INTRODUCTION

Globalization

refers to rapid increase in the share of economic activity taking place across national borders. It goes beyond the international trade includes the way in which goods/ services are produced /created, delivered &sold & movement of capital.

Definition :

A typical - but restrictive - definition can be taken from the International Monetary Fund which stresses the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology.

KEY PLAYERS
They are Multinational firms which carry out business across the national borders.

The World Trade Organization (WTO) THROUGH WHICH INTERNATIONAL TRADE AGREEMENTS ARE NEGOTIATED& ENFORCED The World Bank & International Monetary Fund (IMF) are means to assist Govt .in achieving development aims through the provision of loans, technical assistance.

STAGES IN GLOBALISATION

Domestic company links with dealer & distributor. Company does the activities on its own. Company begins to carryout its own manufacturing , marketing & sales in the foreign markets. Company starts full-fledged operations including business systems and R&D. At this stage the managers are expected to perform the tasks which they were doing in domestic markets to replicate them in foreign markets.

Conditions for globalization

Business Freedom-No unnecessary Government restrictions like restrictions on sourcing of funds and other factors from abroad. Hence the liberalization is the 1st step towards facilitating globalization. Facilitators-Infrastructure facilitation available at home country an help entrepreneurs go globally. Government support Government support available in the form of policy & procedure reform encourage globalization

Resources-Resources is an important factor which decides the ability of affirm to globalize. They include finance ,technology, brand image, companys image, managerial expertise etc. Competitors- This is an important factor which companys success in global market bank on. The factors like low costs& price, product quality, product differentiation, technological superiority. After sales service, market strengths etc are few to name.

Firm operate internationally for a number of reasons:

They may be seeking to secure better sources of raw materials & energy. They may want to obtain access to low cost factors of production such as labour. They may be attracted to certain countries because of subsidies those countries provide. They may be seeking new markets for their products. Domestic markets may no longer be able to absorb production at minimum efficient scale.

Reasons For Globalization

They may be motivated by life style factors.Domestic markets become saturated .As they mature , firms look abroad for new opportunities. They may be seeking opportunities for economies of scope & for learning.

Contd

Entering global markets:

There are a number of steps that need to be taken before you decide to enter international markets. Analyze the international marketing environment. A PEST/STEP analysis needs to be conducted on the market you enter, to assess whether it is worthwhile or not.

Entering global markets

Analyze the international marketing environment. A PEST/STEP analysis needs to be conducted on the market you enter, to assess whether it is worthwhile or not.

Political factors Consider: The political stability of the nation. Is it a democracy, communist, or dictatorial regime? Monetary regulations. Will the seller be paid in a currency that they value or will payments only be accepted in the host nation currency?

Economical Factors
Consider: Consumer wealth and expenditure within the country. National interests and inflation rate. Are quotas imposed on your product. Are there import tariffs imposed. Does the government offer subsidies to national players that make it difficult for you to compete?

Social Factors
Consider: Language. Will language be a barrier to communication for you? Does your host nation speak your national language? What is the meaning of your brand name in your host countrys language? Customs: what customs do you have to be aware of within the country? This is important. You need to make sure you do not offend while communicating your message. Social factors: What are the role of women and family within society? Religion: How does religion affect behaviour? Values: what are the values and attitudes of individuals within the market?

Technological Factors Consider: The technological infrastructure of the market. Do all homes have access to energy (electricity) Is there an Internet infrastructure. Does this infrastructure support broadband or dial up? Will your systems easily integrate with your host countrys?

Global Business Trends

1. Growth of WTO and regional trade groups 3. Impact of the Internet on global communication 2.. Global acceptance of free market system

4. Threats of terrorism and armed conflict

5. Rise of new producers and consumers

6. Management of global environmental resources

SWOT Analysis of Globalisation

Strengths

Weaknesses

economic growth reduction of poverty

Bad communication Diseconomies to scale Increasing use of blimps as transport [*]Uneven distribution of wellfare [*]The role of the less economically developed countries is to provide cheap labour and inexpensive raw materials

Opportunities

Threats

Emerging markets and expansion abroad Innovation Online Product and services expansion Takeovers Comperative advantage

Competition Cheaper technology Economic slowdown External changes (government, politics, taxes, etc) Exchange rate fluctuations Lower cost competitors or imports Maturing categories, products, or services

Trading overseas There are a number ways an organization can start to sell their products in international markets.
1. Direct export. The organization produces their product in their home market and then sells them to customers overseas. 2. Indirect export The organizations sell their product to a third party who then sells it on within the foreign market.

3. Licensing Another less risky market entry method is licensing. Here the Licensor will grant an organization in the foreign market a license to produce the product, use the brand name etc in return that they will receive a royalty payment. 4. Franchising Franchising is another form of licensing. Here the organization puts together a package of the successful ingredients that made them a success in their home market and then franchise this package to oversea investors. The Franchise holder may help out by providing training and marketing the services or product. McDonalds is a popular example of a Franchising option for expanding in international markets.

5.Contracting Another of form on market entry in an overseas market which involves the exchange of ideas is contracting. The manufacturer of the product will contract out the production of the product to another organization to produce the product on their behalf. Clearly contracting out saves the organization exporting to the foreign market.

6.Manufacturing abroad The ultimate decision to sell abroad is the decision to establish a manufacturing plant in the host country. The government of the host country may give the organization some form of tax advantage because they wish to attract inward investment to help create employment for their economy.

7.Joint Venture To share the risk of market entry into a foreign market, two organizations may come together to form a company to operate in the host country. The two companies may share knowledge and expertise to assist them in the development of company; of course profits will have to be shared out also

Conclusion