Chap 2 - Globalization
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Transcript of Chap 2 - Globalization
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Copyright, John Wiley and Sons, Inc.
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eLearning Concepts – Chapter 2 :
1. Understand globalization and why it is important.
2. Define globalization & its stages. 3. Discuss the effects/impact of globalization
and why and how globalizationcan be perceived as a benefit and as a threat.
Globalization
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Copyright, John Wiley and Sons, Inc.
Definition of Globalization Buzzword among businesses & countries Globalization is not a new phoenomenon. Globalization:
Ongoing process in which regional economies, societies & cultures become integrated and interdependent.
Referred to as economic globalization: National economies are integrated into an
international economy by means of trade, FDI , capital flows, migration & technology
Globalization is driven by a combination of economic, technological, socio-cultural, political & organic factors
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Copyright, John Wiley and Sons, Inc.
Definition of Globalization Involves transnational dissemination of
ideas, languages, pop culture Process that arises spontaneously in the mkt
& acts by developing international division of labor, eliminating trade restrictions, reduction in communication & transportation costs
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Copyright, John Wiley and Sons, Inc.
Forms of Globalization Economic globalization – opening & deregulation
of commodity, capital, labor mkts (neoliberal globalization)
Political globalization – emergence of transnational elite & phasing out all powerful nation
Cultural globalization – worldwide homogenization of culture
Other forms – technological globalization sharing of R & D, transfer of technology
Social globalization – interaction of communities Modern globalization – facilitated by advances in
technology which have led to reduction in cost & free trade
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Copyright, John Wiley and Sons, Inc.
An Age of Globalization
Globalization is everywhere. For consumers, it means more choice, lower prices, and blurred national identities. For business, it means lower costs, better supply, and more markets.
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Copyright, John Wiley and Sons, Inc.
Impact / Effects of Globalization
Industry – emergence of global production markets & wider access to markets & wider range of gds & services fro consumers & industries, increases movt 0f raw material, & gds across border
Financial – devt of worldwide financial mkts & access to external financing & global sourcing of capital & investment funds
Economic - devt of global common market – freedom of exchange of gds & services & capital & labor across border, sourcing of cheap labor in low wage countries e.g. companies move to China to take advantage of cheap labor & raw materials
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Copyright, John Wiley and Sons, Inc.
Impact / Effects of Globalization
Political – create a world govt that fosters closer interrelationship among govts & guarantees rights, political freedom & wider political cooperation among countries
Information – enhance info flow between remote geographic regions with improved communication technology
Language – understanding, usage & communication of different languages among different cultures, English as lingua franca, rise of use of Mandarin
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Copyright, John Wiley and Sons, Inc.
Effect of Globalization & Competition
Competition- Markets become more accessible & open – subject to intense competition creating a level playing field for domestic & foreign firms
Argument that globalization leads to corporate monopoly
There is an argument that governments will surrender their sovereignty to global corporations.
As domestic firms find it difficult to compete with larger globalized companies, hence firms must be cost efficient to compete.
However, this is not true – globalization does, however, open governments to the reality of trade and pluralistic influence.
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Copyright, John Wiley and Sons, Inc.
Globalization and the Environment
Does globalization hurt the natural environment? Arguments against globalization that it could lead to increased
inequality & environmental degradation.In locations that are unable to adapt or keep pace with
globalization, it has taken away the competitive edge of once industrial & agricultural areas & lower the quality of life.
Probably not. Resources show that globalization actually helps the natural environment through the national development it fosters.
Global corporations committed to corporate social responsibility to keep environment clean & safe
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Copyright, John Wiley and Sons, Inc.
Globalization can cause job transitions in home and host countries.
Globalization causes wages to go up in developing countries and can put downward wage pressure among unskilled workers at home.
Globalization also causes capital to enter and exit economies easier and more frequently, which causes economic uncertainty.
Globalization – The Social Impact
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Copyright, John Wiley and Sons, Inc.
Globalization and Technology
Cultural globalization aided by Internet which allows interaction & communication between different cultures
Globalization has led to faster diffusion of technology & technological advancement critical for foreign firms
Globalization has led to devt of technology infrastructure esp to developing countries to generate grwoth & economic devt.
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Copyright, John Wiley and Sons, Inc.
Globalization and CultureSome suggest that globalization causes cultural
homogenization. This isn’t true. Globalization causes people to be more aware of their
national culture and background, not less.Understanding & acceptance of different culturesLeads to growth in cross cultural contact & cultural
diffusion.Promotes cultural diversity & create opportunities for
cross cultural marketing, trade & communication .The challenge, is to lever resources to maintain
productivity in light of increasing nationalism and cultural awareness.
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Copyright, John Wiley and Sons, Inc.
Other Effects of Globalization Legal & Ethics – creation, understanding of international
laws & business practices Effects on poor countries – poorer & underdeveloped
economies could benefit from globalization with more development & market opportunities. To developing countries they benefit from globalization
with increased employment, tax revenues, and international relations.
To developed countries benefit from globalization with increased production, imports, exports, and corporate growth.
However argument against globalization that it results in exploitation of labor & resources of developing countries
In their effect to be a part of globalization process, some loss of sovereignty in govts in control & decision making of domestic policies
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Copyright, John Wiley and Sons, Inc.
Globalization – Gains or Losses?
Did Globalization Cause the Financial Crisis?
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Copyright, John Wiley and Sons, Inc.
Globalization – In summary
Globalization is complex and expensive. It forces business firms to adopt strategies and operations to different cultures and climates. When business can do this, and this is what this class is all about, it can achieve a very good return on investment and useful global operations.