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Globalization (Causes and drivers of globalization (Importance of…
Globalization
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When did it started?
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Development in capitalist economies:
- accumulation: scale of production
- commodification: scale of consumption
put price on things have no economic value -> achieve economies of scale and move cost to where cheap
Some prominent explanations mentioned:
• The spread of “rational” scientific knowledge
• Access to cheap labor or cheap natural resources (formerly also known as “colonialism”)
• Opening up new markets (to pay for expensive innovations)
• Avoiding local economic adversity (crises) and competition
• Or evading taxes (tax havens) or other regulatory restrictions
Disintegration of global economy:
- 2WW: great depression
- cold war: Eastern Europe and Chinese communism
- Economic problem af ter WWII of Germany and Japanese
- protectionism by government, import tariff
Strain & Glennie: third wave of globalization: greater connectivity between business and changing balance of economics power
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Modes of entry
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licensing: allow oversea firms to offer service/product with fee
little investment, low risk, fast entry
license can learn experience and enter as competitor
franchising: like licensing but many products, brands
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wholly owned- subsidiary: acquisition of a firm oversea/Greenfield site operation
- greater control and all revenue
- expernsive and risky
Strategy alliances and joint venture: because globalization increase competitor, market in developing countries
pros:
- fast and efficient than sub-contracting
- low cost, less radical and more value than wholly-owned or outsourcing, merger
- politics easy
variations: - one party control
- shared control
- majority/minority ownership
- third party owned (international joint venture)
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Drawbacks:
- organizational complexities
- success depends on strategic fit
- capability
- commitment
- control
- measuring performance outcome
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Globalization: process the world is converging economically, politically and culturally the circulation of goods
Feature:
- increased trade global market
- increase speed of information and technology transfer
- international defense and trade alliance
- changing ownership patterns and cross-border acquisitions
- multi-cultural employees
- global value chain (MNCs)
Globalization
Scholte:
- internationalization: growth in trade (global network and value chains)
- liberalization: of market, information, capital flow
- universalization: regulatory framework (WTO, EU)
- westernization: dominance of western
- deterritorialization: boundaries less relevant
=> reconfiguration of social geography by transplanetary and supraterritorial connection
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