G.

RODEL MORALES
(Professor) 1
 Definition of Globalization
In general term, globalization
refers to the development of
global or worldwide business
activities, competition and
markets and the increasing
global interdependence of
national economies.
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 Definition of Globalization

Globalization of economies:
Increasing interdependence
between national economies
throughout the world.

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Globalization of markets:
Increasing homogenization
of consumer tastes and
product preferences in
certain markets.
4
Globalization of industries:
Increasing globalization of the
productive process, with firms
choosing to concentrate or
disperse value-adding activities
around the world according to
the locational advantages to be
obtained.
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Globalization of strategy:
The extend to which an
international business
configures and co-ordinates
its strategy globally.

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 Which factors can be attributed to
recent developments of globalization?
 Manufacturing technology

 Transportation technology

 Information and communications

technology
 Trade liberation

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 PERSPECTIVE OF BUSINESS
GLOBALIZATION
 (consists of two main components):

 The globalization of markets refers to merging distinct

and separate national markets into one huge global
marketplace.

 The globalization of production means that firms

distribute their production processes to different
locations around the globe in order to take advantage of
regional differences in the cost and quality of the
production factors. 8
 Is globalization
a
blessing or curse?
 Is globalization a blessing or curse?
The Blessing The curses
 Consumers have access to  The already impoverished countries
are becoming even poorer.
a much wider range of
products and at relatively  Employ child labor, condoning
low prices. inhuman working conditions and
paying slave wages in developing
 Increased global trade has countries
made people wealthier  There have been huge job loses
 Companies benefit from among unskilled workers in
low cost production in developed countries.
developing countries  Bring threats to the national cultures
 Developing countries and identities alike.
benefit from increasing  Huge international companies have
employment and wage the greater economic power than the
levels government of the developing
countries where they are operating.
 Damage the ecological environment.
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 Globalization cannot be prevented but can be
managed by governments, international
bodies and global businesses to raise living
standards for all.
 The reduction of poverty is not simply a
social and moral issue it is also economic and
political.
 Transnational Businesses can gain reputation
and productivities by investing and setting
standards in poor countries.
 Developed countries “aid” the poorer nations.11
Prescriptive or Deliberate Approach to Strategy

 Focus on long-term planning aimed at

achieving a fit between an organization’s
strategy and its environment.
 Advantage: It structures complex
information, defines and focuses business
objectives, establishes controls, and sets
targets that performance can be measured.
 Disadvantage: It is overly prescriptive
because the business environment can be
very chaotic and complex.
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Emergent or Learning Approach to Strategy

 The complexity and dynamism of modern

business organizations and their environments
suggest that strategy will emerge and evolve
incrementally over time.

 Strategy evolves rationally in response to

changes in the environment.

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Competitive positioning approach to strategy

 Begins with analysis of the competitive

environment using the five-forces framework.
 Followed by value chain analysis, which
examines the value-adding activities of the
organization and the linkages between them.
 Finally, select a generic strategy, supported by
the appropriate configuration of value-adding
activities.
 It is termed outside-in.
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 Resource, Competence and Capability
Approach to Strategy
 Emphasized how to manage resource
inputs in developing core competences and
distinctive capabilities.
 It is termed inside-out.
 It also emphasizes the potential advantages
of collaboration between organizations
whose competences are mutually
complementary. 15
Knowledge-Based Approach to Strategy
 Knowledge is viewed as being the only sustainable
source of competitive advantage.
 Knowledge can be categorized as:
 Know-how (practical Knowledge)
 Know-why (theoretical Knowledge)
 Know-what (strategic Knowledge)

 Organizations must seek to create new knowledge

that is grounded in organizational learning and that
underpins core competences and value-adding
activities, through which competitive advantage is
achieved. 16