Globalisation

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BY: Nidhi Chopra Dimple Arora Hitesh Raj

6/9/12

The IMF defines globalizations as:

The growing economic worldwide through : interdependence of countries

increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technology.

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Essential conditions for globalisation

Business Freedom Facilities Government Support Resources Competitiveness

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Stages of globalisation
Ohmae identifies 6 five different stages in the development of a firm into a global corporation.

The first stage is the arms length service activity of essentially domestic company which moves into new markets overseas by linking up with local dealers and distributors. In stage two, the company takes over these activities on its own. In the next stage, the domestic based company begins to carry out its own manufacturing, marketing and sales in the key foreign markets. In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R & D and engineering. In the fifth stage, the company moves toward a genuinely global mode of operation.
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Dimensions of globalisation

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Drivers of globalisation

Worldwide reduction of barriers to trade and investment. Market liberalization and adoption of free markets. Industrialization , economic development and modernization. Integration of financial markets. Advances in technology.

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Socital consquences of globalisation

Loss of national sovereignty Off shoring and the flight of jobs Effect on poor Effect on the natural environment Effects on national culture

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Firm-level consquences of market globalisation

Countries new business opportunities for internationalizing firms New risks and intense rivalry from foreign competitors More demanding buyers

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Does globalisation hurt or benefit the poor?

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Advantages Generates employment

Disadvantages Developed countries can stifle development of undeveloped and underdeveloped countries.

Consumers to get much wider variety of Economic depression in one country can products to choose from. trigger adverse reaction across the globe Businesses and investors get much wider It can increase spread of communicable opportunities for investment diseases. Companies get access to much wider markets Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale. Companies can exploit the workers by paying them less wages.

Companies are able to procure input goods and services required at most competitive prices. Consumers get the product they want at more competitive prices. Capital inflow ,technology etc

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Globalisation in India

In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model known as Liberalization, Privatization and globalisation in India (LPG), was to make the Indian economy one of the fastest growing economies in the world. An array of reforms was initiated with regard to industrial, trade and social sector to make the economy more competitive. The economic changes initiated have had a dramatic effect on the overall growth of the economy. It also heralded the integration of the Indian economy into the global economy. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1 billion and inflation was as high as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India

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Thank you

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