UMAIR FAROOQ MUGHAL

GLOBALIZATION & GLOBAL BUSINESS TODAY

BY UMAIR FAROOQ mUGHALM-COM FROM PU

E-mail umair_farooq123@yahoo.comContact no +92 331 3366205

Working as a Teacher & Banker. Currently Teach International business & finance, Interpersonal skill, I to B, MBF, Economics, Computer, EOP, BCRW, Audit and B-Law in The house of accounting and New Stars

College.

UMAIR FAROOQ MUGHAL

What is Globalization. Globalization Definition. Key Factors of Globalization. The Emergency of Global Institutions. Drivers of Globalization. Changing Demographic of Global

Economy. The Globalization Debate/ Negative

Faults/ Disadvantages.

ROAD MAP: Previewing the Concepts

UMAIR FAROOQ MUGHAL

Introduction:

Globalization means shift toward the international market. It is a process by which businesses or other organization develops international influence or start operating on an international scale. The term globalization has been increasingly used since the mid-1980 and 1990. In 2000 IMF identify the four basic aspects of globalization; 1) Trade & transportation (2) Capital & investment (3) Movement and migration of people (4) Knowledge.

What Is Globalization

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‘’The worldwide movement toward

economic, financial, trade & communication integration is called globalization.’’

‘’Globalization is the process of international integration arising from the interchange of world views, product, ideas & other aspect of culture’’

‘’The movement of domestic & national market toward international market is called globalization’’

Globalization Definition

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Globalization of Market Globalization of Product

Globalization of Market: ‘’The expansion & access of businesses to all over the

world to reach the needs of the customer internationally is called globalization of market.’’

Examples: Access to McDonald Pizza MTV OR BBC LEVIS JEANS COCA COLA PEPSI

Key Factors of Globalization

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Globalization of Production:

‘’Sourcing of material & services from other countries to gain advantage from price differences in different nations is called globalization of production.’’

Example: HONDA who is making the spare parts in China

assembling the products in Pakistan & designed the engine in Japan.

Type PUBLIC. Founded in 1948. Headquarters Japan. Area served Worldwide. Slogan ‘’THE POWER OF DREAMS’’

Key Factors of Globalization

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Help manage, regulate & police the global

marketplace. Promote the Establishment of multinational

treaties to govern the global business system.

Examples Include:

GATT [General Agreement on Tariffs & Trade] Regulate international trade. Dealing rules of

trade among Nations & serve 153 Countries. Its purpose was reduction in tariffs & trade barriers.

The Emergency of Global Institutions

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WTO 1995 [World Trade Organization]

It’s MOTTO ‘’UNITY IS STRENGTH’’ Its establish in 1995. That is international trade organization. It’s Purpose to liberalize international trade. It replaces GATT & signed by 160 Nations. Dealing rules of trade.

IMF 1944 [International Monetary Fund] It’s MOTTO ‘’COMPLACENCY MUST BE AVOIDED’’. Give loan &

monetary facilities to countries & serve 188 countries. IMF was established to maintain order in the international monetary system. It works for economic development, reducing poverty, secure finance etc.

WB 1944 [World Bank] It’s MOTTO ‘’WORKING FOR A WORLD FREE OF POVERTY’’. WB

was set up to promote Economic Development. It server 188 Countries. It provide loan to developing country for capital programs.

The Emergency of Global Institutions

UMAIR FAROOQ MUGHAL

UN 1945 [United Nation]

Its current mission is: "To foster the growth of the world's bureaucracies while developing innovative methods for our member nations to disguise corruption as humanitarian aid" It serves 193 countries. Maintain international pace & security. Develop Friendly Relation among nation. Co-operates in solving international problems. Promoting respect human rights. G-20 1999 [Group of 20]

It formed in 1999. Its purpose to bring together systemically important industrialized & developing economies to discuss key issue in global economy.

The Emergency of Global Institutions

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Drivers of Globalization:

"Globalization is not something we can hold off or turn off . . . it is the economic equivalent of a force of nature -- like wind or water."

Drivers of Globalization

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following factors that underlie the trend

towards greater globalization:

Drivers of Globalization

Decline Trade & Investment Barriers

Technological Change

Other Drivers

International Trade [Import and Export]

FDI [Investment in Foreign Country]

World war II GATT WTO

World war II Microprocessors Telecommunication Internet Transportation

Technology WWW

Market Drivers Cost Drivers Competitive Drivers Political Drivers

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Decline Trade & Investment Barriers:

After the Great Depression and the Second World War, developed countries have opted to remove barriers to international trade and foreign direct investment. After the emergency of global institutions like GATT, WTO, IMF etc. the trade and investment barriers decline. Now we are easily sale our product and purchase anything due to globalization.

International Trade:‘’ International trade occurs when a firm exports goods or services to consumer in another country’’.

FDI [Foreign Direct Investment]:‘’FDI occurs when a firm invests resources in business activities outside its home country.’’

Drivers of Globalization

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Technological Change:

Over the last decades there has been significant technological advancement. Such as Microprocessor, internet, Telecommunication etc. Microprocessor:

Due to invention of microprocessor after world war II many changes accurse in globalization. These include satellite, optic fiber and wireless communications as well as the Internet, the worldwide web and provided the possibilities of e-commerce. Telecommunication:

Telecommunications is technology that sends information over distances. Mobile phones, land lines, satellite phones and voice over Internet protocol (VOIP) are all telephony technologies. Internet:

 The rapid growth of the Internet is the latest technological driver that created global e-business and e-commerce. By using WWW you can easily purchase and sale anything in the world. Transportation Technology:

Improvement in transportation technology in air, sea and rail systems to accelerate the globalization activities. Also, decline in transportation costs and less time needed to travel from one place to another.

Drivers of Globalization

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Others Drivers:

Market Driver:Many consumer goods and services are now universally available, no matter one’s

geographic location or social setting. Now days we are easily purchase any brand product due to globalization of market. Cost Driver:

Sourcing efficiency and costs differ from country to country and global firms can take advantage of this fact. Like Honda Company manufacture his product with the help of three countries China, Pakistan and Japan. Competitive Driver:

With the global market, global inter-firm competition increases and organizations are forced to “play” international. Due to competition between countries or industries everyone make his product differ and more reliable as compare to others. Political Driver:

Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign direct investments in almost all over the world. It is only due to liberalized political environment of a country.

Drivers of Globalization

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Change world output & world trade

Picture:Share of world output generated by

developing countries increasing since 1960.

Changing Foreign Direct Investment (FDI) Picture:

The stock of FDI generated by rich countries decline. Cross border flow of FDI rising. The larger recipient of FDI is China.

Changing Demographic of Global Economy

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Anti-globalization Protest:

Protestors think globalization change the world in negative way Globalization Jobs & Income: Globalization & National sovereignty:

Economic power is shifting away from national government toward international organization like WTO, UN, and EU. Globalization & the World Poor:

Gap between rich & poor countries increase due to free trade & benefits of globalization not equally shared. Causes Unemployment Environmental Problems

A company may want to build factories in other countries because environmental laws are not as strict as they are at home.

The Globalization Debate/ Negative Faults/ Disadvantages

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Diseases can Spread:

Human, animal and plant diseases can spread more quickly through globalization. Globalization of Labor Policies:

Due to free flow trade and manufacturing facilities more from advance to less advance country therefor labour policies also change. Loss of Culture Conflicts Monopoly Unequal Wealth Distribution Inflation Infrastructural Differences

The Globalization Debate/ Negative Faults/ Disadvantages