What is globalization?

 The shift towards a more integrated and

interdependent world economy
 Two components:
 The globalization of markets
 The globalization of production
 Globalization : An Example
Designed in Germany
Office Assembled in Mexico (DaimlerChrysler)
American Car Components in USA & Japan

Gasoline
Fabricated from Korean Steel and M
alaysain Rubber
British MNC in US
BP Service Station Oil wells of Africa
Consult Pumped out by French company
Shipped in a Greek Shipping Line
okia Designed in Finland
N
Assembled in Texas
Stockbroker Chip sets designed by Indian
immigrant Engineer working in San Diego for
Coffee beans from Brazil Qualcomm
Chip sets manufactured in Taiwan
Chocolate from Peru
Duetsche Telecom, German
Transformed from state owned
Coffee Stall Shares monopoly into global co by Israeli
CEO
 Globalization of markets

 The merging of distinctly separate national

markets into a global marketplace
 Tastes and preferences converge onto a global
norm
 Firms offer standardized products worldwide
creating a world market
 Globalization of markets

 Significant differences still exist between

national markets on many relevant dimensions

 These differences require that marketing and

operating strategies and product features be
customized to best match conditions in a country.
 Globalization of markets

Range of problems are wider and more complex

in different countries
 Government intervention in trade and
investment creates problems
 International investment is impacted by
different currencies
 Globalization of production

 Refers to sourcing of goods and services from

locations around the world to take advantage of
 Differences in cost or quality of the factors of
production
 Labor
 Land
 Capital
 Emergence of global institutions

 Globalization has created the need for

institutions to help manage, regulate and
police the global marketplace
 GATT
 WTO
 IMF
 World bank
 United Nations
 Global drivers

 Macro factors that underlie trend towards

greater globalization

 Decline in trade barriers

 Technological change
Pattern of declining tariffs
 Declining barriers to trade

 Globalization of markets and production has

been facilitated by
 Reduction in trade barriers (Tariff and Non Tariff)
 Removal of restrictions to foreign direct investment
 The role of technological change

 Microprocessors and telecommunications

 The internet and world wide web

 Transportation technology
 Global drivers
Other factors that underlie trend towards
globalization
 Increased competition in the domestic market
 Profit advantage
 Growth opportunities / increase market share
 Increasing consumer needs
 Global Economic trends
 Government Policies and Regulations
 Monopoly on the business / industry
 Strategic vision of the organization
 Globalization debate-Pro

 Lower prices for goods and services

 Economic growth stimulation
 Increase in consumer income
 Creates jobs
 Countries specialize in production of goods
and services that are produced most
efficiently
 Globalization debate-Con

 Destroys manufacturing jobs in wealthy,

advanced countries
 Wage rates of unskilled workers in advanced
countries declines
 Companies move to countries with fewer
labor and environment regulations
 Loss of sovereignty
Managing in a Global Marketplace
 Managing Difference in countries (PEST
Analysis)
 Control and Coordinate production and
marketing activities
 Knowledge of rules governing international
trading and investment system
 Currency Market