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Industry Globalization

What is a global industry? Why? Which drivers/factors most important? How does a global industry compare with a multi-domestic one? How is the extent of globalization measured? What are the implications for firms international strategies?

Meaning of globalization
has written that globalization "is a widelyused term that can be defined in a number of different ways. When used in an economic context, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labor.. variety of micro-processes that begin to denationalize .

Definition continues
Though the precise definition of globalisation is still unavailable a few definitions worth viewing, Stephen Gill: defines globalisation as the reduction of transaction cost of transborder movements of capital and goods thus of factors of production and goods. Guy Brainbant: says that the process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution

Negative and positive globalization


Negative: removing the barriers, where the cost of raw mat goes down plus other negative effects Positive: standardizing international laws and policies to facilitate trade

Motives
why Alignment with world economy ? What are the motives behind ( drivers) Internals( monopolistic adv, oligopolistic reaction,product LC stage) Externals: macro Cap mkts globalization Formation of international bodies

Globalization Drivers
Market Drivers Cost Drivers Government Drivers Competitive Drivers

Low
Multi-domestic

High
Global

Market Globalization Drivers


Common customer needs Global customers Global market channels Transferable marketing Idea is expanding markets in reply to saturated domestic market Economies of scale

Cost Globalization Drivers


Global scale economies Sourcing efficiencies Factor of production differences High product development costs Rapidly changing technology

Government Globalization Drivers


Unrestrictive trade and investment policies Compatible technical standards Common marketing regulations

Competitive Globalization Drivers


High two-way trade / cross-border FDI Global competitors Interdependence among countries
Policy Link Trade/Investment Link Management Link