Globalization “an unprecedented compression of time and space reflected in the tremendous intensification of social, political, economic, and cultural interconnections and interdependencies on a global scale” - Stegler The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms. -bized.uk

One way to approach this: think about the world before globalization Distance mattered—space often measured in time Territorial boundaries more or less kept things in and out Society and culture had spatial referents Everything had its “place” (literally)

Globalization Distance becomes almost irrelevant (the end of distance) Boundaries are increasingly permeable. Groups and cultures increasingly don’t have a territorial basis (deterritorialization) A new kind of non-physical “place” is emerging (supraterritoriality) In a world of deterritorialization and supraterritoriality:

Globalization Could Involve...

Globalization Reflects a business orientation based on the belief that the world is becoming more homogeneous and that distinctions between national markets are not only fading, but for some products, will eventually disappear. As a result, companies need to globalize their international strategy by formulating it across markets to take advantage of underlying market, cost, environmental, and competitive factors.

Globalization of Markets Refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross-border trade have made it easier to sell internationally. It has been argued for some time that the tastes and preferences of consumers in different nations are beginning to converge on some global norm, thereby helping to create a global market.

Globalization of Markets

Globalization of Production Refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production. By doing this, companies hope to lower their overall cost structure or improve quality of functionality of their product offering, thereby allowing them to compete more effectively.

Globalization of Production The Lenovo ThinkPad Lenovo is a Chinese company. It acquired IBM’s personal computer operations in The ThinkPad is designed in the US; the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the US.

Drivers of Globalization Political Forces There is a trend toward the unification and socialization of the global community. Preferential trading arrangements, such as the NAFTA and the EU, that group several countries into a single market have presented firms with significant marketing opportunities.

Technological Factors Advances in computers and communications technology are permitting an increased flow of ideas and information across borders, enabling customers to learn about foreign goods. Cable and satellite TV systems in Europe and Asia, for instance, allow an advertiser to reach numerous countries simultaneously, thus creating regional and sometimes global demand. Global communications networks enable manufacturing personnel to coordinate production and design functions worldwide so that plants in many parts of the world may be working on the same product.

Market Forces As companies globalize, they also become global customers. Finding the home market saturated also sends companies into foreign markets. Cost Economies of scale to reduce unit costs are always a management goal. One means of achieving them is to globalize product lines to reduce development, production, and inventory costs.

Competitive Forces Competition continues to increase in intensity. New firms, many from newly industrialized and developing countries, have entered world markets in automobiles, computers, and electronics, for example. Another competitive driving force for globalization is the fact that companies are defending their home markets from competitors by entering the competitors’ home markets to distract them.

Pros - Economic Aspect Employees of a transnational corporation may be well paid compared to other workers in the country Free trade between nations is established – countries can produce to its strengths and import the goods it needs without the threat of tariffs Increased investment in developing countries stimulates their economies A wide range of products are available at affordable prices due to free trade Sharing of technological innovations is fast and fair

Cons - Economic Aspect Jobs are being outsourced from developed countries to less developed countries resulting in higher unemployment Transnational corporations may have fewer environmental regulations to follow and can pay lower wages – they can ‘shop around’ for best options Corporate headquarters are usually located in the USA or western Europe resulting in resentment in the accumulation of economic power Transnational corporations are becoming so large they are beyond the power of smaller governments Economies are linked due to trade – economic hardship in one country will more greatly affect other nations Cultural identity is lost due to mass use of western consumer products and entertainment Profits usually do not stay in developing countries – they are returned to developed world

Pros – Cultural Aspect Globalizations of communications sees great quantities of information shared around the world The best of cultures can be shared and understood on a global scale There is more influx of information between two countries, which do not have anything in common between them There is cultural intermingling and each other is trying to know about the other’s cultural preferences and in the process of doing so, we are actually coming across things that we like and in the course of time adopt it

Cons – Cultural Aspect A small number of private media companies decided what information is to be shared and shape public opinion through sensationalization (bias) Media and entertainment impact is westernizing other cultures There are some experts who think that globalization; along with the positive aspects is also leading to the incursion of negatives like communicable diseases and social degeneration

Pros – Political Aspect Gradually there is a world power that is being created instead of compartmentalized power sectors. Politics is merging and decisions that are being taken, are actually beneficial for people allover the world Since we share financial interests, corporate and governments are trying to sort out ecological problems for each other International agreements are working towards trying to protect the environment from pollutants that cause global warming, destroying ecosystems, and increasing acidity levels in seas and oceans Communications allow for the message of political freedom tyranny in the for of democracy to spread globally

Cons – Political Aspect For nations that are at the receiver’s end are also giving up the reins in the ends of a foreign company which might again lead to a sophisticated form of colonization