mod 1 - ibm globalization of markets - final
TRANSCRIPT
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8/9/2019 Mod 1 - IBM Globalization of Markets - Final
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MODUL
EGlobalization of Market
&Globalization of
Production
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GLOBALIZATION ! Used by an Indian
Set made inChina/Taiwan
Chip made in US
Transported to Indiain the ship owned bysome other countrypeople
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GLOBALI ATIONShift toward a more integrated and
interdependent world economy
Globalization has two different facets:
The Globalization of Markets
The Globalization of Production
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THEGLOBALI ATIONOFMARKETS
Refers to the merging of historically distinct andseparate national markets into one huge globalmarket place
Consumer products credit cards,soft drinks,sony play station video games, McDonalds
hamburgers, are offering a standardizedproduct worldwide and helping to create aglobal market
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BUTSIGNIFICANT DIFFERENCES
Between national markets and the various
dimensions like
Consumer tastes & preferencesDistribution channels
Culturally embedded value systems
Businesssystems & legal regulations
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CASE: WAL-MARTSGLOBAL
EXPANSION Largest retailer in the world Over 4500 stores
International expansion in 1991begins with Mexico in
response to market saturation in the US
Localization strategy adopted after trial and error
Global buying power has allowed it to reap economies
ofscale
Wal-mart facessignificant competition from otherglobal retailers, but has the first mover advantage in
some markets
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WHAT ISGLOBALI ATION?
The shift towards a more integrated and
interdependent world economy
Two components:
The globalization of markets
The globalization of production
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GLOBALI ATIONOF MARKETS
The merging of distinctly separate national
markets into a global marketplace Tastes and preferences converge onto a global
norm
Firms offer standardized products worldwide
creating a world market
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GLOBALI ATIONOF MARKETS
Significant differencesstill exist between
national markets on many relevant dimensions
These differences require that marketing and
operatingstrategies and product features be
customized to best match conditions in a
country.
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GLOBALI ATIONOF MARKETS
Countries are different
Range of problems are wider and more
complex
Government intervention in trade and
investment creates problems
International investment is impacted bydifferent currencies
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GLOBALI ATIONOF
PRODUCTION Refers to sourcing of goods and services
from locations around the world to take
advantage ofDifferences in cost or quality of the factors of
production
Labor
Land
Capital
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EMERGENCEOFGLOBAL
INSTITUTIONS
Globalization has created the need forinstitutions to help manage, regulate and police
the global marketplace
GATT
WTO
IMFWorld bank
United Nations
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GLOBAL DRIVERS
Macro factors that underlie trend towards
greater globalization
Decline in trade barriers
Technological change
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PATTERNOF DECLINING
TARIFFS
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DECLININGBARRIERSTO
TRADE
Globalization of markets and production has
been facilitated byReduction in trade barriers
Removal of restrictions to foreign direct
investment
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THE CHANGINGPATTERNOF WORLDOUTPUTAND TRADE
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PERCENTAGESHAREOFTOTALFDI
STOCK
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Fig: 1.3
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VOLUMEOFFDI INFLOWS, 1994-2002($BILLIONS)
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Fig: 1.4
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THEROLEOFTECHNOLOGICAL
CHANGE
Microprocessors and telecommunications
The internet and world wide web
Transportation technology
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THESHRINKINGGLOBE
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Fig: 1.2
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CHANGING DEMOGRAPHICSOFTHEWORLD ECONOMY
World output and trade
Changing foreign direct investment Changing nature of multinationals
Mini multinationals
Non US multinationals
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NATIONALORIGINOFLARGESTMULTINATIONALCORPORATIONS
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Fig: 1.5
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GLOBALI ATION DEBATE-
PRO
Lower prices for goods and services
Economic growth
stimulation
Increase in consumer income
Creates jobs
Countriesspecialize in production of goodsand services that are produced most
efficiently
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GLOBALI ATION DEBATE-CON
Destroys manufacturing jobs in wealthy,
advanced countries
Wage rates of unskilled workers in advancedcountries declines
Companies move to countries with fewer
labor and environment regulations Loss ofsovereignty
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