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Introduction
a world in which barriers to cross-boarder trade and investment are declining; perceived distance is shrinking due to advances in transportation and telecommunications technology, material culture is starting to look similar the world over and national economies are merging into an independent, integrated global economic systems.
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What is globalization?
The shift towards a more integrated and interdependent world economy from isolated and disintegrated economy for increasing efficiency and productivity and decreasing production, transportation and marketing costs of goods and services is termed as globalization. There are two components of this globalization such as: The globalization of markets The globalization of production
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Globalization of markets
The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross-boarder trade have made it easier to sell internationally. Tastes and preferences converge into a global norm, Firms offer standardized products worldwide creating a world market,
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Globalization of markets
Significant differences still exist between national markets on many relevant dimensions,
These differences require that marketing and operating strategies and product features be customized to best match conditions in a country,
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Globalization of markets
Countries are different, Range of problems are wider and more complex, Government intervention in trade and investment creates problems, International investment is affected by different currencies.
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Globalization of production
Refers to sourcing of goods and services from locations around the world to take advantage of
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Global drivers
Macro factors that underlie trend towards greater globalization
Decline in trade ( import and export of goods and services) and investment ( foreign direct investment) barriers, The role of technological change i.e. change in telecommunications, internet & worldwide web, transportation technology etc.
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Lower prices for goods and services Economic growth stimulation Increase in consumer income Creates jobs Countries specialize in production of goods and services that are produced most efficiently
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Destroys manufacturing jobs in wealthy, advanced countries Wage rates of unskilled workers in advanced countries declines Environmental degradation The cultural imperialism Companies move to countries with fewer labor and environment regulations Loss of sovereignty
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