Basics of Globalization

1. Subject Expert
Anamika Jaiswal
Globalization
MARKETING AND RETAIL
BUSINESS

2. Objective of the Study
 To understand the concept of
Globalization
 To understand the impact of Globalization
on International Trade

3. Defination of Globalization
According to IMF:
It represents the growing economic interdependence of the
countries worldwide through increasing volume & variety of
cross border transactions in goods & services & of
international capital flows & also through the more rapid
&widespread diffusion of technology.

4. Globalization
 The integration of all national economies
into one global market, with one set of
rules
 Global market takes precedence over
national autonomy
 Supporting institutions are IMF, World
Bank, World Trade Organization (WTO),
NAFTA, etc.

5. FEATURES OF GLOBALISATION
 Operation & planning to expand business throughout the world.
 Erasing difference between domestic & foreign market.
 Buying & selling of goods & services from any country.
 Establishing manufacturing & distribution facilities in any part of the world.
 Product planning& development are based upon international
considerations.
 Sourcing of material from any part of the world.
 Global orientations in strategy formulation.
 Considering the entire globe as a single market.

6. The Rise of Globalization
 Globalization is expanding cultural,
political, and economic connections
between people around the world.
 It is increasing buying and selling of
goods, across national borders promoting
international trade and financial capital
flows.

7. Benefits of Globalization
 Improved Living Standards
 Increased Creativity and Innovation
 Lowered Costs for Goods and Services
 Easy Access to Foreign Culture
 Access to new technological developments.

8. Challenges of Globalization
 Job Mobility
 Western Dominance
 Loss of Cultural Identity
 Threat to Domestic Industries
 Increasing Competition

9. FORMS OF GLOBALIZATION
 Cultural globalization
 Economic globalization
 Geographical globalization
 Institutional globalization
 Political globalization
 International environment globalization

10. Impact of Globalization
 Ecological sustainability
 Distribution of wealth and income
 Economic output
 Economic stability
 Democracy
 The allocation of scarce resources
towards an improved quality of life for all
people

11. Globalization and India
 Looking at the trend and its uprising since all these years, the
answer is yes!
 To be precise, globalization has proven advantageous to
professional and skilled individuals, primarily from urban regions.
 The unskilled population hasn’t gained enough out of globalization.
For example, industries, as well as service firms, have been
supported by this scheme more effectively as compared to the
agricultural sector.
 The rise of MNCs has been quite significant after globalization.
However, small producers are bound to face tough competition.

12. International Trade
 International business comprises of all commercial transactions
that take place between two or more countries beyond their
political boundaries.
 These transactions may take place between private companies or
governments of different countries. International Business
conducts business transactions all over the world.
 These transactions include the transfer of goods, services,
technology, managerial knowledge, and capital to other countries.
 International business involves exports and imports. •
International Business is also known, called or referred as a
Global Business or an International Marketing.

13. International Trade
 An international business has many options for
doing business, it includes, i. Exporting goods
and services. ii. Giving license to produce goods
in the host country. iii. Starting a joint venture
with a company. iv. Opening a branch for
producing & distributing goods in the host
country. v. Providing managerial services to
companies in the host country.

14. Basics of International Trade
1. Exchange rates – The price of a nation’s
currency in terms of another nation’s currency.
2. Balance of Trade – The difference in value
between a country’s imports and exports.
3. Imports – Bringing goods or services into a
country for sale.
4. Exports – Sending goods or services to another
country for sale.

15. Trade and World Output
• World trade
• 80% merchandise
• 20% services
• World output impacts trade
• Growing output = growing trade
• Sluggish output = sluggish trade
• World trade grows faster than world output

16. Need for International Trade
 Remove the narrowness of domestic market, induce innovations, achieve
the full advantages of economies of large scale production and increase
productivity,
 make savings and capital accumulation easier, and
 those that acquire new knowledge, new ideas and cultures, new skills and
entrepreneurship and disseminate technical knowledge.
 Trade can boost productivity which, in turn, raises the incomes and
standards of living even of poor developing countries.

17. APPROACHES TO INTL.Trade
 Ethnocentric Approach
 Polycentric Approach
 Regiocentric Approach
 Geocentric Approach

18. Ethnocentric Approach
 It focuses on the values and ethnics of the home
country. The strategies are devised and formulated for
domestic operations first and the overseas operations
are secondary.
 The foreign activities are conducted mainly to distribute
surplus.
 This approach is suitable for small companies as less
investment is required and less risk is involved. The
activities are managed by an export department or a
separate international division.

19. Polycentric approach
 Under such approach a company’s policies and
procedures are based on host country.
 The local market needs and requirements are met by a
team of local employees and various foreign subsidiaries
are established to work independently to achieve the
objectives and plans of the organization.
 Such an approach is generally used by multinational
corporations.

20. Regiocentric approach
 It is applicable when the company caters to different
regions of different markets.
 Each region has special or distinctive feature depending
upon regional factors, political factors, economic factors
etc. the regions are categorized and strategies are
formulated accordingly having national and regional
headquarters.

21. Geocentric Approach
 It is a method of international recruitment where the
MNC’s hire the most suitable person for the job
irrespective of their Nationality.
 The rationale behind the Geocentric Approach is that the
world is a pool of talented staff and the most eligible
candidate, who is efficient in his field.
 This approach is followed by the firms that are truly
global because they follow the integrated global
business strategy.

22. PROBLEMS OF INTERNATIONAL
TRADE
 Distance
 Different languages
 Difficulty in transportation and communication
 Risk in transit
 Lack of information about foreign businessmen
 Import and export restrictions
 Study of foreign market
 Frequent market changes

23. BARRIERS TO INTERNATIONAL
TRADE
 Tariff Barriers: are taxes imposed on goods entering a country from
another country. They suggest that tariff revenues are paid to the
government of the country that allows the goods to enter its nation
and this revenue is used to finance government services.
 Quota System: the prices increase in the home market and this
enables domestic producers to increase production and consumers
to reduce consumption.

24. BARRIERS TO INTERNATIONAL
TRADE
 Non-Tariff Barriers (NTB): Subsidizing domestic producers is one
way to restrict terms under which foreigners can compete in the
home market. They also state that restricting access to foreign
money to buy foreign goods is known as Exchange Control.
 Tariff-Rate Quota: It is said to be the combination of the ideas of
tariff and quota. The implementation of a TRQ is a very good idea
for the benefit of both countries – that importing and the one
exporting, and the concerned governments.

25. THANK YOU