Global Environment

Globalisation

• IMF defines globalisation as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology”.

Drivers of globalisation

• International trade (lower trade barriers and more competition)

• Financial flows(FDI, technology transfers/licensing, etc.)

• Communications(traditional media and the internet)

• Technological advances in transportation, electronics, etc.

• Population mobility, especially labour.

Essential conditions for globalisation

• Business freedom• Facilities• Government support• Resources• Competitiveness• Orientation

Foreign market entry strategies• Exporting• Licensing/franchising• Contract manufacturing• Management contract• Assembly operations• Fully owned manufacturing facilities• Joint venture• Countertrade• M&A• Strategic alliance• Third country location

Challenges/obstacles to globalisation

• Government policy and procedures• High cost• Poor infrastructure• Obsolescence• Resistance to change• Poor quality image• Supply problems• Lack of experience• Limited R&D and marketing research• Growing competition• Trade barriers