Globalisation

Shift towards a more integrated &

interdependent economy Name Roll no.
Sonali Daine 11
Dipti Dalvi 12
Mandar Deshmukh 13
Rupesh Devaliya 14
Kriselle D’silva 15
Definition
• The growing economic
interdependence of countries
worldwide through increasing
volume and variety of cross
border transactions in goods and
services and of international
capital flows and also through the
more rapid and widespread
diffusion technology.
Features
• Operating & planning to expand business.

• Erasing difference between domestic & foreign markets.

• Buying & selling goods & services from/to any country in

the world.

• Establishing manufacturing & distribution facilities in

any part of the world.
Cont…
• Product planning & development are based on market consideration
of the entire world.

• Sourcing of factors of production & inputs from the entire globe.

• Global orientation in strategies, organizational structure and culture

• Setting the mind & attitude to view the entire globe as a single market.
• Companies view all the stakeholders
from all countries equally for their
operations

• Example: Coca-Cola, Honda,

Reliance

• Mazda’s sports car MX-5 Maita

was designed in California,
its prototype product is created in England,
assembled in Michigan and Mexico using
advanced electronic components of New Jersey,
fabricated in Japan by sourcing the
finance from Tokyo and New York
and marketed worldwide
Globalisation process
Domestic Companies exports
through dealers

Domestic Company exports

directly on its own

Domestic Company becomes

an International Company

Company replicates a foreign

Company in foreign Country

Company becomes a true

Foreign Company
Globalisation
could involve
all these
things!
Drivers of globalisation

1. Establishment of WTO:-
Objective: To strengthen the world economy and lead to
more trade, investment, employment & income growth
throughout the world

Advantage: Value of exports(2.5) & imports(10) were

increased

2. Regional Integration:-
It increases size of market, aggregate demand for
products & services, quantity of production,
employment & economic activity
Example:
• European Union, NAFTA, ASEAN
NAFTA:-
• January 1, 1994

• USA, Canada & Mexico joined together to form a trade

block to eliminate all trade barriers among countries

• It accounts for 16% of world exports & 25% of the world

imports
3. Declining Trade Barriers:-
After world war 2, the member countries of the (GATT) agreed to
reduce tariff rates

45 30
40
25
35
30 20
25
15
20 USA Japan
15 10
10
5
5
0 0
1913 1950 1990 2000 1913 1990 2000
4. Declining Investment Barriers:-

• To establish manufacturing facilities in other countries

• To encourage growth of global business

5. Growth in FDI:-

• The investment made by a company in new

manufacturing &/or marketing facilities in a foreign
country
• Outflow of FDI increased from US$564 billion in 1980 to
US$19,636 billion in 2006
6. Strides in Technology:-

• Microprocessors & Telecommunications

• The Internet & World Wide Web- e-mail, voice mail
• On-line Globalization
• Transportation Technology- commercial jet aircrafts,
super fighters, containers,etc.

7. Growth of Multinational Companies:-

• Organization doing business in more than one country

• EU had 163 out of 500 top MNC’s followed by USA(162)
& Japan(67)
Globalisation of Markets
• Features
Globalisation of Markets
• Reasons for globalisation of markets

1. Mass production

2. Diversification of portfolio

3. Profit maximization

4. The adverse business environment

5. To cater to the demand

6. Failure of the domestic companies

Globalisation of Production
• Reasons for globalisation of production

1. Restrictions on imports Eg: Toyota

2. Availability of high quality raw materials & components

3. Availability of inputs at low cost

4. Availability of skilled human resources

5. Liberal labor laws

6. To reduce the cost of transportation

7. To design &produce products as per the varying taste of consumers

Globalisation of Production

• For example:
Jet airlines-Boeing 777

- Has 132500 major components.

- Production of components in 545

different locations.
 Software devp / Shared Sourcing /
R&D
Engineering Services / BPO Manufacturing

Astra Zeneca Philips Siemens

ABN Amro
Conducting planning to proposing to
BPO center
expand make India a
cutting edge services entire
software prod. manufacturing
R & D as well global
hub for
as discovery R&D from operation and
medical
work in India 1000-2500 seats other banks
systems
in coming years

Bajaj Allianz
Glaxo STMicroelectr ABB supplying
does IT
Smithkline onics planning world wide
servicing for
setting up both to expand 1000 demand for
some Asian
clinical trial seat Noida certain power
Countries,
and research in software devp products from
looking to
India facility to 1500 India
expand
Globalisation of Investments

• Globalisation of investment refers to investment

of capital by a global company in any part of the
world.
• It also known as FDI
• Example- Coca-Cola
Globalisation of Investments
• Reasons for globalisation of investment

1. Rapid increase in the volume of global trade

2. Provision of congenial environment for attracting FDI
3. Direction of FDI towards developing countries
4. Investment by small & medium size companies
5. Change in composition of FDI
6. Limitations of exporting & licensing
7. To have control over the manufacturing & marketing activities
Globalisation of Investments
• Modes of Globalisation of investment

1. Acquisition of foreign companies

2.Joint ventures
3.Long term loans
4.Issuing Equity Shares, Debentures, Bonds
5.Global Depository Receipts (GDR) etc.
Globalisation of Technology
• The latest developments in IT have enabled the global

company to develop into a virtual global company.

• How technology fastens the process of globalisation?

1. Microprocessors & Telecommunication

2.The Internet & World Wide Web

3.On-line Globalisation

4.Transportation Technology
Advantages of globalisation
Disadvantages of globalisation
• Kills the domestic
business

• Increased gap between

rich and poor.

• Exploitation of natural
resources
There are plenty of people who believe that
globalisation is a negative development,
protests at the G8 summits, pollution, poverty
and concern over GM crops are just some of
the issues.
 • National
Sovereiganty at stake

• Violation of labour &

environmental laws
There are plenty of people who believe that
globalisation is a negative development,
protests at the G8 summits, pollution, poverty
and concern over GM crops are just some of
the issues.
Impact of globalization on India
A) On Indian Economy
• Evaluation of L.P.G.
• Indian economy is becomes second fastest growing economy in the
world.
• Increase in growth rate i.e. India’s GDP has touched US$ 1.25 trillion
mark.

B) On Indian Industry
• It increased the FDI.

• Opportunities in BPO,KPO,IT etc. sector

• MNCs Have Entered The Market Both For Sourcing As Well As Selling Their
Products

• International expansion of Indian companies, products

• It increased the competition for domestic companies

• Increase in the manufacturing and export

• Manufacturing Companies have restructured and downsized (Engineering,

Metals, Cement, Electrical Machinery, Textiles)

• Lot Of Companies Offered Voluntary Retirement Schemes (VRS) And

Reduced The Number Of Employees.
• Example: MNC’s like Coca-Cola, Samsung Engineering, Ford, City
bank, IBM etc. came to India. And Indian domestic companies like
Videocon, Wipro, Infosys, Tata etc. Were becomes MNC’s by
entering in foreign markets.
C) On Indian Culture

• The Indian culture is changing rapidly due to

the Globalization.

• Indian culture is leaning towards a formality now.

• Example:
D) On Agriculture

• Technological and instrumental advancement e.g. green house

tech., poly house tech., BT tech. etc.

• agriculture becomes easier but costlier

• Example: in 1990’s cotton seed required for one acre was costs
Rs.90 but in today’s scenario the same ranging between RS.1000-
Rs.3000.

• Export of agricultural products is now becomes easy with giving

high value to the products
Thank You….