Global Is at Ion

GLOBALISATION
GLOBALISATION
Globalisation is the growing integration of the worlds economy. This means that national economies are becoming integrated into one global economy. There is interdependency between national markets, so changes in one part of the world affect all the other parts. This also means, that there are interrelationships between related businesses throughout the world, so businesses do not think locally anymore, they base their decisions on expected changes in the world economy. Globalisation is definitely not a new phenomenon. It has always existed since the world economy started to take shape. So we can say it started with the discovery of the continents. But the carriers of globalisation are not the sovereign nationstates but the trans-national enterprises.
1. Three important aspects of globalisation:

1.
The growing importance of international trade: Between 1980 and 1990 the volume of international trade almost doubled.
2.
The rise of the multinational business: There are lashings of multinational companies which we can see all around the world. The products they sell are similar in all countries. Examples: Coca-Cola, Ford, IKEA.
3.
The emergence of businesses which think globally about their strategy: Such businesses base their strategic decisions on the global market rather than national markets. For example, a business may make parts for a product in several different countries because this is the most cost effective and efficient method to get the product to its consumers. They will tend to make use of their businesss competitive advantage by locating production wherever it is most efficient.
2. Factors affecting globalisation

It could be argued that certain factors have contributed to the growth of globalisation.
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Technological change has played an important role in globalising the worlds economy. There is a huge development in the information technology. The Internet and mobile communication provides fast flow of information, which helps businesses in the growing competition.
Decreasing transport costs: The development of technology allows vehicles, machines to operate more economically.
GLOBALISATION
The deregulation of business: Many companies were privatised, and many of them started to operate in foreign countries, meaning competition for domestic businesses.
The liberalisation of trade: Trade protection has been reduced due to the operation of organisations such as the WTO.
Consumer tastes and their responses have changed: Consumers in many countries are more willing to buy foreign products.
The growth of emerging markets and competition: New markets have opened up in countries that have seen a growth in their national income. Examples might include countries in South East Asia and the more successful former communist countries in Eastern Europe. As businesses in these countries have become more successful, they have been able to compete in Western economies.
Liberalisation of trade: Protectionism and tariffs etc. are abolished between many countries.
3. The effects of globalisation on business

Globalisation has had many effects upon businesses throughout the world: 1. Growing competition/Hypercompetition: Many businesses have entered the global market.. For example, Microsoft, Intel, Compaq and Dell, all relative newcomers to the computer industry, were able to compete effectively against the market leader IBM. HYPERCOMPETITION has been used to describe competition in the new global economy. 2. Meeting consumer expectations and tastes: Competition by businesses seeking to meet customer needs in increasingly effective ways has raised customer expectations in many markets. Businesses must now meet ever greater consumer demands about quality, service and price. They must also provide the greater choice of products expected by purchasers. 3. Economies of scale: Businesses, who entered the global market are able to enjoy the benefits of larger scale of operations. So they can reduce unit output costs through spreading fix costs over a larger volume of output. 4. Choice of location: Businesses with a global presence can choose the most advantageous location for each of its operations. When locating its operations considers the Reduction of costs. For example, Nikes decision to locate its shoe manufacturing operations in countries such as China and Vietnam was perhaps based on cost reduction factors.

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GLOBALISATION

1. Three important aspects of globalisation:

2. Factors affecting globalisation

3. The effects of globalisation on business

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