MEANING

Globalisation means doing business at global level

without any regards to national or state boundaries. It is a process of economic integration with global economy . Globalisation is facilitated by technological improvement,competition,economic growth interdependence between nations and willingness to integrate.

Levels of globalisation
Globalisation of a particular company
Globalisation of a particular industry Globalisation of a particular country level

Globalisation at world level.

Globalisation of a particular company

Large corporations expand business,earn revenue and

increase asset base across the world,there will be flow of capital,goods & technology know-how across different units Ex. IBM,HP,GE,MICROSOFT etc.

Globalisation of a particular industry

The entire industry is dominated by set of companies

and become a global player . Ex. In case of electronics GE,SIEMENS & PHILIPS are the companies which have dominated the business globally. In case of software -some of the Indian cos TCS,INFOSYS,WIPRO,SATYAM ,HCL etc dominated the world market.

Globalisation of a particular country level

Some of the countries specialize in foreign trade and

thrive based on their factor of endowment and export potential. Ex.Singapore as a country thrives as market intermediary without much manufacturing setup,for this reason Singapore sea port is very well develpoed

Globalisation at world level.

As a result of economic interdependence goods,

services and capital are flowing across the border . Service business is taking global shape in order to revive economies of the developed countries. Developed countries in order to improve operating margin ,reduce cost of products and to become competitive player started outsourcing some of their work by taking advantage of labour arbitrage.

Con..
Cos can improve operating profits and come out with

high quality products at lesser costs. The money saved could be utilized for other economic activities. Hence developed countries were able to come out of recession

Stages of globalisation ethnocentric Approach

Ethnocentric feels home country is very much

suitable.It seems similarly in foreign : domestic company formulates policy on product,design,HR and marketing . Excess capacity or inventory is exported outside India , export is viewed as an extension of home market and handled as separate division at best within marketing department. The maintenance of domestic approach towards international business is called ethnocentric approach

Polycentric approach
Polycentric approach feels each host country as unique

this may be referred as ethnocentric organisation matured for next stage of expansion. Company appoints key personal from the host country that in turn will recruit for the vacancy to him. Policy of host country decisions regarding design,product and strategy is done by the head of the host country. Polycentric approach of the subsidiary focuses on the conditions of the host country.

Regiocentric approach
Regiocentric sees similarities & dissimilarities in a

world.Companies operate in a country for some time. When host country requirements are met, company decides to export to nearby country or to any country,which share similar economy & culture . At this stage foreign subsidiary considers regional approach for formulating strategy & policies.

Con..
However the same product designed under polycentric

approach is used in other countries of the region,but with different marketing strategies.

Geocentric approach
Geocentric approach sees similarity and differences in

home and host countries. In geocentric approach,entire world is a single country for the company with multiple subsidiaries. Company selects people of entire world wherever its subsidiary functions as independent,autonomous body in formulating policies,strategy,product design,HR,operations,marketing and corporate office co-ordinates functioning of subsidiaries.

Factors influencing globalisation

History
Economy Resources & market

Production
Political Industrial organisation technology

merits
Faster industrialization
Flow of capital Speed of production

Increased standard of living

Flow of technology Increase in consumption attitude

De merits
Labour
Rich-poor gap Depletion of natural resources

Commercial exploitation

Barriers to globalisation
Tariffs
Quotas Voluntary Export Restraint

Monetary Barriers
Standards Local Content Requirements

Investment Restrictions
Bureaucratic Hurdles

Concepts of globalisation
MNC:

companies that maintain significant operations in two or more countries simultaneously but CONTROL is vested with home country.
TNC:

a company that maintains significant operations in more than one country simultaneously decentralizes decision making in each operation to the local country.

Con..
Global village The concept of a boundary less world; the production and marketing of goods and services worldwide. Borderless organization A management structure in which internal arrangements that impose artificial geographic barriers are broken down

MNC Advantages
Investment,employment and income level increases

consequent to operation of the MNC in the host country Ancillary industries grow resulting in industrial and economic development. Gets latest technology, managerial techniques and practices of MNC. Host country gets best & sophisticated management techniques from the managerial practices of MNCs

Con
Market supplier and intermediaries of the host

country get stimulation of increased business from MNCs operations. It creates competitiveness & helps to enhance it. Host country can take advantage of the foreign culture brought in by the MNCs Domestic countrys import will reduce & export gets boost due to the goods produced by MNC,s,this will create better favourable balance of trade.

Control over MNCs activities

Department of co affairs.
Ministry of industry & development. RBI

Ministry of finance.

TNCs characteristics
Geocentric orientation
Scanning or information acquisition Vision & aspiration

Geographic scope
Operating style Adaptation Extensions HR policy purchasing

Stages of international business

Domestic company
International company Multinational company

Global company
Transnational company

International business risk

Legal risk
Country risk - Political risk-financial risk Regulatory risk

Social risk
Environmental risk

Assessment of Business Risks

Check list
Expert based scoring system Economic methods

Rating & ranking system

Risk Reduction strategies

Establish risk assessment system
Developing local economy Local equity participation

Good corporate citizens

Maintaining good political relation