of international business
International company Multinational company
International business risk
Country risk .Political risk-financial risk Regulatory risk
Assessment of Business Risks
Expert based scoring system Economic methods
Rating & ranking system
Risk Reduction strategies
Establish risk assessment system
Developing local economy Local equity participation
Good corporate citizens
Maintaining good political relation