Globalisation Internal motives: why firms expand abroad External forces: why it is easier for them to do so

Efficiency/Growth motives economies of scale spread the risk home market saturated harvest older product lines – in emerging markets

Market motives service internationally mobile clients exploit comparative advantages to be in important ‘lead’ markets –markets where the ideas are –markets that set the trends

Competition motives counter foreign competitors create economies of scale/critical mass form international alliances

Resource motives cheaper materials cheaper labour skilled labour favourable taxation and legislation new ideas and expertise

Which is the main motive for your company? This will affect the scale, speed and mode of market entry the marketing mix strategy adopted

Craig and Douglas define 3 stages of internationalisation Initial market entry for reasons above Expansion in individual foreign markets in response to local conditions

Global rationalisation - avoids duplication -synergy from shared resources & ideas -counters global competitors -services global clients Global Marketing Strategy (1995) But are global strategies now in danger of being outflanked by local competition?

Accelerating International Growth Companies can no longer afford to enter new markets in a careful sequential process over decades Thinking globally from the start is a necessity Rosenzweig et al 2001

External forces for globalisation Muhlbacher, Dahringer and Leihs (1999) Technological change the shrinking planet, the global village Accumulation of capital Human creativity and efficiency result of education?

Pre-conditions? Liberalisation of trade Political stability (Pax Americana) Political freedom (the Open Society) Economic confidence Are these under threat?

Trans-national corporations 500 companies control 42% of world wealth. Only 27 countries have a GNP larger than the turnover of Shell and Exxon. Shell 's land holding is larger than 146 countries.

10 corporations control world-wide food production & distribution Most industries are dominated by five or fewer global corporations Consequences?

More powerful than governments but unelected, unaccountable and with no sense of social responsibility? Guardian 30/4/97 2:4 free movement of capital and business without free movement of labour = power of organised labour is destroyed influence of US oil companies on the Bush administration = Kyoto agreement on greenhouse gas emission targets abandoned Trade liberalisation forced on developing countries but not on US or EU

Regional free trade areas eg European Union, NAFTA A political counterbalance to the MNCs? Or a way of demolishing national defences to make it even easier for them?

The big question Global Free Trade –Blessing or Curse ? –Aspiration or reality? Read for next week’s seminars Nike and Reebok in Indonesia