Lecture Notes 2

I

1830-1890

Transport by rail and sea – long trade routes-increases the

international goods trade

Telephone and telegraph – a better communication for companies,

especially in relation with the supply chain

Automated production

II

1900-1930

The emergence of American and European extractive and

manufacturing industries

Production of electricity and steel

The territories under European control - ideal places to establish

subsidiaries of European multinationals

The expansion of U.S. multinationals to profitable European

markets

The Phase ends with the crisis of 1929 - with effects on changes in

government policies

III

1948-1970

GATT – the first efforts to reduce trade barriers appear

The reconstruction process after the second World War appears-

the massive increase in demand for consumer goods, USA - leader

of the globalization

The re-build of Japanese multinationals

Increase in the importance of product brand

IV

1980-

present

ICT - PCs, automation

Change in government policy- liberalization

Increased FDI in less developed countries

Technological innovations in transport, global marketing and

branding appear

Globalization –Theories

There are various theories on globalization

1) Douglas and Wind (1987), Ohmae (1989) - some products are global,

others are not

Examples

The degree of globalization of an industry

Not all industries have the same degree of globalization for the

competition - the different dynamics of the economic, technologic and

competitive factors

Global industry/with a high level of globalization?

Kogut:

The industry in which the company’s competitive position in a

country is significantly influenced by its situation in another country

The factors that determine a global industry: - the measure in which a

certain industry makes necessary the integration of activities that bring added

value on the value chain

Globalization –Theories-Seq.

2) Theodore Levitt (1983)

-Technology- is the determinant force behind the globalization of markets

leading to a final homogenization of the demand, together with:

-Telecommunications

-Media

-Transportation

-Travels

-Consequences:

-Identical products are sold on the market

-The industries are dominated by large corporations that benefit from scale

economies

Government

related

factors

Market related

factors

Globalization –Theories-Seq.

3) George Yip model (2003)

Factors of the

competitive

environment

Cost related

factors

Globalizational

potential

popo

The George Yip Model (2003)-seq.

Factors of the competitive environment :

-The global strategies of competitors

-National economies’ interdependences

Cost related factors:

-Economies of scale and scope, including the decreasing curve of the products’

development costs;

-The experience curve;

-Development of logistics;

-Exploiting cost differences between countries.


Market related factors:

-similar preferences between consumers;

-emergence of global consumers;

-marketing practices that can be transferable between countries ( scale economies-

obtained from marketing);


Government related factors:

-Commercial policies, decrease in price barriers, subsidizing domestic companies;

-Commercial policies that support a local component in the products it makes (local

content requirements), control over technology transfer, intellectual property rights,

capital and financial flows;

-regulations for the local market enforced by the government, technical standards;

The effects of globalization-positive effects

For companies For clients For countries

Increased access to

markets/access to markets

with mass consumption

Lower prices Better life standards both in

developed countries as well as

in developing countries

Scale economies and low costs A wider choice possibility The development of

democratic processes

Access to resources Improved quality

Access to lower taxes in other

countries

The effects of globalization-positive effects

Pagina 20 este deja in engleza-grafic

The effects of globalization-negative effects

For companies For clients For countries

Increased competition Product standardization Loss of national identity and

culture

More educated and demanding

clients

Pollution Unequally distributed benefits

Increased volatility of the

international environment

Pollution

Trends of the international business environment from the

perspective of globalization

The globalization phenomenon has reached both the production as well as the

services area;

There are wide scale changes in the distribution of production-the relocation of

production (increased and stable production in South-East Asia and decreasing in

North America and Europe);

Certain countries have specialized on production and others on industry and

consumption;

The global recession and the major differences between the economic increase

rates-leas to changes in the distribution of wealth and income in the world;


perspective of globalization-seq.

The economic and political unions such as EU, IMF have grown in importance and

power;

The states’ nuclear power grew;

The religious fundamentalism increased;

The threat of international terrorism appears;

The tendency to shift from multilateralism to unilateralism (for example - the power

enforced by the USA on other states)

The role of governments in the international business environment and world economy is

gradually changing.


perspective of globalization-seq.

The prevalence of long-term unemployment;

The continuance of the European integration process for other regional

blocks;

Increase in pollution, waste of resources and water scarcity;

High availability of information and ease of communication;

The technological progress, including in the ICT area, biotechnology,

genetics, robotics, etc..

A demographic transition characterized by declining birth rates, which led

to an increased life expectancy and an aging population – the so-called

'demographic time bomb'- with long-term implications on government

policies, especially in the taxation and health sector;

Dynamic national and international cultures, mass immigration, cultural

interaction, tolerance and intolerance

Changing the attitudes towards family, health, crime and society.

Conclusions

At a general level:

-All these trends have a significantly impact both on companies as well as on governments

and individuals;

-All these environment forces act as a group both on international business as well as on

national business;

-These factors are influenced and influence, in their turn, the wider trends of economic

growth, employment and investments.

Conclusions-seq.

At the company level/long term strategy:

-Due to the fact that the environment factors are unpredictable, the planning processes must

be flexible, adaptable;

-The necessity arises for an increased organizational flexibility;

Conclusions-seq.

-At the individual/group level:

- Individuals can no longer count on working in a stable environment or count on abilities or

responsibilities that do not change;

• The rapid pace of the market and the technological changes, the increase in the amount of

information, the changes in the economic area and the competitive pressures - determine the

need for employees to renew their skills and abilities according to the demands of the

market;

• Individuals must adapt to change at least as fast as the business environment;

Conclusions-seq.

Effects: flexible work practices-part-time, teleworking, on a determined period, etc

Pagina 28-Grafic –deja in engleza

Conclusions-seq.

Implications for governments

Pagina 29-Grafic-deja in engleza

Conclusions-seq.

Ranking of the most competitive

countries, 2001-2002 (WEF)

Ranking of the most

competitive countries,

2012-2013 (WEF)

1. Finland 1. Switzerland

2. USA 2. Singapore

3. Canada 3. Finland

4. Singapore 4. Sweden

5. Australia 5. Holland

6. Norway 6. Germany

7. Taiwan 7. USA

8. Holland 8. UK

9. Sweden 9. Hong Kong

10. New Zeeland 10. Japan

Lecture Notes 2

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