Globalization

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Slide 1:

Globalization Pradip Singh Assistant Professor SAMS Varanasi

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Concept of globalization Why companies go global Challenges of globalization

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“ Globalization is a process of development of the world into a single integrated economic unit” “Globalization means several things for several people” “No boundary for trade & rule” “It is the process of internationalizations of products, markets, technologies, capital, human resources, information & cultures” Definitation

“The Growing economy interdependence of countries world wide through increasing volume and verity of cross border transactions in goods and services & of international capital flows & also through the more rapid widespread diffusion of technology” --IMF “All institution have to make global competitiveness a strategic goal. No institution, weather a business, a university or a hospital, can hope to service, let alone to succeed, unless it measures up to the standards set by the leaders in its field, any place in the world.” --Peter Ducker :

“The Growing economy interdependence of countries world wide through increasing volume and verity of cross border transactions in goods and services & of international capital flows & also through the more rapid widespread diffusion of technology” --IMF “All institution have to make global competitiveness a strategic goal. No institution, weather a business, a university or a hospital, can hope to service, let alone to succeed, unless it measures up to the standards set by the leaders in its field, any place in the world.” --Peter Ducker

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Globalization involves expansion of business operations throughout the world. It need to integration of individual countries of the world into one global market their by erasing difference between domestic market and foreign market. it creates interdependency between nations. In the transactional economic the goal is market maximization & not profit maximization. Trade, which increasingly follows investment, is becoming a function of investment. Products are planed and developed for the world market. Features

Cont…..:

Cont….. Buying and selling of goods and services takes place from/to any country in the world. Factors of productions like raw materials, labour, finance, technology & managerial skills are sourced from the entire globe.

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International trade FDI Financial Flows Tech. Transfers Portfolio investment & debt. Communications . Technological Advance in transportation, electronic, bioengineering & related Fields. Population Mobility, especially of labour. Note:- Each of these drivers of change has accelerated in recent years and each reinforces the other. Drivers Of Globalization

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Business Freedom Facilities Government Support Resources Competitiveness Orientation Essential condition for globalization

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Wider Market :- Globalization offer larger markets to domestic Products. Domestic firms can export their surplus output. Rapid Industrialization :- Globalization helps in the free flow of capital and technology between countries. Free flow of capital and Technology from advance countries help the developing countries to boost up their industrialization. Greater Specialization :- Globalization enables the domestic firms to specialize in area where they enjoy competitive or comparative advantage. Specialization also helps to save resources and promote export of the country. Higher Production :- Globalization leads to spread up of manufacturing facilities in different country. Advantages of Globalization

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Cont….. Price Stabilization :- Globalization can reduce price differences between countries . Increase in employment and income :- Globalization creates job opportunities in developing countries and the income of people increase due to increase industrialization. Competitive gains - Globalization increase competition for domestic firms through imports and multinational corporation. Domestic firms learn about new products, new technologies and new management system. Higher Standard of living. World peace :- Globalization promotes culture exchange and mutual understanding among different nation.

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Interdependence :- Globalization increase interdependence between nations of the world. As a result economic sovereignty and control over the domestic company are reduce. Threat to domestic Industry :- Globalization leads to establishment of manufacturing and marketing facilities by multinational and developing countries. These domestic firm in these countries fail to face the onslaught of multinationals. Unemployment :- Globalization leads to restructuring of industry. Technology up gradation and focus on area of comparative advantages create unemployment and underemployment among low skilled workers. As a result income inequality, poverty and social unrest may increase. Disadvantages of Globalization

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Cont…. Drain of basic resource :- Natural resources, Basic raw material and sellers of Agricultural and other inputs and buyers of finished goods. Brain Drain and economic underdevelopment of poor countries is the result of exploitative character of international trade. Technological dependence :- Developing countries become technologically dependent on developed countries and these foreign technologies are available at a high cost and are often not adaptable to local condition. Alien culture :- Globalization promotes consumption pattern and life styles which are inconsistence with the local culture and values. It may lead to shift in the industrialization pattern contrary to the national priorities.

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Opportunities in other markets :- If overseas markets are showing higher growth rate, it make sense to look at them. Cost Control :- Dominance in more then one market increase the ability of a company to control cost. This helps when the industry is cyclical in nature. Using new technology :- Access to technology and high quality manufacturing facilities, particularly useful for engineering company. New market :- If revenues are coming in from many countries, dependence on the domestic market is reduce. Creating a global company :- if the company is cost competitive and offers high-quality products, the world is its market. Why companies Go Global ?

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Indicator 1990-91 2001-02 Foreign Trade as % of 14.6 22.8 national income Current A/C Inflows, 22.0 39.3 outflows as % of GNP Capital A/c I&O as %of 39.6 82.4 GDC formula Balance of Payment 9.6 7.8 Flows as % of GNP External debt service 2.8 2.9 as % of GNP Indicators of India's Globalization

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Challenges of Globalization Bureaucracy Product at low Cost Provide the Quality product Provide good Infrastructure Provide new and better Technology Provide good Professional Management Improve R&D International Coordination

Sports &:

Sports & Globalization

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Olympics Began in 776 BC by Greeks 2004 Summer Olympics: 11,000 competitors from 202 countries 2002 Winter Olympics: 2,400 athletes from 77 countries

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National teams or individuals representing their country competing for title of World Champion Alpine skiing, soccer, track & field, badminton, curling, motorcycling, rugby, volleyball… World Cup

FAST FOOD: Globalizing the World:

FAST FOOD: Globalizing the World FUN FACT: McDonald's got started in China in 1990 SMALL business BIG BUSINESS

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– Web Global News, John Yunker “Eat, Drink, Go GLOBAL”

Thank You:

Thank You

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