Driving and Restraining Forces (International Marketing) by SREE RAMA RAO on SEPTEMBER 25, 2007 There are a number

of forces which induce and propel globalization and thereby e xpand the scope and importance of international marketing. On the other hand the re are also forces with restrain globalization. The important forces driving globalization are the following:Liberalization: One of the most important factors, which have given a great impe tus to globalization since the 1980s is the almost universal economic policy lib eralizations which are fostering a borderless business world. While a lot of the liberalizations owe it to the Global Agreement on Trade and Tariff (GATT) / Wor ld Trade Organization (WTO), substantial liberalization have been occurring outs ide the GATT/WTO like, for example the revolutionary economic policy changes in China and other socialist/communist nations It may be noted that it has become q uite common to describe the global trend as LPG (liberalization, privatization a nd globalization) indicating the mutually interdependent and reinforcing nature of these forces. One of the impacts of liberalization and privatization is the s urge in cross border M&A (mergers & acquisitions) and other FDI (foreign direct investment) resulting in greater global economic integration. Multinational enterprises which link their resources and objectives with world m arket opportunities, have been a powerful force driving globalization. Taking ad vantage of the liberalization trend, there has been a fast growth of the number of MNC and their global network of affiliates. The MNC leverage their strengths to link global resources and opportunities and thereby strengthen the globalizat ion trend. Technology is a powerful driving force of globalization. Technological advances have tremendously fostered globalization. Several technological developments bec ome compelling reasons for internalization. Technological break through are subs tantially increasing the scale economies and the market required to break even. Technological revolution in several spheres, like transport and communication, h as given a great impetus to globalization by their tremendous contribution to re duce the disadvantages of natural barriers like distance and cost. The developme nts in the field of air cargo transportation has fostered globalization by enabl ing quick and safe transportation of sensitive goods like perishables and goods subject to quick changes in fashion/taste. Developments of containerization and refrigeration have also been of high significance. The steep fall in the cost of transportation and communication has considerably accelerated pace of globaliza tion. All these have contributed to the drastic transformation of the logistical and global distribution of the value chain system. The world wide web has a stu pendous impact on globalization. Global sourcing was encouraged not only by trad e liberalization but also by technological developments which reduced transport costs. Advent of containerization and super tonnage cargo ships drastically redu ced transport costs. The IT revolution has made an enormous contribution to the emergence of the glob al village. The cost of new product development is very huge in several industries such as p harmaceuticals. To recoup such high costs a global market is required. A corolla ry is that the fast technological changes, which hasten product obsolescence, ne cessitate a short pay back period, which can be realized only with a very large market. Further, because of the huge investment and diverse skill requirements associate d with new product development, cross border alliances in research and developme nt are becoming more and more popular. Again, in a number of cases different pha

ses of the product development are carried out in different countries either by a company s own affiliates or by outsourcing. Quality and cost: The two most important determinants of demand are the quality and price of the o ffering. These can be better achieved when a firm is global in its operations. Rising Aspirations and Wants: Because of the increasing levels of education and exposure to the media, particularly the electronic media, aspirations of people all around the world are rising. They aspire for everything that can make life m ore comfortable or satisfying. If domestic firms are not able to meet the wants, they would naturally turn to foreign firms. The customer today is, by and large , global. He wants a world class product or a product of desired attributes at i nternational price. He may desire a product available anywhere in the world. His aspirations cannot be tied down to the domestic availability

more at http://www.citeman.com/2141-driving-and-restraining-forces-international -marketing.html#ixzz2JGimJT3K