INTRODUCTION

Globalisation is a progression by which local markets, humanities, and beliefs have

become united through a globe-spanning network of communication and trade
(Gary, 2001). The term globalisation is occasionally used to refer explicitly to
economic globalisation. It is the integration of national economies into the
international economy through trade, foreign direct investment, capital flows,
migration, and the spread of skill and technology. Globalisation of markets refers to
the process of incorporating and unification of the individual world markets into a
sole market. Jurgen argues in his publication in 2005 that the process engages
integration of some common standard, worth, perception, taste and accessibility
around the world and slowly enables the cultures to shift towards the use of
common merchandise or service. It has been greatly argued that globalisation is not
a fresh phenomenon, but rather it has been there since colonial age. However, its
recent and tactful use can be dated to 1983, when Levitt published his article “The
Globalisation of Markets”. (Kapferer, 2008).

One of the features of globalisation of markets is that the size of the company needs
not to be large to create a global market. Even small companies can create a
worldwide market. Factors influencing the locality of manufacturing facilities vary
from country to country. They may be more favourable in foreign countries rather
than in home country because of cheap labour or low taxes in foreign countries,
which forces the corporations to establish manufacturing facilities in other countries.
It is renovating the ways in which countries interact. State economies become
incorporated as the flow of merchandise and goods expands outside the borders. In
theoretical simulations, less trade barriers or decrease in transport costs generates
increase in trade between consumers in another country and producers in the other.
In the current atmosphere, businesses are more able to section their operations
internationally, outlining each stage of manufacture in the country where it can be
completed at the least cost, and communicating ideas for new merchandises and
new ways of manufacturing products around the world.

The digital revolution that has charged up globalisation is alteringhow

customersandcorporationsbehave. This revolution is cumulatingcompetition,
decreasing prices, creating new simulated companies, allowing individuals to sell
goods to each other deprived of a middle man. In the era of new vending, it’s more
important than ever that the company shows that they are on the customer’s side
and they arehere to make their lives a bit easier, a bit better. That’s the base of the
faith companies want to build as they become the model for new business.

In addition, when outsourcing happens between neighbouring nations, such as the

Pakistan and China or Mexico and USA, the exchange of production raises the
intentions for businesses to produce in areas with comparatively low-cost access to
far-off markets. Thus, the location of economic activity inside countries may alter
(Hanson, 2001). The diversity of global market is still dominant even after the
globalisation of markets and production. These discrepancies require the businesses
to formulate diverse policies for each market. The global business firms compete
with each other frequently in different national markets including their home
markets. This essay will further explain the effect globalisation of markets and
production has on an organisation by illustrating it with a case study on TESCO.

CASE STUDY
TESCO is one of the world’s largest merchant after Wal-Mart. It has followed an
aggressive foreign expansion strategy into US, South Korea, Eastern Europe and
China. It sources its goods globally and always purchases in great volumes, which
helps it to keep costs down of its products. Substantial cost-cuttings are made
through handling the supply chain efficiently and effectively. The corporation has
introduced a points card which collects data from customers when they use it to buy
items. The data is then used to provide discounts and offer savings with the range of
products on deals. This builds loyalty and develop promotions that aim for specific
customers. Through the use of this technology, TESCO has been successful to create
a fair amount of customers for themselves and remains a leader within the UK
market. (HSC Online, 2014).

The size of the business can be estimated by the figures provided by (Tesco, 2014)
that it’s operating about 6,784 stores worldwide, engaging over 500,000 employees.
That makes it the largest food supplier in the world. It also offers online services over
its subsidiary, www.tesco.com. The largest company in UK’s market operates below
four banners of Metro, Express, Superstore and Extra. The company vends about
40,000 food products, clothing and non-food lines. The company also produces own-
label merchandises which are categorised in three levels, normal, value and finest.
Apart from these, Tesco also provides several petrol stations, becoming one of
Britain’s major independent gasoline retailers.

One of the major retailers in the world, Tesco’s early experiences with globalization
was not fruitful. However, later Tesco started restricting its stores and merchandises
according to the worldwide markets. It entered South Korea in the year 1999 by
starting a combined venture with a deep-rooted native retailer Samsung. The joint
venture assisted Tesco attain in-depth understanding of the marketplace and also
helped it get the finest store locations (Tesco plc. 2014). Tesco began working in the
country under the well-established ‘Home Plus’ banner. Tesco confined its stores
according to the likings of the Korean customers and brought in several of its
international best practices into the country.
Globalisation of markets and production has a great role in making Tesco plc.
Britain’s largest retailer, as a major multinational corporation. 65 % of its operating lie
outside the UK with 12 international subsidiaries (ibid). During the progression of
expansion Tesco has been able to capture and benefit from the innovation which
emerged from international subsidiaries. Due to the interconnection of the markets,
Tesco’s organizational structures and operating skills have been continuously
transformed as it has learned to operate in and adapt to host economies. The firm
has transferred knowledge from the UK around its international operations using
intra firm networks of telecommunications and face-to-face best practice
transmissions. Innovatory practices emerging within the international subsidiaries
have also been captured via bottom up processes of organizational learning.

Only thanks to internet, Today, Tesco have been able to include 13 countries in its
business empire which give it access to over 3 billion people, which is about 54% of
the total world’s population. Because of the advent of technology, the process is so
progressive that (Tesco Plc., 2011) claims it would have been the world’s biggest
online grocer if they knew it back in the early 1980. That means 13% of all card
transactions in the Britain would be on a Tesco credit cards, or there would be more
than six millionclub card holders just in South Korea (ibid)

Tesco has been successful in using the concept of outsourcing and cashing the
productivity out of it throughout the past years. The Multi-floor store design and
operational services were developed in Tesco’s East Asian subsidiaries. Afterwards,
being transferred into Britain in the form of “stores on Stilts” designs which first
appeared in Altrincham in 2002 (Aim research, 2014). The Low-build-cost stores
technique was first developed in Thailand and then was transferred to Europe and
used as a benchmark to assess its Central European developments. Food hall
merchandising techniques (emulating East Asian “wet markets”) being transferred to
and used to enhance “retail theatre” within its Central European hypermarkets (ibid).
International production has been so successful that Tesco has extended its
applications management outsourcing contract, in a deal worth of £18 million (CIO,
2007).

Philip Clarke in his first speech as the CEO of Tesco Group said “We are in a new era
of retailing, creating great opportunities and challenges for every retailer, and
putting even more focus on consumer trust” (Tesco plc., 2011). Thus, Tesco have
embraced thetechnology,built the team, and fostered talent. And In return the
globalised market gave them one of the most successful businesses of our times.

Clark proclaimed that by the completion of the year Tesco will double the amount of
stores with non-food Click and Gather to 600 (ibid).

CONCLUSION
Globalisation affects all three levels of manufacture, but in diverse behaviours.
Globalisation make available a market for main industries, but demand can
occasionally take importance over sustainability, to the disadvantage of long-
standing reasonableness. Minor businesses benefit from globalisation because
businesses select zones where the market suits them, but this may lead to
redundancy for trained employees who reside in countries with a greater standard of
living. Globalisation, joined with technology, is a benefit for tertiary trades when
corporations can sell services on the international marketplace without repositioning.
They are, however, vulnerable to market variations.

Anyhow, Because of the interconnected global market, companies can achieve

increased revenue opportunity through global sales. They are able to reach a bigger
customer base with better success chances. Through globalisation of production,
they can also enjoy reduced production costs by producing in low cost countries
such as Apple Inc. is producing most of its products in China. With these businesses
investing in developing companies, it also increases income for these countries which
creates an overall good environment for economic activities.

Fascinating as it seems, the changed atmosphere causes the traditional norm of

running a local businesses to become null and void. Businesses nowadays need to be
on a bigger market to gain the competitive advantage above its rival businesses.
Global planning might seem fancy and fruitful, but global execution is definitely not
an easy task. Extremely talented team is required to sustain a business in such
competitive environment. Furthermore, some countries might take global production
as exploitation of their workers which can damage a company’s image. Thus, with
careful planning and innovation, companies today can be much more successful than
they ever was.

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