global by hedongchenchen

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									Globalization: Trends and Prospects
             What is Globalization?


• From a general/macro-perspective




• From a firm perspective
The Growth of World Trade and World Output


                                180

                                160
                    World
                    Trade       140

                                120
                         World
                         Output 100



             1982 1986 1990 1994 est
                         The Shrinking Globe



       1500 -1840                   1850 - 1930          1950s      1960s




                                                       Propeller   Jet
                               Steam locomotives       aircraft    passenger
Best average speed of horse-   average 65 mph.         300 - 400   aircraft, 500
drawn coaches and sailing      Steamships average 36   mph.        - 700 mph.
ships, 10 mph.                 mph.
The Changing Pattern of World Output and Trade
The Changing Nature of Global Output

           Shares of World Output
                                         65%
                 Developing
                 countries†              60

                                         55

                                         50
                                         45
                          Rich
                          Industrial     40
                          Countries
                                         35


          1990     2000      2010      2020
                          forecast †
Changes in the Annual Inflows of Foreign Direct Investment




   $bn
               Evaluating Globalization


• The essence of globalization is a subordination of human rights,
  of labor rights, consumer, environmental rights, democracy
  rights, to the imperatives of global trade and investment. This is
  world government of the Exxons, by the General Motors, for the
  DuPonts (Ralph Nader)
• I think it's helping human rights because what it's doing is it's
  giving jobs to people at salary levels that they never would have
  had access to before. So in time I think this becomes more self-
  corrective (James Robinson, former head of AmEx)
• Asia: Child Labor and 11c an hour (Nike)
      Firm-level Benefits of Globalization

• Increase profitability in ways not available to purely
  domestic firms:
   – greater returns/diversify risk by exploiting core
     competencies abroad (domestic market saturation; new
     market opportunities)
   – realize location economies by rationalizing value chain
       • implications for both lower costs & differentiation
         through global web of value creating acts
   – realize greater experience curve economies
       • learning effects in technologically complex tasks &
         economies of scale from barriers to entry
         Global Standardization Philosophy


• Customer needs and interests are becoming increasingly
  homogenous worldwide
• Consumers are willing to sacrifice preferences in product
  features for lower prices at higher quality
• Substantial economies of scale in production and marketing
  can be achieved by developing standardized marketing
  programs
        Constraints to Implementing Global
             Standardization Strategy

• External
   – Governmental and trade restrictions
   – Differences in marketing systems
   – Nature of competitive structure
   – Socio-cultural influences on consumer preferences

• Internal
   – Financial and managerial constraints
   – Local management motivation and attitudes
               Industry Globalization Drivers



                      MARKET DRIVERS




                         Industry
                         Globalization    GOVERNMENT DRIVERS
COST DRIVERS
                         Potential




                    COMPETITIVE DRIVERS
     Globalization Forces: Market Drivers


• Convergence of per capita income, lifestyles and tastes??

• Global Customers due to increased travel and
  organizational buying

• Growing global and regional channels

• Increasing number of world brands and global advertising
      Strength of Market Globalization Drivers


                                         Civil Aircraft


                           Automobiles

              Toothpaste


  OTC Pharmaceuticals



Low                                                  High
      Globalization Forces: Cost Drivers


• Continuing push for economies of scale (but offset by
  flexible manufacturing)
• Accelerating technological innovation
• Increasing cost of product development relative to market
  life
• Advances in transportation
• Emergence of newly industrialized countries with
  productive capability and low labor costs
      Strength of Cost Globalization Drivers



                                     Pharmaceuticals

                              Computers


         Commercial Banking

  Soft Drinks



Low                                                    High
  Globalization Forces: Competitive Drivers


• More countries becoming key competitive battlegrounds
• Rise of new competitors intent on becoming global
• Growth of global networks making countries
  interdependent in particular industries
• More companies becoming internationally oriented rather
  than nationally centered
• New global alliances
 Strength of Competitive Globalization Drivers


                                                 Civil Aircraft
                                     Computers
                                  Automobiles

                    Soft Drinks


  Book Publishing



Low                                                          High
    Globalization Forces: Government Drivers


• Reduction of tariff barriers
• Reduction of non-tariff barriers
• Creation of new trading blocs
• Decline in the role of government as producers and
  consumers
• Market liberalization and privatization
• Adoption of common standards
 Strength of Government Globalization Drivers


                                                    Toothpaste

                                      Soft Drinks

                            Automobiles

           Civil Aircraft

  OTC Pharmaceuticals



Low                                                              High
The Structure of the Course


         The Environment

            The Firm


            Business
           operations:

								
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