Globalisation

Ahamed Azaad
Masters In Finance & Marketing (USA), BA (Hons)
Business Management & Finance, CIMA pass finalist,
ACMA, PGD Dip in HRM.
What comes to your mind when you
think about the word:

Globalisation
What questions can you ask?
 Globalisation
• What is the definition of globalisation?
• What are the characteristics of globalisation?
• What are some examples of globalisation?
• What are some non-examples of
globalisation?
 Globalisation
• Definition:
– The process by which people, their ideas and their
activities in different parts of the world become
interconnected or integrated.
– Main idea: INTERCONNECTEDNESS.
 What allows globalisation to
spread and grow?
[what are the key driving forces?]
• Developments in transportation and
communication
– Transportation
– Communications
• Transnational Corporations [TNCs]
 How…
…Does transportation help to spread
globalisation?
…Does communications help to spread
globalisation?
…Transnational Corporations [TNCs] help to
spread globalisation?
Developments in transportation
and communication
• Transportation
Definition: transport systems are the means by which
people, materials and products are transferred from one
place to another.
– Improvement in transportation technology cuts
down the time taken to get from one place to
another [for both people and products]
• Commercial jet aircraft, large ocean-going vessels,
Containerisation

What allows globalisation to spread

 Developments in transportation
and communication
• Communications
Definition: Communication systems are the means by which information is
transmitted from place to place in
the form of ideas, instructions and images.
– Invention of advanced communication technology has allowed
consumers to access information about new products and places more
efficiently and conveniently.
• Internet has transformed the way one communicates, conducts
business, obtains information and purchase

goods.
What allows globalisation to spread and grow?
3 Stages of Globalisation

Stage
1
Global
Integration

Facilitated by r a i l and

sea Communication via

Telegraph
3 Stages of Globalisation

Stage Stage 2
1
Global Establishment of IMF
Integration (International Monetary Fund)
Facilitated by r a i l
and sea
Communication via GATT (General Agreement on Trade Tariffs)
Telegraph established

Capital inflows increase from USA

America production systems adopted

internationally
3 Stages of Globalisation

Stage Stage 2 Stage 3

1 Rise of large industr ial nations
Global Establishment of IMF
(East Asia)
Integration (International Monetary Fund) Communication
Facilitated by r a i l Advancements
and sea Improved Transport
Communication via GATT (General Agreement on Trade Systems
Telegraph Tariffs) established Assembly
lines
Capital inflows increase from USA Computer Aided
Production

America production systems

adopted internationally
 Transnational Corporations
(TNCs)

• Definition: Large global firms that operate in a

number of countries and have production or
service facilities outside the country of their
origin
– Economies of the different countries
become more integrated.
 What are the impacts of
globalisation?
• Economic
• Social
• Environmental

Are these impacts positive or negative?

 Economic impact of
globalisation
1. Improvements in standard of living
2. Increased competition among nations
– Investment and market
– Talent
3. Widening income gap between the rich and
poor
 Economic impact of
globalisation
Elaboration:
- Globalisation has both positive and negative
impact
- Many people experienced an improvement
in their living standards due to an increase in
their income
- However, there are also people who do not
get to enjoy the positive impacts of
globalisation
 Economic impact #1:
Improvement in standard of
living (example)
• As countries trade and invest in each other, they
earn more money.
• Such money are used by the government to develop
the country (e.g. education, health, housing etc)
• People living in these countries can enjoy the
benefits and hence, have a high standard of living.
• People also have a wider variety of choices in the
products that they buy.
 Economic impact #2:
Increased competition among nations
(example)

• Countries now face more intense competition to

attract Transnational Companies (TNCs) to invest
in their country.
– E.g. Singapore, China (pg. 52-53)
– Poverty cycle: Many developing countries find it
hard to attract foreign investments because of
their poor infrastructure and political stability.
Such countries often remain poor.
 Economic impact #2:
Increased competition among nations
(example)

• Countries also want to attract talented people

to work in their country.
– E.g. India
– Brain Drain: highly skilled people migrating to
other countries
 Economic impact #3:
Widening income gap between
the rich and the poor (example)
• Developed countries draw away TNCs,
investments, skilled people and resources away
from poor areas.
• Developing countries are unable to produce better
quality goods and higher priced goods.
• Developing countries also face trade restrictions
from the developed countries.
• The gap between the rich and the poor
increase [and this can led to tension]
 Social Impact
• Increased awareness of foreign culture
• Loss of local culture
 Social Impact #1:
Increased awareness of foreign
culture
• People become more aware of different
cultures [through travelling, through internet,
movies etc]
 Social Impact #2:
Loss of local culture
• There is a loss of local culture, especially when
TNCs, or global brands such as Starbucks and
McDonalds dominate the consumer market in
developing countries
• This leads to a homogenous culture across the
world.
 Social Impact #2:
Loss of local culture
• Spread of different foreign cultures
– countries might be uncomfortable that foreign
cultures are affecting their youths as they lose
interest in the local culture
– Some people may see these foreign cultures
as being forced onto them
– E.g. pop culture
 rap music, MTV, Hollywood
 Environmental impact
• Globalisation can be a destructive force to the
natural environment.
• TNCs use natural resources at a rapid rate and
care only about profits and not environmental
protection
 Environmental impact
• Deforestation and related problems
• Global warming
• Environmental management
Environmental impact #1:
Deforestation
• Deforestation: cutting down of trees in forests
and jungles
• Many rainforests in many countries have been
cut down to make way for the development of
industries, agriculture, housing and
transportation so as to make money for the
country.
• E.g. Brazil, Indonesia (pg. 59)
Environmental impact #2:
Global warming
• Globalisation also causes global warming
• Causes of global warming
– Transportation of goods  aeroplanes and ships
produce large quantities of greenhouse gases
– Factories  produce large quantities of
greenhouse gases
• Such gases leads to an increase in
the average global temperature
 Environmental impact #3:
Environmental management
• Globalisation ALSO brought about an increase
in awareness of environment development:
sustainable development.
– Sustainable development: development
that meets the needs of the present
without affecting the
ability of future generations to meet
their needs
 Environmental impact #3:
Environmental management
• When the environment is well preserved,
future generations can continue to use the
resources to enjoy a high standard of living.
• Possible alternative energy sources: wind,
solar and geothermal power.
• The challenge: to convince countries to find
such alternative sources and find ways to
generate power using those sources.