UIAMS Trimester - VI L-1-4

Performance of trade and investment activities by firms across national borders. Product Presence in different markets of the world.

Production bases across the globe.

Human Resource to contain high diversity.

Investment in international services like banking, advertising, tourism, retailing and construction technology.

Companies conduct value-adding activities on a

global scale, i.e. organize, source, manufacture,

market, etc.

Firms international expansion is made more compelling and easier due to market and product globalization- for firms small and large. A level playing field has made cross-border activities appealing to all types of firms- large and small; manufacturing and service sectors (e.g. banking, transportation, engineering and design, advertising, and retailing).

All value-adding activities including sourcing, manufacturing, and marketing, can be performed in international locations. The subject of cross-border trade can be products, services, capital, technology, know how, and labour. Firms internationalize through exporting, foreign direct investment, licensing, franchising, and collaborative ventures.

Collapse of the Berlin Wall- Ended the Cold War and allowed those in Eastern Europe and Western Asia to join the world's stage. Netscape Workflow Software Uploading Outsourcing Off shoring Outsourcing In forming Supply Chaining The Steroids Wireless, Internet, VoIP, File Sharing

There is a movement towards a globalization of markets, as the tastes and preferences of consumers in different nations are beginning to converge upon some global norm. Ongoing economic integration and growing interdependency of countries worldwide. Integration is central to globalization, which has resulted in the widespread diffusion of products, technology, and knowledge worldwide, regardless of where they originate.

Globalization of Capital

Globalization of Corporate Mindset

Globalization of Supply Chain

Globalization of Market Presence

The extent to which a company targets customers in in all major markets within its industry throughout the world. The global acceptance of Coca-Cola, Levis jeans, Sony Walkmans, and McDonalds hamburgers are all examples. By offering a standard product worldwide, they are helping to create a global market. Even smaller companies can get the benefits from the globalization of markets. Wal-Mart Airtel India, South East Asia and Africa.

The extent to which the company is accessing the most optimal locations for the performance of various activities. It may be possible to have a fairly regional market presence and yet a highly globalized supply chain.

Toyota Japan and 1/3rd in 25 countries of America, Europe and Asia.

The extent to which a company is accessing optimal sources on a world wide basis. China.Coms operations primarily in HK and China, but got itself listed on the US based Nasdaq Stock Exchange.

Ability of the organization to understand and integrate diversity across cultures and markets. United Colors of Benetton Mc-Donalds Dominoes Frito Lays

Greater integration and interdependency of national economies; leading to freer movement of goods, services, capital, and knowledge Rise of regional economic integration blocs Growth of global investment and financial flows Convergence of consumer lifestyles and preferences Globalization of production.

Measure of a Nations Global Ability

Political EngagementNations membership in world bodies, human resources, financial contribution, Trade treaties Technological Connectivity Number of Internet users, hosts, secure servers Personal Contact international trade and tourism, voice and data traffic, remittances, personal transfers, employee compensations Economic Integration FDIs, capital flows, income from investments

The developing markets have huge untapped potential . The BRIC Countries Brazil, Russia, India and China and their growth trajectories. MNCs are locating subsidiaries in low wage countries. Low cost labor, lower production cost, Changing Demographics

Regional trading blocks are adding to the pace of globalization. NAFTA - North American Free Trade Agreement. The agreement opened the door for open trade, ending tariffs on various goods and services, and implementing equality between Canada, America, and Mexico. Effect on exports, imports, agriculture, trade balances, investments, environment, mobility of persons.

Declining trade and investment barriers have vastly contributed to globalization. Earlier protection of the domestic markets the infant industry argument. What resulted was the Great Depression No Jobs No Income No Demand- No Supply No Income

This led to the free trade agreement regime resulting in the WTO.

The technological revolution developments in communication, transportation, information processing.

Opportunity from Foreign Exchange, circulation of money. Resource Seeking natural, human resources, strategic assets. Tatas acquisition of Corus Chinese Lenovos acquisition of IBM.

Maximization of economic efficiencies

Increase in consumer welfare

Enhanced Trade

Globalization

Better efficiency of local firms

Increased cross border capital movement

 Inequalities b/w developed and developing nations Gap b/w rich & poor Unemployment Hindrance to domestic Industry Balance of Payment Problem Increased volatility Loss of cultural identity Shift of power to MNCs

Americanization
Coca colonization Disney fication Mc donalization Walmartization

Refers to the measure of a nation by the size of its accumulated treasures. Accumulated wealth is traditionally measured in terms of gold, as earlier gold and silver were considered the currency of international trade. Mercantilism was implemented by active government interventions which focused on maintaining trade surplus and expansion of colonization. National govts. imposed restrictions on imports through tariffs and quotas and promoted exports by subsidizing production.

Accumulation of wealth takes place at the cost of the trading partner. A favorable balance of trade is possible only in the short run and would be eliminated in the long run. Presently the gold reserves represent only a minor proportion of the national foreign exchange reserves. The theory overlooks other factors such as the countrys wealth, natural resources, manpower, skill levels etc. Mercantilist policies were used by colonies as a means of exploitation.

Advocated by economist Adam Smith, that wealth of a nation does not lie in building huge stockpiles of gold and silver in the treasury. But the real wealth of a nation is measured by the level of improvement in the quality of living citizens, as reflected by the per capital income. A countrys standard of living can be enhanced by international trade with other countries either by importing goods not produced or by producing large quantities of goods through specialization and exporting the surplus.

Natural or Acquired Advantage

Natural a countrys geographic and agro climatic conditions, mineral or natural resources, specialized man power Acquired Advantage Product Technology & Process Technology; the underlying opportunity cost.