School Of Finance And Commerce

Course Code: BCOM1001 Course Name: Business Organization

Globalization

Faculty Name: Vaishali Joshi Program Name:

 Topics Covered

• What is globalization
• Aspects of globalization-economic, cultural and political
• Dimensions of economic globalization
• Drivers of globalization
• Factors restraining globalization
• Advantages and disadvantages of globalization
 What is globalization

•Globalization refers to the free cross-border

movement of goods, services, capital, information,
and people. It is the process of creating networks of
connections among actors at multi- continental
distances, mediated through a variety of flows
including people, information and ideas, capital, and
goods.
 Aspects of globalization

Globalization

Economic Political Cultural

globalization globalization globalization
 Economic globalization

• The term ‘globalization’ is widely

used in business circles and economics
to describe the increasing
internationalization of markets for
goods and services, the financial
system, corporations and industries,
technology, and competition.
 Cultural globalization

It refers to the transmission of ideas,

meanings, and values around the world
in such a way as to extend and
intensify social relations.
Cultural globalization involves the
formation of shared norms and
knowledge with which people associate
their individual and collective cultural
identities.
 Political globalization

Political globalization refers to the growth of the worldwide political system, both in size and
complexity.
One of the key aspects of the political globalization is the declining importance of the nation-
state and the rise of other actors on the political scene.
The creation and existence of the United Nations is called one of the classic examples of
political globalization.
Dimensions of economic globalization

Globalization
of markets

Globalization Globalization
of production of markets

Globalization
Globalization of
of technology corporations
and industries
 Globalization of production

•The globalization of production refers to the tendency among many firms to source goods and services from
different locations around the globe in an attempt to take advantage of national differences in the cost and quality
of factors of production. (labour, energy, land and capital)
 Globalization of markets

• Marketing gurus in the last two decades have

extensively argued over customized marketing
strategies in the globalization of markets.

•Theodore Levitt, in his path- breaking paper

'Globalization of Markets', views the recent
emergence of global markets on a previously
unimagined scale of magnitude.
 Globalization of technology

• Global firms rely on technological innovations to

enhance their capabilities.
• Thus, technology is both driven by and is a driver
of globalization.
• Moreover, it has led to the emergence of new
‘technologically driven character’ of the global
economy
 Globalization of competition

• This refers to the intensification of competition among business enterprises on a global scale.
• To cope with global competition, firms need to simultaneously harness their skills and generate
synergy by a broad range of specialized skills, such as technological, financial, industrial,
commercial, cultural, and administrative skills, located in different countries or even different
continents.
 Globalization of corporate and industries

• The worldwide economic liberalization led to the rapid growth in FDIs and the relocation of business
enterprises heavily driven by the various forms of international strategic alliances and mergers and
acquisitions across the world.
• As a result, there has been widespread rise in the fragmentation of production processes, whereby
different stages of production for a given product are carried out in different countries.
 Drivers of globalization

• Economic liberalization
• Technological breakthroughs
• Multilateral institutions
• Rising research and development costs
 Factors restraining globalization

Regulatory controls
E.g. Restrictions on portfolio and foreign direct investment considerably influence monetary and capital flows
across borders
Emerging trade barriers
countries use innovative marketing barriers such as quality and technical specifications, environmental issues,
regulations related to human exploitation, such as child labour, etc.
 
Cultural factors
Cultural factors can restrain the benefits of globalization. For instance, France's collective nationalism favours
home-grown agriculture and the US fear of terrorism has made foreign management of its ports difficult and
restrained the entry of the Dubai Port World.
 Advantages

• Peaceful Relations.
• Free Trade
• Global Connectivity
• New Markets
• Employment Opportunities
• Consumer Welfare; Quality
• Travel
• External Borrowing
 Disadvantages

• Global unemployment
• Increase in illegal activities
• Dumping of waste
• Health problems
• Wipe out of domestic industry